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.     

Key influencing factors of green vegetable consumption in Beijing,China

Green-certified vegetables are nutritious, attractive to the senses, and in line with the principles of sustainable development. The objectives of this study are to reveal the mechanism of green-certified vegetable consumption; that is, to explore the key influencing factors behind consumers' purchase intentions, purchase behavior, and willingness to pay for green-certified vegetables. Based on the Theory of Multi-attribute Attitudes and the Theory of Planned Behavior, a research framework of the consumption mechanism oriented to consumers' preferences regarding green-certified vegetable quality was established. By collecting 520 questionnaires from Beijing, China, the model was confirmed by the ordered logistic regression and interval linear regression method. The results showed that consumers have heterogeneous quality preferences, and their purchase intentions and purchase behavior levels are relatively high, with an average willingness to pay (WTP) of 138.58%. The key influencing factors driving consumers' purchase intentions, purchase behavior, and WTP include protein content belief, mineral content belief, vitamin content belief, organic vegetable safety belief, freshness belief, and taste belief. In addition, color belief and packaging quality belief significantly influenced consumers' WTP, while origin reputation belief and brand reputation belief significantly influenced consumers' purchase intention and purchase behavior. The findings of this study can guide the supply side of green-certified vegetables to improve product quality according to consumer demand, so as to promote the sustainable development of green-certified vegetables.     

The Effect of Information on Willingness to Pay for Canned Tuna Fish with Different Corporate Social Responsibility (CSR) Certification: A Pilot Study

The objective of this study was to assess the role of information in consumers' willingness to pay (WTP) for food products with corporate social responsibility (CSR) certification. The item used for the experimental design was canned tuna fish, a product on the market that is already exhibiting various kinds of certification related to social and environmental attributes. Two different kinds of certifications were examined, namely Friend of the Sea, which involves environmental aspects, and SA8000, related to workers' rights and more general social attributes. We implemented experimental auctions, taking into account three information treatments. The initial findings show that the WTP for both CSR labels is higher than the WTP for tuna fish without any CSR certification. Nevertheless, the information provided on CSR certification did not change consumers' WTP among the certification schemes. Our findings could also serve to fine‐tune marketing strategies to consumer preferences and determine which CSR activities are worth undertaking.     

Do tech products have a beauty premium? The effect of visual aesthetics of wearables on willingness-to-pay premium and the role of product category involvement

Does design, not technology, affect consumers' valuation of wearable devices? This study empirically examines the impact of the visual product aesthetics of wearables on consumers’ willingness-to-pay (WTP) premium, along with the relevant intervening consumer psychology of perceived benefits. The results of an online survey revealed a significant and positive association between the visual product aesthetics of wearables and WTP, perceived product quality (PQ), and perceived enjoyment (PE) of wearables. In addition, PE mediated the relation between visual aesthetics and WTP, while PQ did not. Meanwhile, consumer involvement moderated the relation between visual aesthetics and WTP. Implications and limitations were discussed.     

The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine

The absolute and relative impact of current quality and reputation variables on consumer decisions are examined using data from the market for Bordeaux wine. The estimates indicate that a model of consumer decision making which incorporates information on reputation (past quality) and collective reputation (average group quality) rejects alternative models that include current quality. The results also indicate that reputation has a large impact on the willingness to pay of consumers, that long term reputation is considerably more important than short term quality movements, and that consumers react slowly to changes in product quality. Collective reputation is shown to have an impact on consumer willingness to pay that is as large as that of individual firm reputation. If reputation and collective reputation effects are ignored, the estimated impact of current quality and short term changes in quality on consumer behaviour are overstated.     

