Private-label branding and willingness to pay: evidence from an auction experiment

The competitive pricing of private-label brands is a strategy used to gain a competitive advantage. Notwithstanding the introduction of many private-label brands – i.e. private-label brands with a name identical to that of a firm (own-name brands) and private-label brands with a name distinctive from that of a firm (other-name brands) – that compete with national brands, identifying equitable prices that reflect brand value remains difficult. This study aims to determine the appropriate price of private-label brands by measuring consumers’ willingness to pay. An experimental auction method measures ‘actual’ willingness to pay in a non-hypothetical setting. The study was conducted in Thailand, which has the lowest price discrepancy between national brands and private-label brands. The results show that the willingness of consumers to pay for both types of private-label brands is higher than that for un-branded products. However, there is no significant difference in the premium between own-name and other-name private-label brands. Unlike leading and second tier national brands, consumers are willing to pay a discounted price for both own-name and other-name private-label brands; for the latter, they are willing to pay a more steeply discounted price. The finding of this study regarding the amount that consumers are willing to pay for an own-name private-label brand is consistent with the current market price strategy, whereas the current market price strategy for other-name private labels is inconsistent with the amount participants are willing to pay. The study shows that to appropriately price their products in a manner that yields the highest returns, retailers must determine how much consumers are willing to pay.     

Consumer Willingness-to-Pay for Food Safety in Taiwan: A Binary-Ordinal Probit Model of Analysis

A probit model for whether or not consumers are willing to pay a premium for hydroponically grown vegetables (HGV) is estimated jointly with an ordered probit model analyzing the magnitude of such premiums for consumers who would pay them. Results of the joint estimation and the conventional single equation ordered probit model were presented for comparison. Unlike the single equation approach, the joint estimation allows the flexibility of parameterizing separately the probability and level of premiums that a consumer is willing to pay for a safer food. The results show that family health status and household income are the most important and significant factors that determine the amount of premium a consumer is willing to pay for HGV. However, they are insignificant in predicting the likelihood of a consumer's willingness-to-pay a higher price. In addition, marginal probabilities were calculated to assess the influence of various socioeconomic and attitudinal variables on the likelihood that a consumer would be willing to pay a premium for HGV and the additional amount of premiums.     

Factors Influencing Consumers’ Willingness to Pay for Organic Fruits and Vegetables: Empirical Evidence from a Consumer Survey in India

Numerous consumers confronted with increasing environmental problems, food safety issues, and augmentative health problems increasingly desire to have healthier and more natural foods grown in an eco-friendly manner. Hitherto organic foods only partly benefit from this increasing market environment, and their market share stays rather low despite high growth rates. This article aims to investigate consumers’ willingness to pay (WTP) for organic fruits and vegetables and relevant factors affecting consumers WTP. The contingent valuation method was selected to estimate WTP. Empirical data was drawn from a 250-consumer survey conducted in Bangalore during February 2013. A binomial logistic regression model was applied to obtain the value of WTP and determine the factors influencing it. The results indicated that about 90% of the consumers were willing to pay a premium price ranging between 5% to more than 100% in order to acquire better-quality fruits and vegetables; factors such as family income, size of the family, gender, and other opinion variables such as chemical residue in conventional foods, trust on retailers, taste, and environmental concerns significantly influence consumers’ WTP. More than 87% of the consumers indicated that high price, lack of availability, narrow range, and irregular supply are the major barriers for them to buy these products. The results provide useful evidence to pertinent governmental agencies in terms of assisting in the design of policies for the promotion of organic food production and marketing and reaching the target public. Furthermore, firms involved in the organic foods business may also see benefits when drawing information in order to calibrate marketing strategies.     

Consumers' valuation of food quality labels: the case of the European geographic indication and organic farming labels

This paper assesses consumers' preferences and willingness to pay for European Union geographical indication quality labels [Protected Designation of Origin (PDO) and Protected Geographical Indications (PGI)], organic farming label and other product quality cues. Using a choice experiment, random parameter logit model and olive oil as product of interest, results suggest that respondents are willing to pay the highest premium price for a product with a PDO label, followed by organic farming label, a quality cue describing the product as extra‐virgin olive oil and then a PGI label.     

