Hedonic Price Modeling of the Quality Attributes of Products

This study considers a model for estimating the value of quality attributes of products. Specifically, the study applies a hedonic price model, which has been widely used to evaluate the effect of environmental characteristics such as air quality on property prices. The study first establishes some attributes for a hedonic price function for Cafe Americano based on a literature review and then formulates a functional form of the hedonic price. Finally, the study suggests that value of quality attributes can be indirectly estimated from product prices. That is, the price of a product may reflect all the attributes of the product and thus the quality of a product's attributes may influence its prices. The findings have practical implications for marketers of coffee franchises.