An examination of the effects of partitioned country of origin on consumer product quality perceptions

This paper deals with the effects of partitioned country‐of‐origin associations on consumer product quality evaluations. The main objective of this research is to examine the cognitive processes by which country‐of‐origin information influences the consumer's evaluation of a product. To study the psychological process by which the country‐of‐origin associations are integrated in the formation of related behavioural deliberation, a hypothetical structural model was developed. The model contains seven theoretical constructs, i.e. country of design, perceived product sophistication, country of assembly, perceived manufacturing excellence, country of parts, perceived product quality and perceived product design. Data were analysed via structural equation models using Analysis of MOment Structures (AMOS) 5.0. Results show that countries that already have positioned themselves around a reputation for technological innovation related to product development and manufacturing may expect consumers to transfer those associations to new products from the country.     

Effects of au naturel packaging colors on willingness to pay for healthy food

This study introduces and defines a novel color family—au naturel colors—and proposes that featuring these hues on product packaging enhances consumer willingness to pay (WTP) for healthy food products, but not for unhealthy food products. This effect occurs irrespective of the fit between the colors of the product and of the packaging, and of the color lightness or saturation. Perceptions of product authenticity mediate the relationship between au naturel colors packaging and consumer WTP for the product. The results of seven studies provide support for the proposed conceptual framework, contributing to the literature on consumer responses to colors and packaging features, and allowing to draw implications for the marketing of healthy food products.     

Effect of Experiential vs. Cognitive Involvement on Consumer Preferences: Application to Region of Origin Labeled Food Products

Region of origin labeled food products consumption is influenced both by cognitive motives related to the individuals' health and safety concerns and by affective motives in relation within the pleasure, the emotional states and the social values. The objective of our study is to examine the effect of involvement and its nature (cognitive vs. experiential) on consumer preferences toward region of origin labeled food products. Discriminant analysis shows that both the cognitive and experiential dimensions of involvement discriminate between the two groups: those who prefer regional food products and those who prefer either national or foreign products. By targeting each profile by an adequate communication strategy, food labels could meet consumer expectations. Thus, their acceptance becomes higher.     

Consumer expectations and the communications gap: Causes of consumer dissatisfaction

Despite steady improvement in product quality and values, consumer complaints and demands for protective legislation are more common than before. The rising expectations of consumers are a main cause of consumer irritation, and exaggerated promotional information contributes to these rising expectations. The remedy for consumer dissatisfaction is to narrow the gap between consumer expectancy and perceived product performance, primarily by reducing exaggerated expectancy. More careful and thorough monitoring of consumer satisfaction levels can help reduce consumer dissatisfaction. Three guidelines are suggested for dealing with discrepancies between consumer expectancy and product performance.     

Evaluation strategies of American and Thai consumers

The effects of two factors (congruity of product information with consumer expectations and perceived risk associated with the product) on strategies used by consumers to evaluate products are tested in the United States and Thailand. When product information does not match expectations, consumers in both cultures increase evaluation effort and shift from using summary representations stored in memory to evaluation based on actual product attributes. Perceived risk also enhances evaluation effort in both cultures, but does not result in a similar shift from category-based to attribute-based processing. © 1994 John Wiley & Sons, Inc.     

On the Edge of Buying: A Targeting Approach for Indecisive Buyers Based on Willingness-to-Pay Ranges

Targeting the “right” consumers is a core part of marketing. Whereas existing techniques to identify these consumers use demographic or psychographic variables or behaviors such as response probabilities, a proposed new targeting approach builds on consumers’ incremental responses to identify them by their willingness-to-pay (WTP) ranges. These WTP ranges reveal a consumer as a definite buyer, a definite non-buyer, or an indecisive buyer. The proposed theoretical framework indicates that indecisive buyers offer the highest incremental responses to targeted marketing mix activities and thus should be the most preferred targeting group. A sequence of three laboratory experimental studies validates the proposed approach for targeted price discounts and non-price tactics. In addition, a large-scale field experiment involving a consumer engagement campaign that includes observed purchase behavior demonstrates the high external validity and applicability of this approach.     

