Measuring consumer's willingness to pay for organic and Fair Trade products

Previous research has extensively studied consumer's environmental and social concerns. However, measuring the value of the environmental or social dimension of a product remains a challenge. This paper proposes to partially fill this gap by measuring the double ‘Fair Trade and organic’ labels' value using an experimental method – the Becker‐DeGroot‐Marschak's mechanism. Two ‘organic and Fair Trade’ and two conventional chocolate products were tested on a sample of 102 consumers. Results show that organic and Fair Trade labels increase consumers' willingness to pay, and allow the identification of three consumers clusters. The first cluster represents people insensitive to the label. For the second cluster, the ‘organic and Fair Trade’ labels' influence on the improving image of the products is positive and important. And finally, for the third cluster, the valuation of the ‘organic and Fair Trade’ label is determined by the product's taste. Our research contributes to a better understanding of consumers' valuation of Fair Trade and organic labels, leading to our conclusions, which offer managerial implications with respect to this market (importance of taste and usefulness of double labels).     

Are Stated Preferences Confirmed by Purchasing Behaviours? The Case of Fair Trade-Certified Bananas in Switzerland

As the market share of Fair Trade food products in countries of the North grows, understanding consumer preferences with regard to this recent label is becoming increasingly important. This article reports on a test of the consistency of consumers’ stated preferences, for which a survey was conducted at the place and time of actual purchase decisions. The aim of the survey was to further improve the understanding of consumers’ stated motivations for buying ‘Fair Trade’ and ‘organic Fair Trade’ bananas in Switzerland. Hypothetical questions with double dichotomous choices were used to compare two types of bananas – conventional and labelled – and to assess the average stated willingness-to-pay (WTP) for Fair Trade-labelled bananas. The results show that Fair Trade is largely accepted in Switzerland and that the premium for purchasing such products is influenced by age, the number of young children and the perception of the Fair Trade label. I then used a comparative test of field observations and stated preferences for bananas to measure inconsistency in choices. This comparison reveals that less than one-fifth of the answers are in principle inconsistent. These results point to the importance of confidence in the Fair Trade labels if consumers’ purchases are to increase.     

Understanding postorganic fresh fruit and vegetable consumers at participatory farmers’ markets in Ireland: reflexivity,trust and social movements

This paper examines how trusting relations between consumers and vendors of organic fresh fruits and vegetables (FFVs) in a particular type of farmers’ market (FM) in Ireland are established and maintained, and what the implications of this are. First, the food system is outlined, and then its attendant problems. These problems have led to various solutions, two of which are organic food and FMs. Then, the growth in these two areas is outlined, as is the accompanying growth in the academic literature on these two areas, some of which overlaps. Various pressures, including in particular the increasing distance food travels and disconnected stallholders and products at the FM, are suggested. In light of this, a need to apply an understanding of the reflexive consumer, trust and social movements is suggested. It is found that the consumers interviewed act reflexively by choosing to go to these FMs. They prioritize the trusting relationships built up through repeated personal contact at these FMs over and above organic certification. Along with and as part of this, they prioritize local, fresh, seasonal ‘chemical‐free’ FFVs over and above imported certified organic produce. Various aspects of collective identity formation, including modes of behaviour, objects and stories, and language, are involved in this process. These elements, to some extent, act as a buffer against the pressures of distance and disconnection. Along with this, the essential meaning of the word organic is, in this particular context, reconstructed to include various socio‐environmental values missing from some certified organic produce. The word postorganic is suggested. The main methodologies used are semistructured in‐depth interviews and participant observation.     

The Urgency and Necessity of a Different Type of Market: The Perspective of Producers Organized Within the Fair Trade Market

The development of the certified Fair Trade market was initiated by a group of indigenous communities in Mexico. Over time, their vision of Fair Trade as a different type of market has become increasingly marginalized by an emphasis on poverty reduction. This article presents their understanding of what Fair Trade should and should not be. It presents the key principles of the Fair Trade market as effectiveness, ecological sustainability, social sustainability, and more direct producer–consumer relationships. The key challenges that confront Fair Trade in living up to these principles are the need to democratize the formal structures of Fair Trade so as to give a greater voice to small producers and to link with other social movements to confront the dominant neo-liberal trade regime.     

For Love or Money? Fairtrade Business Models in the UK Supermarket Sector

This article analyzes the distribution of benefits from Fair Trade between producing and consuming countries. Fair Trade and conventional coffee production and trade were examined in Nicaragua in 2005–2006 and 2008. Consumption of the respective coffees was assessed in Finland in 2006–2009. The results indicate that consumers paid considerably more for Fair Trade-certified coffee than for the other alternatives available. Although Fair Trade provided price premiums to producer organizations, a larger share of the retail prices remained in the consuming country relative to conventional coffee trade. Paradoxically, along with the certified farmers and cooperatives, Fair Trade empowers roasters and retailers.     

