The relevance of interaction choice: Customer preferences and willingness to pay

As the number of available channels and ways to use these channels proliferate, current literature and managerial practice assume that broader interaction choice invariably generates value for customers. In light of the costs and complexity of offering these interaction options, the questions become how important having interaction choice is for customers, how much actual willingness to pay exists, and which customer groups particularly value such choice. To investigate this domain, two choice-based conjoint analyses are implemented in the health insurance industry, which provides a unique research opportunity since regulation naturally limits the relevant attributes of offerings. To cope with the substantial heterogeneity in prices for health insurance depending on the insureds' risks, the methodological innovation of quasi-individual pricing is introduced, which leads to highly satisfactory validity of the estimation results. The results indicate that customers have considerable additional willingness to pay for more interaction choice; however, in contrast to the extant literature, this does not hold for all interaction options. Customers' elicited preference structures further show that health insurers can optimize the configuration and pricing of their offerings to improve customers’ experiences and to create value.     

The effect of information on consumers' willingness to pay for natural and organic chicken

This study examined the effect of definitions for organic and natural on willingness to pay a premium for organic over natural chicken. Data were collected using surveys and experimental auctions that were conducted before and after information was presented. Before information, approximately two‐thirds of participants inaccurately equated the requirements of natural with those for organic. After information, nearly 50% increased their premium, while 30% decreased their premium. Logistic regression results showed that consumers who had overestimated the requirements for natural were most likely to have an increased premium after information, with significantly higher bids for organic. For those who decreased their premium after information, awareness of consuming genetically modified (GM) foods was a key variable. The non‐genetically modified (non‐GM) requirement of organic appears to be of low value to some consumers. Overall, consumer confusion regarding organic and natural standards may be having substantial impacts on the two markets.     

An empirical comparison of methods for measuring consumers’ willingness to pay

A valid procedure for measuring consumers’ willingness to pay (WTP) is crucial in designing optimal pricing policies or for estimating demand for new products. Understanding potential sources of differences in WTP estimates that emerge from value elicitation studies constitutes an important step in research on how managers should estimate consumers’ WTP. This research presents an empirical analysis of two potential sources of differences and discusses possible means of mitigating them. We find substantial and significant differences between the WTP reported by subjects when payment of the stated price is real or hypothetical. Notwithstanding the dichotomy between real and hypothetical WTP, we find significant differences among the WTP estimates of a broad range of value elicitation methods.     

Consumers’ attitudes,trust and willingness to pay for food information

Market failure can be corrected using different regulatory approaches ranging from high to low intervention. Recently, classic regulations have been criticized as costly and economically irrational, and thus, policy makers are giving more consideration to soft regulatory techniques such as information remedies. However, despite the plethora of food information conveyed by different media there appears to be a lack of studies exploring how consumers evaluate this information and how trust towards publishers influence their choices for food information. In order to fill such a gap, this study investigates questions related to topics that are more relevant to consumers, who should disseminate trustful food information, and how communication should be conveyed and segmented. Primary data were collected both through qualitative (in‐depth interviews and focus groups) and quantitative research (web and mail surveys). Attitudes, willingness to pay (WTP) for food information and trust towards public and private sources conveying information through a new food magazine were assessed using both multivariate statistical methods and econometric analysis. The study shows that consumer attitudes towards food information topics can be summarized along three cognitive‐affective dimensions: the agro‐food system, enjoyment and wellness. Information related to health risks caused by nutritional disorders and food safety issues caused by bacteria and chemical substances is the most important for about 90% of respondents. Food information related to regulations and traditions is also considered important for more than two‐thirds of respondents, whereas information about food production and processing techniques, lifestyle and food fads are considered less important by the majority of respondents. Trust towards food information disseminated by public bodies is higher than that observed for private bodies. This behaviour directly affects WTP for food information provided by public and private publishers when markets are shocked by a food safety incident. WTP for consumer association (€1.80) and the European Food Safety Authority (€1.30) are higher than WTP for the independent and food industry publishers that cluster around zero euro. Furthermore, trust towards the type of publisher also plays a key role in food information market segmentation together with socio‐demographic and economic variables such as gender, age, presence of children and income. These findings invite policy makers to reflect on the possibility of using information remedies conveyed using trusted sources of information to specific segments of consumers as an interesting soft alternative to the classic way of regulating modern food markets. JEL codes: D12, D18, D89, Q18.     

