Final Report Summary - FOODLABELS (Do consumers value food labels? An assessment of the impact of information and personality traits on the demand for food labels)
The research objective of “FOODLABELS” is to assess to what extent consumers would value the provision of multiple food labels, when making food choices in Spain. The specific research objectives proposed were: 1) to segment consumers into groups depending on psychological/personal factors (attitudes, lifestyle, environmental and ethic values, eating habits, lifestyles etc), 2) to identify food labels that Spanish consumers would value more than others, 3) to find the maximum willingness to pay (WTP) for food labels, and 4) to test projection bias and self-control under temptation of future consumption on consumers’ valuation of food labels.
In order to achieve the first two objectives of the project, a stratified random sample of around 500 consumers was made on the basis of town district and age. The survey was carried out in Zaragoza (Spain) during the fall 2011 using a structured questionnaire with several questions including a Best-Worst question. In the Best- Worst question, Spanish consumerswere asked to choose the most preferred food label and the least preferred one among a set of food labels.
The seven different food labels value by consumers were: 1) Organic, 2) Designation of origin; 3) Food miles, 4) Nutrition information, 5) Local, 6) Animal welfare and 7) Carbon foodprint. The questionnaire also contained questions on socio-demographic characteristics (i.e. sex, family size and composition, age, education level, income) and consumers’ personal factors.
Firstly, results indicated that consumers´ characteristics depending on psychological/personal factors (attitudes, lifestyle, environmental and ethic values, eating habits, lifestyles etc) are as follows:
• more than 89 % of interviews believes that food should be produced taking into account animal welfare practices
• Around 90 % of consumers thinks that food should be produced fitting with environmental friendly systems
• 88 % of individuals is in agreement that food should be packed with organic material
• Around 60 % of consumers believes that food should be from those countries which respect the human rights
• more than 70% of interviews usually compares the food labels before shopping,
• more than 75% of consumers pays attention to the price of food products
• However, only 50% of consumers like to test two products and to dedicate time to cook.
• more than 75% of Spanish consumers usually eats at home with their family, while only 10% of respondents eats at work place bringing his/her meal from home.
• more than 70% of individuals gives importance to his/her eating habits
• around 80% of interviews does not snack between meals
• more than 80% of consumers follows a balanced diet
Second, results from the Best-Worst question indicated that the three labels more value by consumers were:
• the designation of origin (DOP),
• the organic label
• the nutritional label
On base of these results, to achieve the last two objectives of our project, we implemented an experimental auction using cheese products with these three labels. In recent years, the use of non-hypothetical experimental methods such as experimental auctions has become very popular in estimating people’s willingness to pay (WTP) for product attributes or new products. One of the major reasons for the increasing popularity of experimental auctions is their incentive compatibility properties. That is, subjects have the dominant strategy to submit bids equal to their value for the good. The experiment was conducted to 145 individuals that were incentivized to reveal their true willingness to pay (WTP) for the three cheese products (plus the baseline cheese product).
In accordance with the third objective, results indicated that the WTP for cheeses with “DOP”, “organic” and “light” labels were positive and statistically significant indicating the consumers are willing to pay a positive premium for these labelled cheese products. Moreover, results show that consumers are willing to pay a higher price for the DOP cheese, followed by the organic and the light cheese.
Finally, findings confirm the existence of projection bias when consumers made their decisions about food products. In particular, projection bias was found in two out of the three analyzed cheese products (nutritional and organic). Specifically, projection bias exists because currently hungry participants were willing to pay more to get the cheese with the “light” and “organic” claim when they anticipated being hungry in the future than when they anticipated being satiated. Second, projection bias exists because for any current hunger or satiated state, the participants were willing to pay more for the cheese with the “light” claim when they anticipated being hungry in the future than when they anticipated being satiated. Moreover, the results also suggest that individuals´ preferences are not dynamically inconsistent because participants were still willing to pay more for the DOP and the organic cheese than for the “light” one when they were satiated or when they anticipated being satiated.
Our results also showed that the “light” claim could help individuals to exercise their self-control because they were willing to pay a higher price for a cheese with a health-related claim (“light”) than for the cheese product without this claim.
