Willingness to pay for organic products: Differences between virtue and vice foods - Van Doorn & Verhoef - Article

The market for organic food is full of potential: many consumers desire natural foods, considering the environment, animal welfare and health benefits. Due to extensive media coverage, the awareness of environmental issues grows. Organic farming does not involve the use of pesticides and artificial fertilizers, products that potentially have a harmful effect on the environment. Thus, the choice for organic products can be an ethical one. Other important reasons for consumers to prefer organic products are the health concerns associated with these products. Because of the growing interest of consumers in organic products, the organic market has become an attractive one. Yet, the actual market shares of organic food remain quite low. The most common explanation for this phenomenon is that regular food is less expensive than organic food. Although consumers prefer organic products, they are not willing to pay the high prices.

Just few studies had been concerned wit the willingness to pay (WTP) for organic products. This article focuses on the extent in which consumers are willing to pay a price premium for organic products, and especially why they are either willing or not willing to pay that price. The researches assume that there are two kinds of motives that influence the willingness to pay: these motives are either individual and pro-social. In this study, the researchers differentiate between virtue and vice products. Relative vices are products that are appealing in the short term, but can lead to negative outcomes on the long run. Relative virtues on the other hand, may be less appealing in the short term but have less negative effects in the long term than vices. So, virtues may be a better choice.

Studies found that consumers are more responsive for promotions of organic virtue food. It is likely that the willingness to pay may differ between the two different product categories.

Variables that may influence WTP

The choice for or against organic food can be seen as a social dilemma. Individual motives have to be weighted against more social or collective motives. Because organic products are different from regular products, consumers are willing to pay a higher price for them. But, the extent in which consumers are willing to pay more for organic claims may very under different conditions.

Individual motives are quality and healthiness. Organic food products may taste better than conventional food products. On the other hand, unsatisfactory quality is one of the main reasons not to buy organic food. The influence that an organic claim can have for the perceived quality of a product, may be different for vice and virtue products. Organic claims are likely to have a negative effect on the quality perception of vice foods, because the amount of excitement and fun may be reduced by the idea of wholesomeness that the claim signals. Virtue food products are already associated with wholesomeness, so an organic claim can positively affect the consumers perception of quality for these products. The same counts for perception of healthiness: because virtue products are more healthful, a organic claim may have stronger effects on the health perception of these products. Yet, the difference in perception between vice products with and without an organic claim may be larger, because vice products are in nature not healthy: an organic claim may suggest that they are not that unhealthful.

Other motives for consumers to buy organic products, are more pro-social. Examples are environmental issues and animal welfare. Organic products are perceived as more pro-social than regular products, but the effect may differ between vice and virtue products.

Vice products are commonly seen as “bad” and may evoke feelings of guilt. An organic claim may be guilt-reducing, because organic products are linked with contribution to good causes. So, organic claims are more likely to have stronger positive effects on vice products than on virtue products.

Previous studies state that the perception of quality have positive effects on the willingness to pay. The same counts for the link between health perception and the willingness to pay.

The connection between the willingness to pay en prosocial motives has not been explored yet. Prosocial perceptions may lead to higher purchase intentions: however, this does not always mean that the products are actually purchased. Previous literature stated that consumers are selfish and that their own individual motives are more important than prosocial motives when it comes to buying products. Consumers buy virtue food products already with virtuous motives; consumers of vice food products may need justification. Therefore, organic claims may have more effect on vice than virtue products.

Consumer characteristics and demographic variables may play an important role for the willingness to pay for organic foods. Consumers who are in higher level concerned with the environment, are more likely to buy organic foods. Women are more concerned with social and communal goals than man, so they tend to are more willing to buy organic foods. Also higher educated consumers are more likely to buy organic foods because they understand the complex relation between organisms and the environment better. Due to the higher prices of organic foods, consumers with higher incomes are more willing to pay for organic products.