Determinants of Consumer Responses to Direct Marketing Media

Abstract

This study examined consumer propensity to respond to direct marketing offers made via catalogs, direct mail, and direct response TV. A comparison of the relative importance of marketer's reputation, advertising exposure frequency, and the product offer revealed that the latter was the most important determinant of consumer response frequency. Marketer's reputation was found to be more important for direct response TV and less important for catalog advertising: neither did high frequency of media exposure appear to impact on responses to direct mail and direct response television. The findings suggest that the maximization of reach rather than frequency could possibly be the primary media communication goal for selling products through direct mail and direct response television.     

The new WTP: Willingness to participate

A key concept underlying competitive strategy is that of WTP, representing the consumer's ‘willingness to pay’ a premium price for goods or services. Through branding and other efforts, companies strive to push their message out and create a high willingness to pay, whereby consumers feel there are few or no substitutes for what these companies are selling. Social media, however, are making push-based marketing anachronistic. Users of social media typically eschew professional communications forced on them by faceless and impersonal organizations, in favor of more personal conversations. These individuals seek greater engagement with their preferred brands, and involvement—with or without the company's approval—in creating brand personalities. Their affinity for these preferred brands might well auger the dawn of a new WTP: willingness to participate. This article presents a model of consumer engagement through social media, and argues for re-conceptualizing WTP by utilizing a series of examples which show how companies that engage consumers via social media (e.g., Facebook, Twitter, YouTube) stand to reap the benefits of long-term competitive advantages.     

Value-based pricing in competitive situations with the help of multi-product price response maps

This article introduces multi-product price response maps for various value pricing applications in competitive situations. The maps are based on the direct elicitation of individual willingness to pay (WTP) as a range for competing products; they reveal an individual's or market's choice probability for a focal product, at its own and competing products' prices. Transforming the price response into profit, revenue, or unit sold maps supports optimal pricing decisions. The maps are also useful for optimizing profit differences from the closest competitor and for portfolio pricing. Managers can use a consumer indecisiveness map, gained from the WTP range data, to devise complementary marketing measures at prices where consumer uncertainty is high. The illustration of this approach uses two empirical examples, featuring two or more competing consumer goods, and demonstrates the predictive and external validity of these proposed maps.     

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.     

Why Country of Origin Still Matters in Food Retailing: Implications for Promotion Management Research

ABSTRACT

Despite considerable focus on the role of country image (CI) and country of origin (COO) in international marketing and consumer behavior research over the past fifty years, several meta-analyses suggest that knowledge of the impact on consumer decision-making is limited. Even though they are among the most commonly traded items, food products (have not received as much attention from researchers as other product categories (i.e. consumer electronics, cars, apparel and footwear). Further, most of the research that focuses on food was conducted prior to the introduction of mandatory labelling requirements in many major retail markets. This critical review contributes to the literature examining the role that this information plays in food retailing within the context of international trade in food. From this critical review, a research agenda is developed, highlighting several major avenues and methodological approaches with the aim of enhancing the relevance and validity of COO research in food retailing and promotion management.     

Does the perception of incongruence hurt more? Customers’ responses to CSR crises affecting the main reputation dimension of a company

ABSTRACT

Corporate social responsibility (CSR) generates benefits for companies and society. However, CSR exposes a company to potential damage when a critical event, such as a crisis, disconfirms the CSR of a corporate reputation. The present article introduces to the crisis management literature the notion of consumer-perceived incongruence (CPI) between corporate reputation and crises. Our first experimental study demonstrates that a high CPI – compared to a low CPI – worsens consumer responses in terms of attitude towards the corporation (ATC), word of mouth (WOM) and purchase intention (PI). The second study shows that these effects are mediated by the perception of a state of discomfort on the part of the consumer. The third study suggests that, in cases of high CPI, the corporate crisis response strategy of apology outperforms that of compensation in reducing the negative effects of discomfort on consumer responses. Theoretical and managerial implications are discussed.