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.     

College—Age Consumers' Knowledge and Perceptions of Food Irradiation

Abstract

This paper explores consumers of 18—24 years of age and their perceptions of irradiated ground beef products and role of irradiation on their purchase decisions. Data was collected with a survey of college—age consumers. Results showed that the majority of participants would be willing to purchase irradiated food products. Participants were somewhat concerned about impact of irradiation on safety and taste. The term “irradiated” and cost to consumer had a negative impact on participants' willingness to purchase irradiated ground beef products. The identification of the attributes should provide a useful guidance for the beef industry in terms of determining marketing strategies to increase the level of this segment of the consumer groups’ preference for irradiated products.     

Will consumers accept irradiated food products?

This study examines consumers’ willingness to pay for irradiated beef products. About 58% of the respondents are willing to pay a premium for irradiated beef. An ordered probit with sample selection model was estimated. Standard errors of the marginal effects of the ordered probit model were estimated using the bootstrap method. Our findings suggest that females and those who think that improper handling contributes to food poisoning are more likely to pay a premium of 50 cents per pound for irradiated beef than others. Those who trust the irradiation technology are also more likely to pay a premium of between 5 and 25 cents per pound for irradiated beef. Supply chain implications are discussed.     

Willingness to pay for organic products: Differences between virtue and vice foods

Faced with growing environmental problems, food safety issues, and increasing obesity rates, many consumers desire healthier, less processed natural foods that are less harmful to the environment. Yet organic foods only partially benefit from this market environment, and their market share remains quite low despite high growth rates. The usual explanation for this discrepancy is that consumers are not willing to pay the price premium prompted by an organic claim. In this paper, we explore the reasons behind consumers' (un)willingness to pay for organic food and investigate whether it differs between virtue and vice food categories. The results indicate that in vice food categories, organic claims are associated with lower quality, which seems to be only partly compensated by higher prosocial benefits. The lower-quality perceptions translate into a decreased consumer willingness to pay (WTP). We supplement the empirical results with data on organic purchases in the Dutch food market. These data show that market shares of organic food are indeed lower for vice categories of organic food.     

A comparative investigation between functional foods and their alternatives with respect to medical claims made

The Centres for Disease Control and Prevention estimate that 76 million people get sick, more than 300 000 are hospitalised, and 5000 Americans die each year from food‐borne illness. Research over the past 40 years has shown, however, that food irradiation can decrease the incidence of food‐borne illness and disease. Despite this benefit, food irradiation has been the focus of much controversy for years. Proponents of irradiation claim that it will improve food product safety by reducing harmful bacteria. Opponents, on the other hand, raise concerns about its long‐term health effects, nutrient loss, and worker safety at irradiation facilities. The debate intensified recently when the US government approved the use of irradiation to kill E. coli 0157:H7 and other harmful bacteria in ground beef and other raw meat. The US Department of Agriculture and the Food and Drug Administration are also expected to decide soon whether to allow the process to be used on sandwich meats, hot dogs, and similar packaged food products. This study examines consumer willingness to pay for irradiated beef products. About 58% of the respondents are willing to pay a premium for irradiated beef. An ordered probit with sample selection model was estimated. Our findings suggest that females and those who think that improper handling contributes to food poisoning are more likely to pay a premium of 50 cents per pound of irradiated beef than others. Those who trust the irradiation technology are more likely to pay a premium of between 5 and 25 cents per pound for irradiated beef.     

Effect of Normative and Affective Aspects on Willingness to Pay for Domestic Food Products—A Multiple Price List Experiment

There is limited knowledge about which factors underlie consumers’ preferences for domestic food products. We used a non-hypothetical multiple-price list experiment to investigate the effect of affective (product-related emotions) and normative (consumer ethnocentrism and subjective norms) factors on consumer willingness to pay for domestic food products. A total of 166 Croatian consumers were given a choice between domestic and foreign food products with different price premiums for domestic food. The results indicate that consumers are willing to pay a premium for both low- and high-involvement domestic food products. Consumer willingness to pay for domestic products is influenced by ethnocentrism, product-related emotions, and sociodemographic variables, but not by social norms.     

Private labels ain’t bona fide! Perceived authenticity and willingness to pay a price premium for national brands over private labels

Abstract

As private labels are consolidating their gains in national markets, a conventional recommendation to national brand manufacturers would most likely be to invest more in marketing in order to increase the perceived quality gap between national brands and private labels. It is assumed that the quality gap would boost consumer willingness to pay a price premium for national brands over private labels. Differing from this conventional approach, the current study focuses on the perceived authenticity gap between national brands and private labels, to explore whether and how this factor influences the effect of marketing and manufacturing variables on willingness to pay. This relationship is relevant in milieus where consumers might take brand authenticity rather than quality perceptions to guide their brand evaluations. The current study finds that the perceived authenticity gap mediates the effect of only some particular conventional marketing tools on willingness to pay. The study suggests that national brand managers should take the presence of private labels in the national markets as an opportunity to exploit the dynamics of authenticity evaluations, rather than as a threat.     

