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.     

Modelling the antecedents of consumers' willingness to pay for eco-labelled food products

The purpose of this paper is to model the antecedents of consumers' willingness to pay for eco-labelled food products. This research utilizes the Theory of Planned Behaviour to model the impact of consumers' awareness of eco-labels, environmental concerns, beliefs in the environmental ability of eco-labels, and presence of children on their willingness to pay for eco-labelled food products. This study uses structural equational modelling and PROCESS macros, to test the moderated mediation model on a sample of 333 online responses. Findings suggest the impact of consumers' environmental concerns and eco-label awareness on their willingness to pay for eco-labelled food products is partially mediated by consumers' belief in the environmental ability of these eco-labels. The relationship is further moderated by the presence of children living in the household. This study establishes the value of consumers' beliefs in the environmental ability of eco-labels and implies that communication strategies need to be carefully refined to provide consumers with more information about eco-labels and to emphasize the environmental ability of eco-labels utilized within the food industry as this can have an impact on their willingness to pay for these products, especially for consumers, who have children in the same household.     

Analysis of consumers' willingness to pay for new food prepared from cowpea flour

Consumers' willingness to pay for cowpea products was analysed by a multi-ordered response model. The analysis indicated that sociodemographic factors are weakly linked to consumers' willingness to pay while product characteristics are strongly linked. Marketing promotion is possible. Thus, akara products, made from cowpea paste, have potential for extending the utilization of cowpeas.     

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.     

Consumer willingness to pay across retail channels

Published research examining differences in consumer willingness to pay for products at omnichannel and pure-play online retailers is based on non-durable, search products and is equivocal; prices at pure-play online retailers are not always lower. This research examines differences in consumer willingness to pay for online purchases of functional and expressive products that differ in the length of product life, i.e. durable and nondurables at omnichannel versus pure play online retailers. Empirical analysis of consumer-centric, multi-site clickstream data of prices paid show that consumers are willing to pay higher prices for home goods products at omnichannel retailers compared to pure-play online retailers but differ for functional and expressive products. Implications are drawn to assist both omnichannel and PPO retailers in their pricing strategies.     

South African consumers' willingness to pay a premium for Karoo Lamb: The influence of subjective and objective knowledge,label information and demographics

In South Africa, Karoo Lamb is a prestigious product associated with free range production. This study examined the influence of subjective and objective Karoo Lamb knowledge, the importance of label information, and demographics on consumers' willingness to pay a premium for Karoo Lamb products. A panel of 355 consumers who had previously purchased lamb/mutton products completed an online questionnaire. The importance of Karoo Lamb label information, subjective Karoo Lamb knowledge and population group had a significant positive impact on willingness to pay a premium for Karoo Lamb. Objective Karoo Lamb knowledge and other demographics did not have a significant impact.     

A censored random coefficients model for the detection of zero willingness to pay

In this paper we address the problem of negative estimates of willingness to pay. We find that there exist a number of goods and services, especially in the fields of marketing and environmental valuation, for which only zero or positive WTP is meaningful. For the valuation of these goods an econometric model for the analysis of repeated dichotomous choice data is proposed. Our model restricts the domain of the estimates of WTP to strictly positive values, while also allowing for the detection of zero WTP. The model is tested on a simulated and a real data set.     

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.     

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).     

Social responsibility as a unique dimension of brand personality and consumers' willingness to reward

Consumers expect organizations to behave in a responsible fashion and want to be informed about those actions. The current research examines the extent to which consumers are willing to reward brands for their socially responsible behavior. Two studies are reported in which social responsibility (SR) was conceptualized as a unique dimension of brand personality. Participants in both studies were presented advertisements in which the personality dimensions of ruggedness, excitement, and SR for a fictitious brand were manipulated. The results indicate that SR is a distinct brand personality dimension and that willingness to reward moderates the effect of SR on attitudes toward the product, advertisement, and brand. Specifically, in all but one case across both studies, the positive effect of SR on attitude was greater for those most willing to reward. © 2008 Wiley Periodicals, Inc.     

Conceptualising consumer regiocentrism: Examining consumers' willingness to buy products from their own region

The key objective of the study is to address the gaps by building a theoretically based conceptual model to examine the influence of consumer regiocentrism and its moderators, and community involvement on consumers’ willingness to buy products from their own region. A mail survey of 2000 consumers from the Western Australian metropolitan area, supported four of the five proposed hypotheses. The results revealed that consumer regiocentric tendencies and community involvement positively influenced consumers’ willingness to buy products from their own region. Community involvement was also found to positively influence consumer regiocentric tendencies. Although perceived product necessity moderated the relationship between consumer regiocentrism and consumers’ willingness to buy products from their own region, perceived economic/personal threat did not moderate the relationship between consumer regiocentrism and consumers’ willingness to buy products from their own region. The study offers several implications to public policy makers as well as strategic and communication managers of regional products and brands.     

Applying the theory of reasoned action to examine consumers' attitude and willingness to purchase organic foods

The organic food market has emerged as a growing trend among consumers. The present study examines the relationship between Health Consciousness (HC), Organic Food Knowledge (OFK), Subjective Norms (SN), Price Perception (PP), Environmental Concern (EC), Attitude (ATT), Willingness to Purchase (WP), and Actual Buying Behaviour (ABB) towards organic food. Furthermore, the study explores the mediating effects of ATT and WP in the relationship between the aforesaid variables and ABB. The data was collected from 240 respondents using convenience sampling approach. The Structure Equation Modelling (SEM) using ADANCO 2.2 is used to test the hypotheses of the conceptual model proposed in the present study. The study found that the variables HC, OFK, SN, EC, ATT, WP significantly affect the ABB. Also, it is observed that EC is the strongest predictor of ATT, WP, and ABB in organic food purchase, whereas PP is the least influencing factor. Further, HC positively influences ATT and WP but shows a negative association with ABB. The antecedents HC, OFK, SN, PP, EC has shown a significant indirect effect on ABB among respondents through ATT and WP. Finally, the theoretical and practical implications are discussed.     

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.     

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.     

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.     

The interaction effect of socioeconomic status and emotions on willingness to pay

The aim of this work is to determine whether the interaction of emotions and socioeconomic status affects a consumer’s willingness to pay. For this purpose, we used an online survey of cheese preferences among primary grocery shoppers in Chile. Through a conjoint analysis, we find that socioeconomic status and emotions, and their interactions, are the significant and relevant variables that explain changes in willingness to pay with regard to cheese texture and color. Moreover, the willingness-to-pay results change relevantly when socioeconomic status is interacted with negative emotions.     

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.     

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.     

A monetary approach to measuring long-run inflationary expectations

In this paper, a model of long-term monetary equilibrium is used to construct an empirical model of long-run inflationary expectations. This model is estimated and used to construct out-of-sample estimates of long-run expected inflation. Comparisons of expectations measures from this model with those from commonly-used autoregressive models and with a model drawn from the term structure clearly favors the former.