Willingness to pay for organic products: Differences between virtue and vice foods

Faced with growing environmental problems, food safety issues, and increasing obesity rates, many consumers desire healthier, less processed natural foods that are less harmful to the environment. Yet organic foods only partially benefit from this market environment, and their market share remains quite low despite high growth rates. The usual explanation for this discrepancy is that consumers are not willing to pay the price premium prompted by an organic claim. In this paper, we explore the reasons behind consumers' (un)willingness to pay for organic food and investigate whether it differs between virtue and vice food categories. The results indicate that in vice food categories, organic claims are associated with lower quality, which seems to be only partly compensated by higher prosocial benefits. The lower-quality perceptions translate into a decreased consumer willingness to pay (WTP). We supplement the empirical results with data on organic purchases in the Dutch food market. These data show that market shares of organic food are indeed lower for vice categories of organic food.     

Can't Buy Me Green? A Review of Consumer Perceptions of and Behavior Toward the Price of Organic Food

Support for organic farming is a promising policy for improving sustainability in the food sector. Further consumer demand, however, is hindered by high prices. We review research from 2000 to 2014 on the role of perceived price, income, price knowledge, willingness to pay, and reactions to price changes on organic food. We find that price is the major perceived barrier to purchase. Income is only a partial explanatory factor and is superseded by psychographic variables. Willingness to pay a premium is around 30% (ranging from 0% to 105%) and depends on consumer segments and product category. Price knowledge is vague, and organic consumers' price sensitivity is relatively lower than that of occasional or nonorganic consumers. The results suggest that further market differentiation in terms of organic consumer segments and food categories is necessary. Furthermore, we discuss detailed implications for public policy and practice and present a future research agenda.     

Corporate social and environmental responsibility in services: Will consumers pay for it?

Two studies investigate consumer awareness of and response toward socially and environmentally responsible practices in the hospitality industry. Results suggest that consumers exhibit more positive response toward establishments exhibiting higher levels of social responsibility, although many are uninformed of the extent to which the organizations they patronize engage in such practices. Most consumers are willing to incur a modest price increase while patronizing an organization that behaves in an environmentally and socially responsible fashion, but that willingness declines dramatically as the price premium escalates. Consumers with high involvement in and positive attitudes toward corporate social responsibility practices are most willing to pay a premium.     

Consumer willingness to pay for sustainable apparel: the influence of labelling for fibre origin and production methods

This study of value‐based labelling for apparel products examined consumer willingness to pay (WTP) for three credence attributes of fibre: origin, type and production method. Experimental auctions were conducted with student subjects in Texas and used socks made from cotton and polylactic acid (PLA), a fibre manufactured from corn. The bid results of two rounds were compared. The first round was conducted without information about the credence attributes of the socks. The second round included varying levels of three types of attributes: fibre origin (imported, US and Texas), fibre type (cotton and corn) and production method [conventional, organic and non‐genetically modified (GM)]. Tobit regression analysis was performed using the attributes and subject demographics to determine consumer WTP for the various attribute levels and to profile consumers with interest in the attributes. In terms of origin, results show that participants were willing to pay a premium for socks with fibres produced in Texas, but not for those produced in the US. Fibre type mattered, with participants requiring a discount once they learned that socks were made with PLA fibre. The greatest premium ($1.86) was placed on socks labelled as organic, slightly more than the premium for socks labelled as non‐GM. The results also indicate that women were less willing to pay for US fibres than men, and Hispanics were less willing to pay for organic or non‐GM fibre production. A key finding of this study is that consumers value information about the local origin of fibres. The premium for organic fibres is not unexpected, given the success of the organic apparel market, but the premium on non‐GM fibres suggests that sustainable production systems that are not organic may be successful if they emphasize other attributes such as local or non‐GM.     