The first study

The first study was concerned with priming virtue versus vices. The investigators made use of a 2x2 between-subjects experimental design. The first variable was virtue versus vice priming; the second concerned a product with or without organic claim. The dependent variable was the price the participants were willing to pay for the product.

The experiment was conducted with 172 students from a large Dutch university. To prime a virtue of vice mindset, their first task was to unscramble ten scrambled sentences. Seven of these sentences had something to do with virtues or vices, the other three were neutral. Then, all of the participants had to answer questions about orange juice with or without an organic claim. The investigators used orange juice as product because it can be perceived as either vice or virtue product. At the end of the study, participants were asked how much they were willing to pay for the orange juice.

The study shows that an organic claim has a negative effect on the quality perception of vice products, but a positive effect on virtue products. Quality perceptions had a strong impact on the willingness to pay for organic virtue products. However, health perceptions did not have the expected impact on the willingness to pay. The study also stated that the positive effect of prosocial motives on the willingness to pay was stronger for vice than for virtue products.

The second study

The second study focused on the willingness to pay for vice and virtue product categories. A large-scale survey amongst Dutch consumers from an online panel was conducted. The final sample contained 709 cases, in which 375 were virtues and 334 were vices.

Supporting the first study, the investigators found that an organic claim had negative effects on the quality perception of vice food products. Surprisingly, they also found that organic claims also had negative effects on the quality perception of virtue products. As expected, the positive effects of organic claims on the perceived prosocial benefits were stronger for vice products. In line with the first research, quality perceptions had a strong impact on the willingness to pay for organic virtue products and health perceptions had not.

In addition, the researchers investigated the influence of the consumer’s demographic characteristics on the willingness to pay. The extend of concern wit the environment had influence on the perception of the products, but no effects on willingness to pay were found. Consumers with high concern of the environment were willing to pay up to 13% more for organic virtue products. However, negative effects on the perception of organic vice product were found, resulting in a lower willingness to pay.

Third study

The third study existed of a 2x2 between-subjects design with 233 Dutch students as participants. This study also had the goal to investigate what the effects of (the absence of) an organic claim were on the willingness to pay for vice and virtue food products: this third and the first study were very much alike. However, unlike the previous studies, the participants actually had to buy products. They had a 50% chance of winning ten Euro in a lottery: if they won this prize, they were obliged to buy a product.

This study supported that organic claims have a positive influence on health perception of virtue food products, that the effect of prosocial benefits had influence on the health perception of vice products and that this effect was stronger on vice than on virtue products.

Fourth study

In this study, the empirical price of premiums and shares of wallet for vice and virtue organic food were explored. Data were collected from a large Dutch household panel, which contains information of food purchases from above 4000 households. An exploration of the data stated that the households bought significantly more virtue than vice organic foods (p<0.05). However, there was no significant difference between vice and virtue products in the demanded premium price. Actual market data show that consumers are more reluctant to buy organic vice than organic virtue products. However, it is likely that other variables, like accessibility of the products and advertising also play a role.

Conclusion

The studies showed that there was a link between organic claims and perceived prosocial benefits. This effect seemed to be stronger for vice than for virtue products, implying that organic claims may work as a guilt-reducing mechanism. This may also count for health perception: when an organic claim is added to a vice product, people believe it is more healthy than its conventional counterpart.

All studies confirmed that there is a relation between quality and willingness to pay. There was no link found between health perception and willingness to pay. Also prosocial benefits played just a minor role: only in combination with vice food products, there was a positive effect on the willingness to pay. Finally, the presence of an organic claim on itself had a positive effect on the willingness to pay. An explanation is that consumers may be aware of the higher costs that come with the production organic foods. Therefore, they are willing to pay a higher price because they believe this price is justified.

Stronger environmental concerns have a positive effect on the willingness to pay; health concerns do not. Also demographic characteristics have little effect. However, young people tend to be more concerned with the environment and therefore buy more organic products. Also woman have a more positive attitude towards organic products, because they are more concerned with community goals.

Year of article

2011