A conceptual framework for analyzing consumers' food label preferences: An exploratory study of sustainability labels in France,Quebec, Spain and the US

In a qualitative study of 375 consumers in France, Quebec, Spain and the US, respondents are asked to choose between pairs of actual food labels and to describe the reason(s) for their choice. The food labels included sustainability labels (eco‐labels, Fair Trade, origin) as well as product attribute (e.g. quality, kosher) and health/nutrition labels. Respondents' reasons were coded in the original language using the same coding system across all four nations to examine their preferences for label message, design and source. We also examined the role of consumers' values, beliefs and experiences on their label choices. The coding system was drawn from a review of theoretical and empirical literature and provides a conceptual framework we call the Label Consumer Interaction model for evaluating consumers' food label preferences. Although this is case study, the results point to substantial differences across nations in terms of preferred labels, as well as the rationale for their choice in terms of attributes of the labels and consumer characteristics.     

Label performance and the willingness to pay for Fair Trade coffee: a cross‐national perspective

In this paper, we investigate how label information detailing the performance of the Fair Trade labelling programme with respect to coffee affect consumers' willingness to pay in the US and in Germany. We provide respondents (university students in the US and Germany) information regarding the hypothetical benefits of the Fair Trade coffee programme on its intended beneficiaries on the production side [the revenue gains to participating marginal farmers (scope of the programme)] and, using stated preference conjoint methods, test how this performance criterion relates to the willingness to pay for Fair Trade coffee. Our empirical results identify a ‘threshold’ property of performance‐based labels. In effect, the willingness‐to‐pay for performance‐based Fair Trade labelled coffee exhibits an inverted U shape in the sense that the willingness to pay is positively related to the scope of the programme, but only up to a critical level. Thereafter, the willingness to pay declines as the income gains to participating growers increase further. Interestingly, this inverted U property is exhibited by both the US and German respondents with different critical thresholds.     

The Consumer Costs of Food Certification: A Pilot Study and Research Opportunities

Certification labels have become a ubiquitous feature on food products across grocery store shelves. Although it is widely acknowledged that certified products often garner higher prices than their noncertified competition, less is known regarding what those price differences are based on, and what the personal, political, or ethical implications are for consumers. This research note argues for greater attention to the implications of certified food prices—which we conceptualize as the “consumer costs” of food certification. The paper discusses the theoretical linkages between food certifications and prices, and outlines the resulting consumer costs of which we are concerned. Through a pilot study in Salt Lake City, Utah, we investigate prices found on certified grocery store rice, and consider the causes and implications of the consumer costs of food certification.     

Sustaining Inter-organizational Relationships Across Institutional Logics and Power Asymmetries: The Case of Fair Trade

This paper explores an empirical puzzle, namely, how inter-organizational relationships can be sustained between organizations that draw upon distinctive—and potentially conflicting—institutional logics under conditions of power asymmetry. This research analyses cases of these relationships and suggests some key conditions underlying them. Examining relationships between ‘Fair Trade’ organizations and corporate retailers, a series of contingent factors behind the dynamic persistence of such relationships are proposed, namely: the presence of pre-existing ‘hybrid logics’; the use of boundary-spanning discourses; joint tolerance of conflict; and co-creation of common rules. These four elements are supported by a fifth mediating factor, i.e. the presence and use of a Fair Trade certification system in the collaboration. The latter appears as a central vehicle facilitating cross-logic relationships—it can be seen as a ‘boundary object’ embodying a series of narratives and discourses that are open to multiple interpretations corresponding to the dominant institutional logics of each partner organization.     

Dichotomous Thinking and Ethical Consumerism: Overcoming the Negative Effects of Self-Interest Bias through Third-Person Narrative Persuasion

The authors examine consumer attitudes toward ethically labeled products and demonstrate that consumers who think dichotomously tend to favor their own self-interests over the social good by choosing mainstream noncertified products over products displaying ethical labels such as fair trade and Fair Wear. The authors further suggest that advertisers can use a third-person perspective to attenuate the negative effects of dichotomous thinking, increase purchase intentions, and encourage consumption of ethically certificated products. Findings from five studies on various ethically labeled products (such as food and clothing) with a diverse group of study participants (American consumers from a popular tourist spot, an online panel, and college students) provided convergent evidence supporting the hypotheses. Theoretical contributions and implications for marketers, policymakers, and consumers are addressed.     