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.     

Consumers' willingness to pay for corporate social responsibility: Theory and evidence

In an era when consumers believe that businesses should engage in corporate social responsibility (CSR), it is vital to understand how it affects consumers' willingness to pay (WTP) for the goods and services offered by such businesses. There is a need for an in-depth study into the relationship between CSR and WTP, and to identify the mediators and the moderators affecting this relationship. To investigate this, we conducted a systematic literature review based on a preliminary search result of 116 unique articles indexed on this topic in four bibliographic databases—Scopus, Google Scholar, Dimensions and Web of Science—published over the previous seven decades. The findings confirm the overall positive effect of CSR on WTP. This study also reveals the indirect effect between CSR and WTP, mediated by variables like Brand Trust, Brand Loyalty, Brand Love, Customer Satisfaction, Brand Attitude, Purchase Intention and Brand Equity. The relationship is impacted by moderators, including demographics, cause-based aspects, company characteristics, personal aspects and types of products. The theory explaining the evidence of each of these aspects provides a deeper understanding of the relationship between CSR and WTP, and the intervening variables. Based on these, a conceptual framework of this relationship involving all the variables is developed. The Theory, Context and Method (TCM) framework is employed to identify gaps and systematically make recommendations for future research. The findings of this study will aid marketers in developing pricing strategies based on a thorough understanding of consumer behaviour in terms of CSR perceptions. Scholars can use this study's conceptual framework to examine previously unexplored relationships. As the literature on CSR and its influence on consumers' purchase behaviour grows, this comprehensive systematic literature review on the effects of CSR on WTP fills an important gap.     

Consumer awareness and willingness to pay for safety of street foods in developing countries: a review

Street food vending is still popular in developing countries despite the giant stride recorded in the areas of food processing and global food supply in the last century. Its contribution to the socio‐economic development of the countries is evidenced by the volume of trade involved and provision of employment for significant portion of rural and urban populace. However, there has been persistent global concern on the risks of street food to the health of consumers because of the attitudes of practitioners throughout the chain. This review summarizes the findings of studies on awareness and perceptions of street food consumers to the hazards involved in street food, and their willingness to pay (WTP) premium for safety intervention. The major limitation to WTP is the extra cost that could result from the implementation of reports of WTP studies which could disenfranchise those consumers that may not be able to afford the premium. This review, therefore, recommends the formulation and enforcement of appropriate public policies that would cover the entire chain of street food vending for the safety of everybody along the chain and the protection of the health of the consumers.     

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.     

The effect of ambient scent on consumers' perception,emotions and behaviour: A critical review

Abstract

The effect of olfactory stimuli on consumer behaviour has received little attention in marketing and retailing literature compared to other atmospheric cues. Researchers report ambiguous findings and shortcomings of measurement approaches. Based on a critical literature review, a field experiment in a regional shopping mall investigates the effectiveness of ambient scent. Before-and-after surveys of randomly selected shoppers in experimental and control groups were conducted and different experimental designs simulated. Those designs not controlling either extraneous variables or attitudinal differences between the control and experimental group reveal a positive effect on factors operationalising mall perception and consumers' emotions. The design controlling both sources of bias indicates no impact of ambient scent on the dependent variables. None of the behavioural variables were affected in any case. This paper questions prior findings on the effectiveness of ambient scent in a shopping-mall environment and calls for more rigour in investigating the effectiveness of atmospheric stimuli in general.     

