A field experiment on consumer willingness to pay for organic grape tomatoes based on purchasing venue
Date
2015
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Delaware
Abstract
Organic food sales have grown rapidly in the past decade, becoming an important sector in the food retailing industry and reaching 39.1 billion dollars in 2014 (Organic Trade Association, OTA). This rising market share had led to an accompanying large number of studies examining consumer perceptions, understanding and willingness to pay (WTP) for organic foods. However, most of these studies examined these issues in the abstract, without a consideration of the purchasing venue. Of the small number that did, typically only two fairly generic venues were investigated. The purpose of this study was thus to determine the influence of four different possible purchasing outlets on consumers' attitudes and WTP for organic foods. Specifically, the goals of this study were to examine whether the purchasing outlet has an influence on consumers' perceptions and WTP for organic grape tomatoes. Four different purchasing outlets were selected: supermarkets (e.g. ACME, Shoprite), farmers' markets, supercenters (e.g. Walmart, Target) and fresh format stores (e.g. Whole Foods, Fresh Market). Grape tomatoes were selected as a common, easy to eat food that was in season at the time of the study. Data was collected through a series of field experiments conducted in Delaware and Illinois in 2014. Locations included local parks, supermarkets, farmers markets and college campuses. A total of 205 consumers participated in the study, with about half in each state allowing for a test of regional differences. A session with a consumer lasted about 10 minutes and began with a BDM auction for a pint of organic grape tomatoes from each of the four venues. Bids were restricted to between $0 and $5. After entering their bids, each answered several survey questions regarding their opinions of organic foods and how they might vary based on purchasing outlet. Next, a random envelope with the name of an outlet and a binding bid price was selected to determine the outlet and price for the auction. While results showed no significant differences in the WTP between farmers markets' and fresh format stores, both were significantly higher than from supermarkets, which were significantly higher than the WTP for those from supercenters. This same ranking order and significance held for questions regarding the safety and health of the tomatoes from each outlet. Perhaps tellingly, this held for a question on how confident consumers were that tomatoes labeled organic at the various locations were truly organic. In terms of taste perceptions, the supercenter again fell to the bottom. Model results additionally suggested that gender and having a child under 18 in the household played a role in these differences. These findings demonstrate that consumers' attitudes and opinion towards organic were not generic, but depended importantly on the purchasing venue. Locations such as farmers' markets and fresh format stores could use this to perhaps achieve much larger premiums than some of their competitors while supercenters clearly could have to spend a lot of effort towards improving their image and trust with organic consumers.