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.     

Consumers' willingness to pay for conventional,organic and functional yogurt: evidence from experimental auctions

This research is aimed at investigating consumers' willingness to pay (WTP) for conventional, organic and functional yogurts in two different information treatments. The basic information treatment provided respondents with yogurts labelled conventional, organic or functional while the second treatment included additional information. To elicit values for these specific products, 100 Italian consumers participated in an experimental auction using the Vickrey fifth‐price sealed‐bid mechanism. Findings reveal that providing additional information through a specific health claim increases consumer's perceived value of the functional yogurt, while for the organic counterpart additional information on organic regulation does not add much to the premium. Moreover, our study shows that specific socio‐demographic variables (as gender, age, presence of kids in the household and the need to follow a specific diet) positively affect WTP for functional and organic yogurts.     

Online luxury goods with price discount or onsite luxury goods with luxury services: Role of situation-specific thinking styles and socio-demographics

Today, the luxury goods and service market is growing faster than ever. However, despite its growth, we do not know much about the ways in which consumers choose to shop online or in store when buying luxury goods. We also lack insight into the factors that can affect such luxury consumption decisions. The purpose of this study is to investigate whether consumers prefer to buy luxury goods online at a discounted price or would rather buy luxury goods in store with additional luxury services at a cover price. This study also examines the extent to which such decisions can be driven by their situation-specific thinking styles as well as other socio-demographic variables. The results show that participants adopted a rational thinking style when deciding to buy luxury goods online with price discounts. On the other hand, an experiential thinking style was evoked when participants chose to visit a store offering luxury brands and luxury services. In addition to momentary thinking orientations, gender as well as income were found to be relevant to a consumer's choice in a shopping platform when seeking luxury brands. More details about the study's findings and their implications are discussed below.     

Consequences of personalized product recommendations and price promotions in online grocery shopping

Shopping convenience can be turned into a competitive advantage for online grocery retailers. Consequently, we study how personalized product recommendations (recommendation agents) and price promotions (algorithmic pricing) compensate for the negative impact that consumer's perceived cognitive effort causes on loyalty. By default, the relationship from perceived cognitive efforts to attitudinal and behavioral loyalty is negative, yet these results demonstrate that personalized price promotions lessen the negative impact, while personalized product recommendations do not have such an influence. The findings contribute to a better understanding of personalized marketing activities in today's data-driven online grocery retailing.     

Age and factors influencing consumer behaviour

When evaluating a product or service, consumers seek out information to judge whether that specific product will meet certain criteria. The main concern of sales providers is how to increase their purchasers' willingness to buy a product. The authors studied the impact of age on the perceived importance and interaction of three factors known to influence people when buying clothes: price, durability and suitability. A sample of 160 French adults aged 18–90 rated their likelihood of buying an item of clothing in 27 scenarios, in which three levels (low, moderate and high) of each of the above three factors were combined in an orthogonal factorial design. For younger participants, a low price was considered a sufficient reason to buy the item of clothing. For older participants, suitability was a more important factor, while for the eldest people, durability was the most important.     

The impact of flattery: The role of negative remarks

This study extends our understanding of flattery and consumers’ use of persuasion knowledge in the retail context by addressing the role that negative evaluations from a salesperson play on consumer's perceptions of store agent trustworthiness. Across two experiments, our findings show that a negative salesperson remark along with a positive remark reduces the client's use of persuasion knowledge therefore enhancing the client's perception of the salesclerk's trustworthiness. Additionally, we found a boundary condition of this effect: the price of the target product. Finally, perceptions of salesperson trustworthiness mediated the effect of the remarks on behavioral intentions.     

The role of involvement: Investigating the effect of brand's social media pages on consumer purchase intention

This study examined the influence of consumer's brand familiarity and the information quality of social media content on their involvement with a brand on the brand's social media pages. Also studied were the influence of involvement on consumer's attitude towards the brand's social media page and the effect of their attitude on future purchase intention from the brand. The results indicated that both brand familiarity and information quality had significant effects on a consumer's involvement with a brand on its social media page, yet the brand's social media content had a greater influence on a consumer's involvement with the social media page. Further, involvement with a brand's social media led to a positive attitude towards the brand's social media page, which in turn influences future purchase intention from the brand. However, the involvement did not directly influence future purchase intention from the brand. The results suggest the significant importance of quality of social media content.     