Demand shifts and willingness to pay in applied trade models

Emerging issues facing open economies, including global value chains and non-tariff measures, have important implications for demand that are often not well suited for analysis with the supply-side mechanisms commonly found in economic models – namely taxes and productivity. The aim of this paper is to provide a methodological approach for implementing demand-side changes. Specifically, the approach adapts the Armington equation to model a change in consumers' willingness to pay for imports. To illustrate, we estimate the impacts of the World Trade Organization's Trade Facilitation Agreement (TFA). Estimated ad valorem equivalents of the TFA are applied as demand-side shocks to consumers' willingness to pay in a global applied general equilibrium model and the results compared to those obtained using Samuelson's iceberg approach. We find that the iceberg approach results in a technical change which increases the productivity of imports, raising real GDP, while the willingness-to-pay approach causes a smaller rise in real GDP, although trade increases further. The impact on the terms of trade differs significantly between the two mechanisms, with prices falling as costs fall, under the iceberg method, and rising with increased willingness to pay. Our results clearly show that the choice of mechanism matters.     

Managers' emotional displays and employees' willingness to act entrepreneurially

In this study we draw on the literature of emotions and entrepreneurial motivation to analyze how and why emotional displays of managers influence the willingness of employees to act entrepreneurially. Using an experimental design and 2912 assessments nested within 91 employees from 31 small entrepreneurially oriented firms, we find that managers' displays of confidence and satisfaction about entrepreneurial projects enhance employees' willingness to act entrepreneurially, whereas displays of frustration, worry, and bewilderment diminish employees' willingness. Moreover, we find that displays of satisfaction, frustration, worry, and bewilderment moderate the effect of managers' displayed confidence on employees' willingness to act entrepreneurially. Our findings have implications for the emotions and entrepreneurial motivation literature.     

Impacts of technology readiness on emotions and cognition in Brazil

This study proposes and tests an extended model for consumer adoption of high technology products in a Latin American country (Brazil) by integrating concepts present in the consumer behavior literature: the Consumer Acceptance of Technology model (Kulviwat et al., 2007) and the technology readiness construct (Parasuraman, 2000). The proposed model considers the relationships between cognitive and affective constructs with technology readiness. By means of structural equation modeling conducted on a sample of 435 young consumers, the results indicate significant relationships between the constructs assessed, showing that consumers' cognitive and affective evaluations of new technologies are significantly influenced by their technology readiness. The effects of technology readiness over affective assessments were greater than those relative to cognitive evaluations regarding high-tech innovations. Nonetheless, the results may reflect specific characteristics of Brazilian (and other Latin American) consumers, who are usually more emotive than those of more rational cultures.     

Charitable organizations' storytelling influence on donors' emotions and intentions

The stories told by charitable organizations are typically designed to take the consumer through different emotional stages. This research probes the view that following exposure to the inciting incident or problem statement in the appeal for a particular charity, the consumer feels negative emotions. These feelings convert into anticipated positive emotions when the consumer is given the opportunity to help the person in need through a donation. Feedback that donors receive from the charitable organization will help to strengthen the emotional pay-off and enhances future donation intentions. The research utilizes an experimental design and data from 319 undergraduate students in a large U.S. university to confirm these hypotheses. Theoretical and managerial implications are then presented.     

Effects of social responsibility labelling and brand on willingness to pay for apparel

This study examined changes in consumer willingness to pay (WTP) for apparel products as labour‐related information and brand were added. Tobit analysis of auction bids from 121 university students for t‐shirts showed men, Hispanics and consumers who believe in social responsibility and fair trade had significantly higher WTP once labour‐related labelling was added. The amount and complexity of information did not matter, leaving substantial leeway to companies in crafting their message. Adding brand significantly increased WTP for two better‐known brands while not changing WTP for the social responsibility messages. Results suggested brands can benefit from stressing social responsibility‐related attributes of products.     

