Modeling the Impact of New Information on Consumer Preferences for Specialty Meat Products

As the demand for organic and natural food grows in the U.S., studies show that consumers would and do pay more for these foods than their traditional counterparts. However, the question remains as to whether consumers really understand the differences between organic and natural products versus common products. The USDA provides an official definition of organic, but there is no official definition or certification for natural products. The general lack of knowledge among consumers concerning organic and natural products can be misleading and hence, there is a need for a better understanding of how consumer pre-existing knowledge and new information regarding organic and natural products influences consumer purchasing behavior. In this study, we research the effect of providing consumers with information regarding organic and natural production processes in four separate stages on their willingness to pay (WTP) for various natural/organic meat products. Through the use of survey data collected in-person during the fall of 2007 Nevada, in which 597 surveys were completed, we examine the impact of consumer perceived knowledge of organic and natural grass-fed production processes on their WTP, whether or not new information/knowledge will modify their WTP, and the degree of modification across meat types and cuts. Meats examined vary from high-end to low-end cuts and across various meat types, such as pork and beef. The modeling will include a multinomial probit model to measure WTP and also consider the modeling issues that arise when updated preferences are included. The results of this study will be important for researchers looking to model updated consumer preferences. The purpose of our research is twofold. First, we wish to observe whether or not advertising and other promotional methods truly influence consumer demand and willingness to pay for these specialty meat products. These results will likely be important to the role of marketing and the way in which information is provided to consumers on organic and natural production methods and the potential positive effects of those methods. Additionally, the paper will show how consumers purchasing experiences and pre-existing knowledge might influence their reaction to the same information.