Do Consumers Care about Ethics? Willingness to Pay for Fair‐Trade Coffee

Consumers’ buying behavior is not consistent with their positive attitude toward ethical products. In a survey of 808 Belgian respondents, the actual willingness to pay for fair‐trade coffee was measured. It was found that the average price premium that the consumers were willing to pay for a fair‐trade label was 10%. Ten percent of the sample was prepared to pay the current price premium of 27% in Belgium. Fair‐trade lovers (11%) were more idealistic, aged between 31 and 44 years and less “conventional.” Fair‐trade likers (40%) were more idealistic but sociodemographically not significantly different from the average consumer.     

Consumer Information and Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?

Using a large dataset of automobile transaction prices, we find that offline African-American and Hispanic consumers pay approximately 2% more than do other offline consumers; however, we can explain 65% of this price premium with differences in observable traits such as income, education, and search costs. Our estimates of unexplained race premia are smaller than previous estimates in the literature. Online, we find that minority buyers pay nearly the same prices as do whites controlling for consumers' income, education, and neighborhood characteristics. These results are consistent with the Internet facilitating information search and removing cues to a consumer's willingness to pay. Our results imply that the Internet is particularly beneficial to those whose characteristics disadvantage them in negotiating.     

Deposit AI as the “invisible hand” to make the resale easier: A moderated mediation model

While existing works pay little attention to price setters and the application of artificial intelligence (AI) agents in second-hand trading, the current research examines whether, and how, price setter (AI VS. seller)affects buyers' willingness to pay (WTP)in the case of second-hand trading on P2P platform. 25 interviews and 3 online studies have been conducted to demonstrate the results: (i) compared with goods priced by sellers, buyers are more willing to pay for goods priced by platform AI (Studies 1&2), (ii) buyers' perceived objectivity mediates the relationship between price setter and buyers' WTP (Study 2), (iii) perceived reductionistic of AI eliminates the effect of price setter on WTP (Study 3), and (iv) augmented intelligence (vs. AI)can have equal effect on buyers’ WTP (Study 4). These findings offer considerable implications for practitioners on how to build an AI pricing agent that is superior to humans on P2P second-hand trading platforms while ensuring the well-being of platform traders.     

Willingness to Pay for Golden Rice in India: A Contingent Valuation Method Analysis

We estimated students’ willingness to pay for golden rice by using the double-bounded contingent valuation method. We found that nearly 55% of the students are willing to buy golden rice at the same price as that of conventional rice, and around 85% at a certain discount. The estimated mean willingness to pay is a 4% price premium. Furthermore, we found that global (food security) and personal (health) benefit perceptions have a positive significant influence, and risk perceptions and sociodemographic variables have an insignificant influence on willingness to pay for golden rice. Overall, our findings indicate that India has a potential market for golden rice.     

The profile of the green consumer in Greece

Sustainable consumption is one of the major goals of the affluent European societies in their quest for sustainable development. A key player in sustainable consumption is the sustainable or green consumer. The aim of this study was to examine the profile of the Greek green consumer based on the study and empirical analysis of engagement in selected 3R (reduce – reuse – recycle) activities. In addition, the attitudes on certain issues related to sustainable consumption of the consumers were examined and analysed. Empirical analysis is based on the use of a cross‐section data set. An extensive survey of 300 Greek consumers via a questionnaire was carried out in the first trimester of 2008. The sampled households were located in five of the main and most representative regions of Athens, with respect to the socioeconomic characteristics (sex, age, income group, education level) of their residents. Respondents were asked to answer questions examining the 3R concept on daily issues such as solid waste generation and water and energy consumption. Empirical results are based on the estimation of regression models. Econometric models are estimated for each question explaining engagement in 3R activities. Empirical results suggest that sociodemographic characteristics do specify engagement in 3R related activities. In particular, age and income are the most influential factors that determine this engagement. In addition, our study reveals that four out of five Greek consumers identify global climate change as the most important issue of our time. However, only one in five of the respondents are willing to change their lifestyle in order to mitigate the negative environmental impacts of our everyday activities; compared with men, women are more willing to do so. One in two consumers report that eco‐friendly products are more expensive than standard ones. However, when questioned as to whether they would pay a higher price for products with less environmental impact, almost four out of five responded favourably.     

