Date of Award

1997

Document Type

Thesis

Degree Name

Master of Science in Administration

Department

Business

First Advisor

Daniel W. Kemper

Second Advisor

Laura DeRigne

Third Advisor

Lisa Boling

Abstract

This thesis will focus on the analysis of price discrimination of alcoholic beverages marketed towards African-Americans in St. Louis. Missouri.

Research has indicated that alcoholic beverages cost more in predominantly African-American communities compared to predominantly Anglo-American communities. Previous studies indicate certain factors that play a major role in identifying price discrimination. Some of these factors include social class, type of retail store and brand names and images.

However, an investigation of price discrimination of alcoholic beverages can indicate other reasons why prices are higher in certain areas. The percentage of alcohol and consumer demand in particular areas may pre-determine the current retail prices as well.

The purpose of the present study is to investigate the possibility that retail prices of certain alcoholic beverages are priced higher in predominantly African-American communities. It is hypothesized that particular brands of beer, malt liquor, liqueur and whiskey are more expensive in African-American communities than in Anglo-American communities. The brands of alcoholic beverages researched were Budweiser beer, Colt 45 malt liquor, Jim Beam and Crown Royal whiskies, and Bailey's Irish Cream and Alize liqueurs. The prices were analyzed at Walgreen's drugstores, Schnucks' grocery stores, and QuikTrip's convenience stores in each community. The communities were chosen based on social class. The African-American communities investigated were University City, Ferguson, Berkeley and Jennings. The Anglo-American communities were Chesterfield, St. Ann, Florissant and Kirkwood. The lower class communities are Jennings and St. Ann. The lower middle class communities are Berkeley and Kirkwood. The middle class neighborhoods are Ferguson and Florissant, and the upper middle class neighborhoods are University City and Chesterfield.

One hundred and sixty surveys were mailed to men and women who live in each St. Louis community. The purpose of the survey was to determine consumers consumption rates of the particular brands of alcoholic beverages researched. Another purpose of the survey is to disprove that prices are higher because consumption rates are increasing.

The data was analyzed by using correlation coefficients, means, variances, Chi-square and multiple ''T" scores. The analysis produced substantial evidence to suggest that the hypothesis be rejected. Based on this sample population, the conclusion is that variables such as social class and brand names and images, can induce the incidence of price discrimination of alcoholic beverages marketed towards African-Americans.

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