The influence of culture,emotions, intangibility,and atmospheric cues on online behavior

This paper examines how emotions and website atmospheric cues influence service tangibility and consumer attitudes. The proposed model was compared across three cultures: North America (Canada and U.S.), China, and the Middle East. The findings support the overall model and demonstrate several non-invariant paths across the groups. Particularly, the results suggest how the influences of two emotional dimensions (pleasure and dominance) on consumer perceptions of site atmospherics vary across cultures. Moreover, the effects of service tangibility dimensions (physical tangibility, specificity, and mental tangibility) on consumers' attitudes toward the website and service vary significantly across the three cultures. Mental tangibility has the greatest influence on North American customers' attitudes, while physical tangibility and specificity have the greatest impact on Chinese and Middle Eastern customers' attitudes, respectively.     

Store environment,emotions and approach behaviour: applying environmental aesthetics to retailing

This exploratory study examines the influence of store environment on emotions and behaviour tendencies. The study brings insights from research on external environments to the study of store environment. We combined the idea of three distinct dimensions of emotions (pleasantness, arousal and dominance) and the role of mediating approach-avoidance behaviours with two variables taken from the field of environmental aesthetics – complexity and order. Twenty-four colour photographs of four sections of two grocery stores were rated by a sample of 43 subjects on their degree of complexity and order. A second sample of 87 subjects rated the same photographs on emotions and approach-avoidance tendencies. The relationship between complexity and order and reported pleasantness and arousal was consistent with findings regarding external environments. The three emotional dimensions mediated an inverted ‘U’ relationship between complexity and approach behaviour tendencies, as expected. Order had a positive correlation with approach behaviour tendencies. The study suggests the importance of examining general variables (such as complexity and order) in the context of retail environments and provides ideas for extensive research.     

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).     

The Effect of Attribute Variation on Consumer Choice Consistency

We study the effect of shifts in attribute level differences on consumer choice consistency. Choice consistency is measured as the variance of the random error component in the consumer utility function: the smaller this variance, the higher choice consistency. We hypothesize that due to increased choice difficulty, choice consistency decreases if attribute level differences increase while average utility level differences between alternatives remain the same. In our empirical illustration we focus on the impact of price level shifts on choice consistency in conjoint choice experiments. Our results show that choice consistency decreases as price level differences increase and absolute price levels increase.     

The role of emotions in utilitarian service settings: The effects of emotional satisfaction on product perception and behavioral intentions

The role of emotions in hedonic service settings is well established, but their role in utilitarian service settings has received scant attention. This research attempts to fill this gap by investigating the effects of customers’ perceptions of service quality and servicescape on their emotional reactions, and their perceptions of product quality and subsequent behavioral intentions. Data are collected from 189 clients/patients who visited an optometry clinic. The study reports that perceived service quality (reliability, responsiveness, assurance, and empathy) and service environment (atmosphere and layout) both increase positive emotional satisfaction. In turn, positive emotional satisfaction leads to a high perception of product quality, high recommendation, patronage intention, and likelihood of purchase. Additionally, product quality perceptions have a significant positive impact on behavioral intentions.     

Ethical product premiums: antecedents and extent of consumers' willingness to pay

Corporate social responsibility is now high on the strategic agendas of major retailers, as consumers demonstrate growing ethical awareness and concern. However, evidence regarding consumers' willingness to pay the price premiums often associated with ethical products is inconclusive. Studies have adopted various survey-based and experimental methods, focusing upon different product categories, each with particular ethical issues. This study included a Zaltman Metaphor Elicitation Technique (ZMET) exploratory investigation then a mail survey of 1000 consumers, indicating willingness to pay ethical premiums across 6 categories. Demographics proved to be poor predictors, although education explained some variance in willingness to pay. Ethical motivations, measured within the framework of the Decisional Balance Scale, proved stronger antecedents, providing guidelines for the communication of ethical attributes. Implications for retailers and opportunities for researchers are discussed.