Assessing the market potential for a local food product: Evidence from a non-hypothetical economic experiment

Faical Akaichi, José M. Gil, Rodolfo M. Nayga, Jr

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to analyze the market potential of a locally produced and high quality food product (i.e. white bean "Mongeta Ganxet" (MG)) from Catalonia, Spain. Consumers' willingness to pay (WTP) for the product is elicited using a non-hypothetical economic experiment and then the sensitivity of WTP values is analyzed with regard to additional information provided to participants that includes reference prices, leaflets and tasting. Finally, a sample-selection model is estimated to assess the factors that significantly affect consumers' WTP for the product. Design/methodology/approach: To elicit the willingness to pay a premium for the local food product, 90 subjects were invited to participate in a random nth price experimental auction. Before auctioning the product, participants were asked to complete a questionnaire about consumer attitudes and purchase habits. Findings: Only 7 percent of participants are willing to pay a price higher than the minimum price from which the MG product may be purchased directly from a producer or the local producing market. Also, it was found that providing reference prices of substitute products (both conventional and alternative high quality white beans) positively affects WTP for the MG. Interestingly, however, provision of information on organoleptic, nutritional and cooking characteristics of the MG and product tasting do not significantly influence WTP. Finally, the level of consumption, the degree of knowledge about the product and the participants' previous experience increase the purchasing intention for the MG. Originality/value: In contrast to traditional market research studies that use hypothetical methods, the authors use non-hypothetical elicitation mechanism to elicit consumers' valuation for an important local food product in Catalonia, Spain. Since actual products and cash were used in the experiments, the authors provided the respondents with an incentive to reveal their true preferences and valuation for the product of interest. The authors also tested the effect of provision of certain types of information on WTP and analyzed the factors that significantly influence consumers' WTP for the product.

Original languageEnglish
Pages (from-to)19-39
Number of pages21
JournalBritish Food Journal
Volume114
Issue number1
DOIs
Publication statusPublished - 2012 Jan 1
Externally publishedYes

Fingerprint

willingness to pay
foods
Economics
markets
Food
economics
Spain
Food Quality
Cooking
Marketing
Habits
Motivation
beans
market analysis
consumer attitudes
auctions
purchasing
cooking quality
questionnaires
nutritive value

Keywords

  • Consumer behaviour
  • Experimental auctions
  • Food products
  • Market research
  • Mongeta Ganxet
  • Prices
  • Random nth price
  • Reference prices
  • Sample selection model
  • Spain
  • Willingness to pay

ASJC Scopus subject areas

  • Food Science

Cite this

Assessing the market potential for a local food product : Evidence from a non-hypothetical economic experiment. / Akaichi, Faical; Gil, José M.; Nayga, Jr, Rodolfo M.

In: British Food Journal, Vol. 114, No. 1, 01.01.2012, p. 19-39.

Research output: Contribution to journalArticle

Akaichi, Faical ; Gil, José M. ; Nayga, Jr, Rodolfo M. / Assessing the market potential for a local food product : Evidence from a non-hypothetical economic experiment. In: British Food Journal. 2012 ; Vol. 114, No. 1. pp. 19-39.
@article{460c6d4ae91f48f1bd5d87d2759a52bb,
title = "Assessing the market potential for a local food product: Evidence from a non-hypothetical economic experiment",
abstract = "Purpose: The purpose of this paper is to analyze the market potential of a locally produced and high quality food product (i.e. white bean {"}Mongeta Ganxet{"} (MG)) from Catalonia, Spain. Consumers' willingness to pay (WTP) for the product is elicited using a non-hypothetical economic experiment and then the sensitivity of WTP values is analyzed with regard to additional information provided to participants that includes reference prices, leaflets and tasting. Finally, a sample-selection model is estimated to assess the factors that significantly affect consumers' WTP for the product. Design/methodology/approach: To elicit the willingness to pay a premium for the local food product, 90 subjects were invited to participate in a random nth price experimental auction. Before auctioning the product, participants were asked to complete a questionnaire about consumer attitudes and purchase habits. Findings: Only 7 percent of participants are willing to pay a price higher than the minimum price from which the MG product may be purchased directly from a producer or the local producing market. Also, it was found that providing reference prices of substitute products (both conventional and alternative high quality white beans) positively affects WTP for the MG. Interestingly, however, provision of information on organoleptic, nutritional and cooking characteristics of the MG and product tasting do not significantly influence WTP. Finally, the level of consumption, the degree of knowledge about the product and the participants' previous experience increase the purchasing intention for the MG. Originality/value: In contrast to traditional market research studies that use hypothetical methods, the authors use non-hypothetical elicitation mechanism to elicit consumers' valuation for an important local food product in Catalonia, Spain. Since actual products and cash were used in the experiments, the authors provided the respondents with an incentive to reveal their true preferences and valuation for the product of interest. The authors also tested the effect of provision of certain types of information on WTP and analyzed the factors that significantly influence consumers' WTP for the product.",
keywords = "Consumer behaviour, Experimental auctions, Food products, Market research, Mongeta Ganxet, Prices, Random nth price, Reference prices, Sample selection model, Spain, Willingness to pay",
author = "Faical Akaichi and Gil, {Jos{\'e} M.} and {Nayga, Jr}, {Rodolfo M.}",
year = "2012",
month = "1",
day = "1",
doi = "10.1108/00070701211197347",
language = "English",
volume = "114",
pages = "19--39",
journal = "British Food Journal",
issn = "0007-070X",
publisher = "Emerald Group Publishing Ltd.",
number = "1",