Price-Quality Correlations in the Japanese Market

This study tested the consumer's rule of thumb, price indicates quality, in the Japanese market. The data source was the Monthly Consumers product testing magazine published by the Japanese Consumer Association. Spearman's rho correlations of price and quality ranged from +.87 to −.80, with a mean of −.06. The slightly negative, near zero mean correlation indicated that, on the average, price was a very poor indicator of quality. Among product categories, bicycles had the highest mean correlation, +.54; mean correlations for other product categories exhibited considerable variation. Comparisons of correlations within a product category, such as television sets or microwave ovens, revealed that a significant positive correlation at one point in time was not a reliable guide to the level of price-quality correlation for that product category at later points in time. Comparing results from this study with results from previous studies of Consumer Reports and Consumers Research reveals a smaller percentage of positive correlations and a lower mean correlation for the present study.     

Uniform or spatially differentiated? Pricing Strategies for Information Goods under simultaneous and sequential decision-making in multi-market context

Product pricing has been one of the central issues in the field of marketing and consumer services for managers and researchers alike. However, pricing of information goods has not been paid much attention in literature. For information goods the marginal costs of production and transportation of information goods (online movies, video games, etc.) is almost zero. Hence, the pricing decisions need to be thought of purely in competitive profit maximizing terms. This paper proposes mechanisms for managers to evaluate and base their pricing decisions on rational frameworks that takes into account various situations when they enter a new market and when they are incumbent in a new market. This paper addresses the research gap of spatially differentiated pricing strategy for information goods that has not been studied in literature so far. We create stylized theoretical models under both, sequential and simultaneous decision-making conditions. We determine the equilibrium price and the equilibrium profit for the two firms for each of the four possible scenarios based on their pricing strategies. Our analysis reveals that the dominance of one pricing strategy over the other depends on product differentiation factor capturing joint effect of the product substitutability and consumer's price sensitivity under sequential decision making and the market size along with consumer's price sensitivity for simultaneous decision making. As an extension, we propose a generalized model demonstrating the uniform and spatially differentiated pricing strategies of the firms under simultaneous and sequential selection for multiple domestic and international markets.     

Search-Purchase (S-P) Strategies of Multi-Channel Consumers

Abstract

Our study sought to determine whether a consumer's search-purchase (S-P) strategy could provide a viable market segmentation tool for understanding consumer's channel choice behavior in today's increasingly complex, multichannel market environment. We collected data (N = 519) nationwide, using a self-administered mail survey and focusing on two product categories (books and apparel). Based on the respondent's search-purchase channel behavior, we identified nine segments and deemed three as viable: the Physical/Physical S-P strategist, the Cross/Cross S-P strategist, and the Cross/Physical S-P strategist. Our findings indicate that a consumer's S-P channel choice strategy is indeed a viable segmentation tool; furthermore, a consumer's S-P channel choice strategy is influenced by the consumer's level of sophistication in regard to the technology and by the benefits sought. We conclude by speculating on the uses that retailers could make of our study, and we propose several possible subjects for future studies.     

Genuine brands or high quality counterfeits: An investigation of luxury consumption in China

This study examines the effects of different marketing and manufacturing factors on the perceived quality gap and willingness to pay (WTP) for genuine luxury brands. Using the survey data of 786 Chinese consumers, the results show that three marketing factors (product innovation, price promotion, and sales environment) and two manufacturing factors (production in country of brand origin and difficulty in producing the products) all indirectly influence WTP through a perceived quality gap between originals and counterfeits. These effects differ significantly among consumers with different counterfeit and genuine brand purchasing experiences. For consumers with counterfeit purchasing experience, it is important to emphasize the manufacturing factors in the marketing strategies; however, for consumers who only buy genuine brands, marketing factors play a more important role. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

