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The Impact of Social Media on Consumer Demand: The Case of Carbonated Soft Drink Market

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  • Liu, Yizao
  • Lopez, Rigoberto A.

Abstract

This article estimates the impact of social media exposure on consumer valuation of product characteristics. We apply the Berry, Levinsohn and Pakes (1995) model of market equilibrium to sales data for 18 carbonated soft drink brands sold in 12 cities over 17 months (June 2011 to October 2012) and social media conversations on Facebook, Twitter and YouTube. Empirical results show that social media exposure is a significant driver of consumer behavior through altering evaluation of product characteristics and purchase choices.

Suggested Citation

  • Liu, Yizao & Lopez, Rigoberto A., 2013. "The Impact of Social Media on Consumer Demand: The Case of Carbonated Soft Drink Market," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 148913, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:148913
    DOI: 10.22004/ag.econ.148913
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    References listed on IDEAS

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    1. Avi Goldfarb & Catherine Tucker, 2011. "Substitution Between Offline And Online Advertising Markets," Journal of Competition Law and Economics, Oxford University Press, vol. 7(1), pages 37-44.
    2. Smith, Michael D. & Telang, Rahul, 2010. "Piracy or promotion? The impact of broadband Internet penetration on DVD sales," Information Economics and Policy, Elsevier, vol. 22(4), pages 289-298, December.
    3. Onishi, Hiroshi & Manchanda, Puneet, 2012. "Marketing activity, blogging and sales," International Journal of Research in Marketing, Elsevier, vol. 29(3), pages 221-234.
    4. Eugene Orlov, 2011. "How Does The Internet Influence Price Dispersion? Evidence From The Airline Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 59(1), pages 21-37, March.
    5. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    6. Stan J. Liebowitz & Alejandro Zentner, 2012. "Clash of the Titans: Does Internet use Reduce Television Viewing?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 234-245, February.
    7. repec:zwi:journl:v:44:y:2012:i:22:p:2859-2865 is not listed on IDEAS
    8. Rigoberto A. Lopez & Kristen L. Fantuzzi, 2012. "Demand for carbonated soft drinks: implications for obesity policy," Applied Economics, Taylor & Francis Journals, vol. 44(22), pages 2859-2865, August.
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    Cited by:

    1. Chen, Xuqi & Gao, Zhifeng & House, Lisa, 2016. "Own and Cross-effect of Social Media on Demand for Fresh Produce: A Case of Consumer Preference for California versus Florida Strawberry," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230137, Southern Agricultural Economics Association.
    2. Huang, Lu & Liu, Yizao, 2014. "The Dynamics of Brand Value in the Carbonated Soft Drinks Industry," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172389, Agricultural and Applied Economics Association.
    3. House, Lisa A. & Jiang, Yuan & Salois, Matthew, 2014. "Measures of Online Advertising Effectiveness: The Case of Orange Juice," 2014 AAEA/EAAE/CAES Joint Symposium: Social Networks, Social Media and the Economics of Food, May 29-30, 2014, Montreal, Canada 169776, Agricultural and Applied Economics Association.

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    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Industrial Organization;
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