}

TY - JOUR

T1 - Assessing the market potential for a local food product

T2 - Evidence from a non-hypothetical economic experiment

AU - Akaichi, Faical

AU - Gil, José M.

AU - Nayga, Jr, Rodolfo M.

PY - 2012/1/1

Y1 - 2012/1/1

N2 - Purpose: The purpose of this paper is to analyze the market potential of a locally produced and high quality food product (i.e. white bean "Mongeta Ganxet" (MG)) from Catalonia, Spain. Consumers' willingness to pay (WTP) for the product is elicited using a non-hypothetical economic experiment and then the sensitivity of WTP values is analyzed with regard to additional information provided to participants that includes reference prices, leaflets and tasting. Finally, a sample-selection model is estimated to assess the factors that significantly affect consumers' WTP for the product. Design/methodology/approach: To elicit the willingness to pay a premium for the local food product, 90 subjects were invited to participate in a random nth price experimental auction. Before auctioning the product, participants were asked to complete a questionnaire about consumer attitudes and purchase habits. Findings: Only 7 percent of participants are willing to pay a price higher than the minimum price from which the MG product may be purchased directly from a producer or the local producing market. Also, it was found that providing reference prices of substitute products (both conventional and alternative high quality white beans) positively affects WTP for the MG. Interestingly, however, provision of information on organoleptic, nutritional and cooking characteristics of the MG and product tasting do not significantly influence WTP. Finally, the level of consumption, the degree of knowledge about the product and the participants' previous experience increase the purchasing intention for the MG. Originality/value: In contrast to traditional market research studies that use hypothetical methods, the authors use non-hypothetical elicitation mechanism to elicit consumers' valuation for an important local food product in Catalonia, Spain. Since actual products and cash were used in the experiments, the authors provided the respondents with an incentive to reveal their true preferences and valuation for the product of interest. The authors also tested the effect of provision of certain types of information on WTP and analyzed the factors that significantly influence consumers' WTP for the product.

AB - Purpose: The purpose of this paper is to analyze the market potential of a locally produced and high quality food product (i.e. white bean "Mongeta Ganxet" (MG)) from Catalonia, Spain. Consumers' willingness to pay (WTP) for the product is elicited using a non-hypothetical economic experiment and then the sensitivity of WTP values is analyzed with regard to additional information provided to participants that includes reference prices, leaflets and tasting. Finally, a sample-selection model is estimated to assess the factors that significantly affect consumers' WTP for the product. Design/methodology/approach: To elicit the willingness to pay a premium for the local food product, 90 subjects were invited to participate in a random nth price experimental auction. Before auctioning the product, participants were asked to complete a questionnaire about consumer attitudes and purchase habits. Findings: Only 7 percent of participants are willing to pay a price higher than the minimum price from which the MG product may be purchased directly from a producer or the local producing market. Also, it was found that providing reference prices of substitute products (both conventional and alternative high quality white beans) positively affects WTP for the MG. Interestingly, however, provision of information on organoleptic, nutritional and cooking characteristics of the MG and product tasting do not significantly influence WTP. Finally, the level of consumption, the degree of knowledge about the product and the participants' previous experience increase the purchasing intention for the MG. Originality/value: In contrast to traditional market research studies that use hypothetical methods, the authors use non-hypothetical elicitation mechanism to elicit consumers' valuation for an important local food product in Catalonia, Spain. Since actual products and cash were used in the experiments, the authors provided the respondents with an incentive to reveal their true preferences and valuation for the product of interest. The authors also tested the effect of provision of certain types of information on WTP and analyzed the factors that significantly influence consumers' WTP for the product.

KW - Consumer behaviour

KW - Experimental auctions

KW - Food products

KW - Market research

KW - Mongeta Ganxet

KW - Prices

KW - Random nth price

KW - Reference prices

KW - Sample selection model

KW - Spain

KW - Willingness to pay

UR - http://www.scopus.com/inward/record.url?scp=84855748959&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84855748959&partnerID=8YFLogxK

U2 - 10.1108/00070701211197347

DO - 10.1108/00070701211197347

M3 - Article

AN - SCOPUS:84855748959

VL - 114

SP - 19

EP - 39

JO - British Food Journal

JF - British Food Journal

SN - 0007-070X

IS - 1

ER -