Price Acceptance for Organic Milk in Beijing,China

This study examines Chinese consumers’ acceptance and price willingness to pay for organic fluid milk. We used questionnaire data gathered in 2014 to analyze the impact of price and milk knowledge, as well as consumer age, gender, education and income on organic milk choice. The results indicate that: 1) young females with a strong educational background have shown the strongest consumption desire for organic milk; 2) those who shop for the family tend to support organic milk and are willing to pay more for the milk; 3) shoppers with more disposable income are willing to pay a premium price for organic milk.     

Consumer Reactions to Corporate Tax Strategies: Effects on Corporate Reputation and Purchasing Behavior

On the basis of an interdisciplinary approach linking taxation, marketing, and corporate social responsibility, the present research investigates the effects of media reports on aggressive and responsible corporate tax strategies (CTSs) on corporate success with consumers. By means of two laboratory experiments (N = 150, 360), we analyze the effects of the CTSs on corporate reputation, consumer purchase intention, and the consumer’s willingness to pay. Our results suggest that aggressive CTSs diminish corporate success with consumers, whereas responsible CTSs enhance it. Nevertheless, consumers are not willing to pay a price premium for products sold by responsible tax-planning companies, but rather punish aggressive tax-planning companies through a slightly lower willingness to pay. Finally, consumers’ tax morale and their attitude toward tax avoidance are important moderating variables. Given the growing level of media interest in taxation, our findings are crucial for assessing consumer-related non-tax costs and the benefits of different CTSs.     

Willingness to Pay for Non‐biotech Foods in the U.S. and U.K.

This study uses closed‐ended and payment card formats to elicit willingness to pay for breakfast cereals made from non‐biotech ingredients. U.S. consumers were willing to pay a 10%∼12% premium to avoid biotech breakfast cereals, whereas U.K. consumers were willing to pay a 19%∼35% premium. Risk perceptions about agrobiotechnology proved to be an important factor shaping willingness to pay a premium for non‐biotech breakfast cereals. If consumers perceived risks to human health or environments from the use of biotechnology in crop/food production, or affiliated biotech foods unfavorably with morality or multinational corporations, they were more likely to pay a premium. Conversely, if consumers associated agrobiotechnology with various benefits (i.e., reduction in chemical use in crop production, mitigation of world food shortages, and improved nutritional content), they were less likely to pay a premium.     

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.     

消费者安全乳品支付意愿研究

消费者对食品安全支付意愿的大小是决定食品安全市场能否长期存在并不断发展壮大的关键因素.本文应用条件价值评估法,基于对内蒙古呼和浩特市、和林格尔县200名消费者的随机调查数据,对消费者乳品安全支付意愿进行研究.研究结果显示,与普通牛奶相比,呼和浩特市与和林格尔县的消费者愿意为安全液态奶多支付29.33％的价格.安全液态奶的价格、消费者的购买经验、质量安全信息需求、风险感知、家中老人数以及家庭月总收入等因素,对消费者购买安全液态奶意愿具有显著影响.因此,本文提出,为提高消费者安全食品支付意愿,政府应不断增加质量安全信息供给,提高政府管制的公众信任度,加大安全食品标识的宣传力度.     

Analyzing Price Premiums for Foods in Japan: Measuring Consumers' Willingness to Pay for Quality-Related Attributes

This study attempts to elucidate the characteristics of price premiums for food products from the consumers' viewpoint. After conducting a survey, consumers' willingness to pay (WTP) for 13 important food elements is analyzed for 10 food categories. The main findings were first, the categories that can easiest achieve a price premium are fruit and vegetables and meat and fish with the hardest being snacks and sweets and frozen foods. Second, the food element most related to price premiums is safety while the least related is convenience. Finally, an appropriate level for price premiums for food products is generally about 20%.     