Humanising Business Through Ethical Labelling: Progress and Paradoxes in the UK

Labelling schemes are practical arrangements aimed at making ‘ethical’ products widely available and visible. They are crucial to expanded development of ethical markets and hence to the addition of moral dimensions to the normally amoral behaviour linking consumers and retail and production businesses. The study reported here attempts to assess the contribution of UK ethical, social and environmental certification and labelling initiatives to ‘sustainable’ consumption and production. The research sought to assess the overall potential of initiatives to inject human values into the supply-distribution chains, through a qualitative survey of 15 of the 26 main UK initiatives: in social justice, animal welfare and environmental sustainability from the agriculture, food processing, timber, aquaculture, textiles and personal care sectors. By analysing the basic characteristics and concepts of these labels and investigating the emergence of labelling initiatives, we assess whether labels help add an ethical dimension, or whether, in some respects, they also reduce such missions to the technical management of adding only another ‘utility’ to a product. The analysis assesses whether the gradual ‘mainstreaming’ of ethical initiatives such as ‘Fairtrade’ risks subsuming ethical goals within business participants’ competitive and profit-oriented logics. However, the contrasting perspectives revealed between rival labelling initiatives show that the scope and functions of labelling projects go beyond the manifest ones of information communication between consumers and producer and actually introduce elements of socio-political regulation. These are essential for more sustainable and ethical business practices and are an integral part of any humanisation of business involvement.     

USDA Certification of Food as Organic: An Investigation of Consumer Beliefs about the Health Benefits of Organic Food

Back in 2002, the United States Department of Agriculture (USDA) implemented the final national standards and began certifying foods as having met the criterion in the production, handling, and processing of organically grown agricultural products. Consumers began seeing the USDA seal displayed as well as, the word “certified” and various levels of organic content on the front display panel of the product. The USDA stresses that the organic standard and label requirements do not imply organic foods are healthier. This research analyzes possible implications of consumers incorrectly inferring that food products with the USDA-organic certification label are healthier than food products without that certification.     

Farmers' markets: consuming local rural produce

Marketing food directly from producers to consumers, so circumventing the ‘middlemen’ in the food supply chain, has many potential benefits. For consumers, direct marketing initiatives are providing people with locally grown, fresh, healthy and, in many cases, organic food at affordable prices. Through buying locally grown produce, consumers are giving their support to local producers as well as helping to revitalize rural economies. Producers benefit through retaining more of the value of their produce, which can help them survive through the current crisis in UK farming. There are also environmental benefits. Creating markets where people can buy produce from local farmers and growers reduces the distance that food travels between producers and consumers, which in turn decreases global environmental pollution. One direct marketing scheme – the farmers’ market – has proved to be particularly popular with local people, producers and the local councils, organizations and institutions who are involved in setting them up. This paper focuses on one such market, the Stour Valley Farmers' Market, which commenced trading on 20th June 1999. Customers who attended the first three of these monthly markets were interviewed to investigate the reasons for their attendance at the market, and their attitudes towards a number of food issues including organic and genetically modified food, local and seasonal food and concerns they may have over the way their food is produced. The research has shown that most customers visited the markets initially out of curiosity, although some attended specifically to buy healthy fresh foods. The vast majority of interviewees expressed a preference for food which is organically grown and free from genetic modification. Organic foods are generally perceived to be healthier and more flavoursome. When buying fresh foods, interviewees stated the importance of quality and freshness in their choice of produce.     

Consumers' perceptions of individual and combined sustainable food labels: a UK pilot investigation

Consumers are faced with an increasing number of sustainable food labels. These different labels may be complementary or add to the increasing competition of product information in consumers' minds. We investigate: (1) the perceptions that consumers in the UK have about sustainable labels vs. other labels, such as origin or nutrition labels; and (2) consumers' reactions to combinations of different sustainable labels. Overall, the findings from two focus groups conducted in the UK indicate that consumers have positive perceptions of organic and fair trade labels but tend to be sceptical about unfamiliar labels and general claims such as ‘climate friendly’. The results also indicate the importance of familiarity, trust and fit between combinations of labels as well as between associating a label with a brand. While the combination of certain labels can enhance the value of a food product, this study also indicates that other label combinations (e.g. private and sustainable label) can detract from a label's value. Implications and recommendations are suggested for managers to counter the image of greenwashing, and for policy makers to facilitate sustainable food choices.     

Place and certification cue usage with Canadian forest products

Place-based promotion is used in many industries, including food and wine products, to create a competitive advantage. This study focused on consumer behaviours related to cue usage of origin (i.e. local and imported) and certification (i.e. sustainable products) with the goal of understanding the importance of these two cues used together or separately in the context of Canadian forest products. The study asked consumers in a small Canadian city about their quality beliefs, value assessments and purchase intentions for local and/or certified products. Using a quasi-experimental design, the manipulations include location (local vs. imported), certification (certified vs. uncertified) and product type (commodity vs. value-added). A repeated measures ANOVA found that both cues of origin and certification were important as respondents perceived local products as better quality and higher value, and respondents were more likely to purchase them over most other types. A regression analysis indicated that in most cases quality and value were predictors, but value was the most important indicator of the likeliness to purchase specific forest products. This study has the potential to aid marketers because certification cue usage does not appear to have been examined in conjunction with a product’s local vs. foreign origin.     