Women,men and organic food: differences in their attitudes and willingness to pay. A Spanish case study

The main purpose of this work consists of displaying the different attitudes of men and women towards organic food, and their willingness to pay for it, in three different consumer intensities: usual, occasional and potential consumers. Several surveys have been carried out to obtain a representative sample of regular food purchasers living in Castilla‐La Mancha (Spain). Statistic analysis previously detecting significant differences with regard to gender and type of consumer has been conducted by univariate analysis to describe attitudes, and multivariate analysis, through ‘logit’ models, to calculate maximum willingness to pay. Results show that women have a more favourable attitude (directly related to their lifestyle) to the purchase and consumption of organic food than men, whereas men are inclined to pay a higher price for organic food than women. In general, men are disposed to pay a higher increase in price than women.     

Food Safety and Consumers' Willingness to Pay for Labelled Beef in Spain

Abstract

The objective of this paper is to assess the quality/safety value for beef consumers, measuring their willingness to pay a price premium for labelled beef. From a survey conducted among food shoppers within the household, consumers are segmented according to their safety perception of specific food products. For each segment, their willingness to pay for labelled beef is calculated. Finally, the main factors explaining such a decision are considered. The results indicate that food scares, the perception of a negative impact of agricultural production on the environment and health concerns are having a major impact on the food consumer purchasing decisions for beef. However, most consumers are not willing to pay a price premium for labelled beef.     

Portfolio concentration and closed-end fund discounts: Evidence from the China market

This paper provides an analysis of the determinants of the closed-end fund discount in Mainland China. We focus on the diversification level of closed-end funds as the investor clienteles for closed-end funds in Mainland China are different from other markets. Our empirical evidence shows that discount is strongly and negatively related to stock concentration as measured by the number of stocks in the fund or Herfindahl index. We also find the discount decreases with the dividend payout and turnover, suggesting that investors are willing to pay a higher price (lower discount) for a fund that pays more dividends and has higher turnover.     

Consumers’ preferences,attitudes and willingness to pay for bio-textile in wood fibers

The bio-textile products made from certified wood fibers are an important product innovation able to diversify the wood product portfolio of enterprises and to increase environmental sustainability. In this paper, we estimate Italian consumers' willingness to pay for three bio-textile products made from certified wood (socks, T-shirt and shirt). Data were collected face-to-face to a sample of 696 consumers through Contingent Valuation. The results from the Cameron and Huppert model show a significant premium price, ranging from 64% to 128% depending on the products, and that respondents with a higher environmental concern are more willing to pay for bio-textile products. Nevertheless, the price turned out to be a key determinant, evidencing how it can constitute a barrier to a more sustainable consumer behaviour. These results are important for the European wood-based industries’ businesses, currently based on stagnant market of traditional wood products, since they indicate there is room for a profitable diversification in bio-textile products. An increased market of bio-textile products can contribute to reduce the fossil fuel dependency of the European Union economy.     

Employing a Dichotomous Choice Model to Assess Willingness to Pay (WTP) for Organically Produced Products

Abstract

This study employs a dichotomous choice model to identify the socio-economic characteristics and attitudes that influence consumers' willingness to pay (WTP) a premium for organically produced products (OPP). Considering consumers' growing interest in quality and safety of food, the study attempts to identify consumers level of awareness on OPP, the intention to buy OPP and the WTP a higher price for OPP. Results highlight consumers awareness and intention, revealing useful information for the development of OPP market. The estimated maximum WTP indicates that consumers are willing to pay a substantial extra price to purchase OPP. Finally, WTP seems to be affected by certain consumer attitudes and socio-economic factors.     

Assess the impact of subjective norms of consumers' behaviour in the Greek olive oil market

The objective of the research was to highlight the role that socio-economic and spatial attributes of consumers – households exert on their choices regarding not only the supply modes but also the price they are willing to pay for different categories of olive oil. Regarding WTP for different olive oil labels, consumers are willing to pay premiums only for olive oils being processed by either private companies or cooperatives, with the latter to gain 34% of them in case they would decide to change the olive oil they usually purchase. The most important consumer profile is the young educated consumer one.