“同品不同价”:价值感知与定价差异——基于当当网自营与入驻商家的比较

平台经济发展日益加剧网络零售市场竞争和价格离散,商家间同商品定价差异背后的理论逻辑亟待厘清。由于消费者对商品各价值特征存在差异偏好,从而产生不同程度的溢价意愿。研究表明:商家在质量、服务、评论反馈方面所代表的价值感知差异对不同商家商品定价差异的传导机制有显著影响。其中,商家间的服务体验价值差异对网络商品定价的提升影响效用明显,评论反馈所代表的信息价值在初次购买后的影响力减弱。面对价格分档,市场上价格敏感者更看重功能价值,追求物美价廉;中高价位商品的消费者更注重增值服务的体验价值感知。互联网零售商要有针对性地制定相关价值感知提升策略;相关管理部门要防范"感知过度"式哄抬物价以维护市场竞争秩序。     

Exploring the Antecedents and Consequences of Míng Pái Kòng (Brand-Name Fanaticism) Among China's Generation Y

ABSTRACT

The authors examine antecedents and consequences of míng pái kòng (MPK)–brand-name fanaticism, obsessive fandom, and purchases of global name brands―among a large number of Gen-Yers in China. This phenomenon is scrutinized because Confucian virtues discourage self-expressive, materialistic flaunting behaviors. A survey of 510 respondents finds that consumers’ need for uniqueness and peer influence affect brand consciousness, MPK, and willingness to pay a price premium for name-brand merchandise. Results indicate that relationships between brand consciousness and MPK are more evident in males and suggest that MPK may be marked by incongruity between projections of status and self. Managerial implications are discussed.     

Factors Influencing Consumers’ Willingness to Pay for Organic Fruits and Vegetables: Empirical Evidence from a Consumer Survey in India

Numerous consumers confronted with increasing environmental problems, food safety issues, and augmentative health problems increasingly desire to have healthier and more natural foods grown in an eco-friendly manner. Hitherto organic foods only partly benefit from this increasing market environment, and their market share stays rather low despite high growth rates. This article aims to investigate consumers’ willingness to pay (WTP) for organic fruits and vegetables and relevant factors affecting consumers WTP. The contingent valuation method was selected to estimate WTP. Empirical data was drawn from a 250-consumer survey conducted in Bangalore during February 2013. A binomial logistic regression model was applied to obtain the value of WTP and determine the factors influencing it. The results indicated that about 90% of the consumers were willing to pay a premium price ranging between 5% to more than 100% in order to acquire better-quality fruits and vegetables; factors such as family income, size of the family, gender, and other opinion variables such as chemical residue in conventional foods, trust on retailers, taste, and environmental concerns significantly influence consumers’ WTP. More than 87% of the consumers indicated that high price, lack of availability, narrow range, and irregular supply are the major barriers for them to buy these products. The results provide useful evidence to pertinent governmental agencies in terms of assisting in the design of policies for the promotion of organic food production and marketing and reaching the target public. Furthermore, firms involved in the organic foods business may also see benefits when drawing information in order to calibrate marketing strategies.     

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.     

What’s behind organic certification of extra-virgin olive oil? A response from Italian consumers

Organic certification represents a growing business in international food market. In this article, an analysis of the factors influencing the purchase of organic extra-virgin olive oil is done for Italian consumers. A k-means cluster analysis was used to identify market segments. Results showed that it is possible to classify the Italian market into three clusters, respectively, indicating high, intermediate, and low willingness to pay a premium price (WTP) for organic certification of extra-virgin olive oil. Safety, nutritional, and health aspects appear to influence WTP. Factors concerning environmental sustainability and the supports to Italian food system are considered important, but do not play a fundamental role in increasing the consumer’s WTP.     

Can't Buy Me Green? A Review of Consumer Perceptions of and Behavior Toward the Price of Organic Food

Support for organic farming is a promising policy for improving sustainability in the food sector. Further consumer demand, however, is hindered by high prices. We review research from 2000 to 2014 on the role of perceived price, income, price knowledge, willingness to pay, and reactions to price changes on organic food. We find that price is the major perceived barrier to purchase. Income is only a partial explanatory factor and is superseded by psychographic variables. Willingness to pay a premium is around 30% (ranging from 0% to 105%) and depends on consumer segments and product category. Price knowledge is vague, and organic consumers' price sensitivity is relatively lower than that of occasional or nonorganic consumers. The results suggest that further market differentiation in terms of organic consumer segments and food categories is necessary. Furthermore, we discuss detailed implications for public policy and practice and present a future research agenda.     

Will Consumers Pay a Premium for Eco-labeled Apples?

Farmers and other producers are responding to consumer concerns about pesticides by creating new marketing opportunities for products grown with environmentally sound practices. The eco-label analyzed in this study is certified by The Food Alliance (TFA), a non-profit third-party certifying organization based in Portland, Oregon. We assess the mean willingness to pay (WTP) for eco-labeled apples using a double-bounded logit model. We conclude that female respondents with children, and strong environmental and food safety concerns are more likely to pay a premium for eco-labeled apples. However, the estimated premium is small (about 5 cents per pound over an initial price of 99 cents), reflecting the overall difficulty with garnering a premium based on “environmentally sound”practices.