mand for quality and breeding, the concepts of hedonic price analysis
and alternative approaches to assessing consumer preferences will be ad-
dressed; further, examples reported in the literature on hedonic price
analyses of food products are presented; finally, conclusions are drawn.
BASIC PRINCIPLES
The Importance of Quality for Consumer Demand
According to the theory of demand, consumer choices among vari-
ous consumption alternatives are guided by the principle of maximizing
utility under the constraints of a limited budget. Products are chosen in
such a way that the overall aggregate of consumed goods provides max-
imum satisfaction. To make rational choices within a limited budget,
consumers rank the products (goods and services) that are offered in
markets according to their contribution to their satisfaction. This rank-
ing of products reflects the preferences of consumers. In other words:
Buying is not possible without reflecting preferences.
Consumers living in industrialized market economies can usually
choose among a broad spectrum of different varieties of food products.
An increasingly differentiated range of processed and nonprocessed agri-
cultural products can be found in markets, presenting a palette from con-
venience food over health food to exotic food. This is due, on the one
hand, to an increasing depth of product processing by the agro-food in-
dustry and, on the other hand, to the overall globalization of markets.
The latter makes agricultural raw products available from all over the
world and independently of growing seasons.
This vast supply of food and primary agricultural products is offered
at prices that have constantly fallen over the last decades in relation to
consumers’ income. Therefore, most consumers in high-income coun-
tries today can easily cover their dietary needs, and in most cases a point
of saturation has been reached with regard to purchase of food. Hence
the average household is generally not confronted with the task of ful-
filling basic dietary needs, subject to its limited budget, but to choose
between different qualities of food products offered, subject to health
considerations and time constraints.
Beyond the basic dietary utility of food products, households in high-
income countries require additional satisfaction by the consumption of
food. This is, for example, the convenience of a ready-to-eat meal or the
healthiness of a food product that is low in calories. Attention may be