AN APPLICATION OF THE HEDONIC PRICINGTECHNIQUE TO CIGARETTES IN THE UNITEDKINGDOM

Hedonic pricing provides a method of establishing implicit values for the non-priced attributeswhich comprise a marketed good. A model for cigarettes is posited and estimated using a sample ofcigarette brands sold in the United Kingdom. A market segmented on the basis of cigarette size isfound to exist and revised functions for the two market segments reported. Consumers in the twomarkets were found to differ in terms of their valuation of tar, nicotine and carbon monoxidecontents of cigarettes and in terms of the importance they attached to a brand having what wasconsidered to be a sophisticated image. For smokers of king/super king sized brands a positivevalue was attached increments to nicotine content and decrements to tar content over the rangestudied. For smokers of regular sized brands a positive value was attached increments to tarcontent and decrements to nicotine and carbon monoxide content. ...r>