These findings have implications for food companies and retailers when launching a new product with specific claims in the food market. Since we found that hunger participants (current and future) would be more willing to pay to get the food product, the communication and promotion campaigns designed by food companies should be done in the specific time of the day when consumers are expected to be hungry. As trying the first time the product is the precursor of liking and then, re-buying, advertisement on TV, and tasting promotions on the store should be scheduled before lunch or dinner when consumers are expected to be hunger because of their greater desire to try the product.
In order to achieve the first two objectives of the project, a stratified random sample of around 500 consumers was made on the basis of town district and age. The survey was carried out in Zaragoza (Spain) during the fall 2011 using a structured questionnaire with several questions including a Best-Worst question. In the Best- Worst question, Spanish consumerswere asked to choose the most preferred food label and the least preferred one among a set of food labels.
The seven different food labels value by consumers were: 1) Organic, 2) Designation of origin; 3) Food miles, 4) Nutrition information, 5) Local, 6) Animal welfare and 7) Carbon foodprint. The questionnaire also contained questions on socio-demographic characteristics (i.e. sex, family size and composition, age, education level, income) and consumers’ personal factors.
Firstly, results indicated that consumers´ characteristics depending on psychological/personal factors (attitudes, lifestyle, environmental and ethic values, eating habits, lifestyles etc) are as follows:
• more than 89 % of interviews believes that food should be produced taking into account animal welfare practices
• Around 90 % of consumers thinks that food should be produced fitting with environmental friendly systems
• 88 % of individuals is in agreement that food should be packed with organic material
• Around 60 % of consumers believes that food should be from those countries which respect the human rights
• more than 70% of interviews usually compares the food labels before shopping,
• more than 75% of consumers pays attention to the price of food products
• However, only 50% of consumers like to test two products and to dedicate time to cook.
• more than 75% of Spanish consumers usually eats at home with their family, while only 10% of respondents eats at work place bringing his/her meal from home.
• more than 70% of individuals gives importance to his/her eating habits
• around 80% of interviews does not snack between meals
• more than 80% of consumers follows a balanced diet
Second, results from the Best-Worst question indicated that the three labels more value by consumers were:
• the designation of origin (DOP),
• the organic label
• the nutritional label
On base of these results, to achieve the last two objectives of our project, we implemented an experimental auction using cheese products with these three labels. In recent years, the use of non-hypothetical experimental methods such as experimental auctions has become very popular in estimating people’s willingness to pay (WTP) for product attributes or new products. One of the major reasons for the increasing popularity of experimental auctions is their incentive compatibility properties. That is, subjects have the dominant strategy to submit bids equal to their value for the good. The experiment was conducted to 145 individuals that were incentivized to reveal their true willingness to pay (WTP) for the three cheese products (plus the baseline cheese product).
In accordance with the third objective, results indicated that the WTP for cheeses with “DOP”, “organic” and “light” labels were positive and statistically significant indicating the consumers are willing to pay a positive premium for these labelled cheese products. Moreover, results show that consumers are willing to pay a higher price for the DOP cheese, followed by the organic and the light cheese.
Finally, findings confirm the existence of projection bias when consumers made their decisions about food products. In particular, projection bias was found in two out of the three analyzed cheese products (nutritional and organic). Specifically, projection bias exists because currently hungry participants were willing to pay more to get the cheese with the “light” and “organic” claim when they anticipated being hungry in the future than when they anticipated being satiated. Second, projection bias exists because for any current hunger or satiated state, the participants were willing to pay more for the cheese with the “light” claim when they anticipated being hungry in the future than when they anticipated being satiated. Moreover, the results also suggest that individuals´ preferences are not dynamically inconsistent because participants were still willing to pay more for the DOP and the organic cheese than for the “light” one when they were satiated or when they anticipated being satiated.
Our results also showed that the “light” claim could help individuals to exercise their self-control because they were willing to pay a higher price for a cheese with a health-related claim (“light”) than for the cheese product without this claim.
These findings have implications for food companies and retailers when launching a new product with specific claims in the food market. Since we found that hunger participants (current and future) would be more willing to pay to get the food product, the communication and promotion campaigns designed by food companies should be done in the specific time of the day when consumers are expected to be hungry. As trying the first time the product is the precursor of liking and then, re-buying, advertisement on TV, and tasting promotions on the store should be scheduled before lunch or dinner when consumers are expected to be hunger because of their greater desire to try the product.