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Pricing Strategy for GM Food: Impact of Consumer Attitude Heterogeneity and GMO Food Labelling

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  • Rong Li

    (Syracuse University)

  • Amiya K. Basu

    (Syracuse University)

Abstract

We consider how a marketer of a GM food product should price it in response to the requirement of GMO food label in the near future and its effect on consumers’ heterogenous attitude. We examine how the GM food pricing is affected by different consumer attitudes toward GM-food (Like, Uninformed, and Dislike), the GMO food labelling to be enforced, and price competition. On the one hand, the GM food seller should expect to raise price after the GMO food labelling to cover the additional cost incurred on labelling. On the other hand, the seller may need to reduce price after labelling as the Uninformed consumers’ attitude may change and become negative once the labelling is available. The tradeoff of these two effects yields interesting results. For example, we find that a monopolist GM food seller may choose to charge a high price, i.e., charge a premium for the GM-traits, and maintain at this price even after the labelling is enforced. Managerial implications and future research directions are discussed.

Suggested Citation

  • Rong Li & Amiya K. Basu, 2020. "Pricing Strategy for GM Food: Impact of Consumer Attitude Heterogeneity and GMO Food Labelling," Annals of Operations Research, Springer, vol. 291(1), pages 463-474, August.
    • Handle: RePEc:spr:annopr:v:291:y:2020:i:1:d:10.1007_s10479-019-03154-w
    DOI: 10.1007/s10479-019-03154-w
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    References listed on IDEAS

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    1. Amiya Basu & Padmal Vitharana, 2009. "—Impact of Customer Knowledge Heterogeneity on Bundling Strategy," Marketing Science, INFORMS, vol. 28(4), pages 792-801, 07-08.
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    3. Alba, Joseph W & Hutchinson, J Wesley, 1987. "Dimensions of Consumer Expertise," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 13(4), pages 411-454, March.
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