Way to success: Understanding top streamer's popularity and influence from the perspective of source characteristics

Live streaming opens a new way for selling products, in which the streamer plays a leading role. Whereas e-commerce live streaming has become ever-increasingly prevalent, how to attract viewers and improve the conversion rate have become problems bothering lots of streamers. Based on 245 viewers' experience of watching top streamers' live streams, we try to find a successful way for small streamers from the perspective of streamer characteristics. This study identifies streamer characteristics from three aspects (attractiveness, competence, and communication style) and examines their effects on streamer's popularity and consumer's behavioral intentions. The results show that beauty, expertise, humor, and passion are all proved to be positively related to hedonic value, and both warmth and expertise are positively related to utilitarian value. Meantime, the results highlight the importance of expertise while beauty shows minor importance. Streamer's popularity can only lead to watching intention, it shows no effect on consumer's purchase intention. These findings highlight streamer characteristics as key factors in affecting streamers' popularity and consumers' watching and purchase intentions and its complex effect in live streaming and marketing.     

Willingness-to-Pay for Multiple Units of Eco-Friendly Wheat-Derived Products: Results From Open-Ended Choice Experiments

A non-hypothetical open-ended choice experiment with a multi-unit elicitation format was conducted to elicit Italian consumer willingness-to-pay (WTP) and demand schedule for new wheat-derived products that were produced by adopting an ecologically friendly post-harvest technique (high heat-treated, HHT). A sample of 270 Italian consumers were surveyed in Bologna, Catania, and Palermo in June 2014. Data were analyzed using a double hurdle model. Results suggest Italian consumers are willing to pay premium prices for HHT flour, while they prefer to pay for HHT packed bread at the same price as a conventional one. Consumers’ WTP for the second, third, and more units are lower than their WTP for the first unit of product. While factors that influence consumers’ decision to buy these two new products are the same, factors that affect their desired product units differ among each products. In conclusion, Italian consumers’ preference for an eco-friendly label depends on the types of products.     

Consumer purchase behaviour of irradiated beef products: a simulated supermarket setting

In December 1997, the US Food and Drug Administration approved the use of irradiation to kill harmful bacteria in beef. As a result of limited information about consumers’ potential response to implementation of this technology, a supermarket simulation setting (SSS) test was conducted to assess consumer purchase behaviour. The objectives were to determine consumers’ willingness to purchase irradiated beef products when provided with information at the grocery store level and consumer's perceptions towards irradiated beef. Primary household grocery shoppers (n = 207) in Griffin, Georgia, USA who consumed beef at least twice per week participated in the study. Ground beef, ground chuck, top round steak and rib eye steak were displayed in refrigerated cases in either traditionally labelled packages (non‐irradiated) or in packages labelled as irradiated. Irradiated and non‐irradiated beef had the same unit price. Participants were instructed to purchase two packages of each cut on their first shopping trip; they then shopped a second time after an informative poster about irradiation had been placed in the display cases. The results indicated that irradiation information displayed on the poster at the point of purchase was effective in causing significant change in beef purchase behaviour. The information caused some consumers who had bought traditional packages initially to buy irradiated packages subsequently while others who bought irradiated packages initially subsequently bought traditional packages. Hence, the net effect of the information was minimal. A mean test across form/cut showed that consumers did not differentiate between the ground form and the muscle form in selecting irradiated packages.     

The effect of physical possession on preference for product warranty

Peck and Shu (2009) found that touching a product causes greater endowment effect. We seek to replicate and extend this finding to the case that whether touching a product consumers have just bought may increase the willingness to pay (WTP) for warranty. Loss aversion, the tendency to prefer avoiding losses over obtaining equivalent monetary gains, often explains product warranty purchases. This tendency will be stronger when the buyers consider the product as part of their endowment. Touching the product promotes stronger ownership perception and thus shifts consumer's reference point. The new reference point causes consumers to anticipate greater pain from the loss of the product and thus leads to higher WTP for product warranty protection. We find support for this hypothesis in two field studies with a total of 104 participants.