Effects of shared characteristics between eco-labels: A case for organic and local food

Food labels are created to reduce information asymmetry and help consumers make better food choices. However, the labels may have unanticipated effects, especially when they share common characteristics that may introduce confusion in making food choices. This study investigates how perceived relationships between different food labels may affect the price premiums of organic and local attributes for milk and fresh strawberries. Results show that the impacts of perception vary by product and label, and different food labels could positively affect price premiums on organic and local products. Results provide policy implications for better labeling and educational programs to reduce inadvertent confusion and improve consumer decision-making.     

Beyond organic: consumer interest in new labelling schemes in the Central Coast of California

Producers are interested in developing labelling schemes that go ‘beyond organic’ to address ethical criteria not included the US Department of Agriculture organic standards. However, consumer interests in labels that are not as widely available as organic in the market are poorly understood. This study reports results of focus‐group research and a survey of 1000 households in the Central Coast region of California to determine which standards consumers are most interested in supporting through their purchases. The results indicate that standards for the humane treatment of animals have the highest level of support, followed by a standard for local origin, and for a living wage for workers involved in producing food. Logistic regression analysis suggests that humane is more likely to be chosen by women, European‐Americans, younger people and frequent organic purchasers. Locally grown was preferred by older people and households with children. A living wage for workers involved in food production was selected more often by Latinos. Although a characterization of trends is not possible due to a cross‐sectional design, the results suggest some potential directions for producers in this region who are willing to supply unmet consumer demands for ethical criteria. There are three basic directions that new and emerging labels may take with respect to US national organic standards: (1) separate from organic; (2) institutionally separate, but tightly integrated with organic; and (3) intended to supplant organic. The success of each of these strategies will depend on how much trust consumers continue to place in government oversight of organic food. The study results also suggest that the movement for a more sustainable food system would benefit from devoting more attention to issues of animal rights and social justice.     

The Fair Trade Idea: Towards an Economics of Social Labels

The concept of Fair Trade is applied to the marketing of a variety of goods. In recent years it has met a continually increasing interest among consumers. Different Fair Trade organizations are trying to accomplish an improvement in working and living conditions in developing countries by means of Fair Trade certificates and by paying a price markedly above world market standard. This is meant to lead to the attainment of basic social standards, especially in agricultural production. The article deals with how Fair Trade works and whether the social aims can be achieved by the application of this trade concept. Our main result is that even though efficiency of redistribution through the Fair Trade institutions is lower than through traditional relief organizations, the Fair Trade concept provides an additional incentive to support better living conditions in the Third World. Moreover, it provides a stimulus for producers to reorganize the production process in a socially more acceptable manner even when this is not rewarded by the Fair Trade company.

Fair Trade: Dynamic and Dilemmas of a Market Oriented Global Social Movement

Fair Trade is analysed as a new economic social movement to the extent that it is based on new forms of collective action and directs its demands primarily to the market rather than to the State. In addition, it is intrinsically a global movement harnessing development goals to new market relations. It differs, however, from similar movements (organics, animal welfare) to the extent that it focuses primarily on traditional issues of redistributive justice rather than a new generation of rights and duties. Fair Trade is understood as having three components: (i) the organization of alternative trading networks; (ii) the marketing of Fair Trade labelled products through licensed conventional traders and retailers; and (iii) the campaign-based promotion of Fair Trade to change both purchasing practices and the rules of conventional trade. As a market oriented movement, Fair Trade relies crucially on the emergence of a new politicization of consumer activity comprising not only “consumer-activists” but also the State as consumer and a new layer of political consumers sensitive to issues of social justice in their daily purchasing practices.

Theory into practice: meditations on cultures of accountability and interdisciplinarity in marketing research

Abstract

The emergence of a more reflexive and discerning customer has created inter alia a demand for ‘better’ food (i.e. quality and ‘authenticity’) in terms of sourcing, processing, and specialist distribution/retailing. As a consequence, the food production/distribution industry is under pressure to change many of its practices. One manifestation is the emergence of farmers' markets and the associated emphasis on ‘local’ food. This paper aims to identify the extent to which ‘conscious’ consumers are committed to buying local foodstuffs and supporting local food producers, especially from farmers’ markets. Given the exploratory nature of this research, a qualitative approach was undertaken using in-depth interviews with ‘conscious’ consumers. The results reveal that ‘conscious’ consumers recognise their own limitations (i.e. time, convenience, and price) but also demonstrate that integrating ethical considerations into their consumption behaviour is a complex and flexible task. A number of strategic actions for farmers’ markets are proposed to help differentiate their provision, particularly in terms of capitalising on perceptions of authenticity and locality.