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Product Differentiation and Market Segmentation in Applesauce: Using a Choice Experiment to Assess the Value of Organic, Local and Nutrition Attributes

Author

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  • James, Jennifer S.
  • Rickard, Bradley J.
  • Rossman, William J.

Abstract

Recently there is much interest among horticultural producers concerning the marketing of organically- and locally- produced food. Here we developed a consumer survey that asked respondents to choose an applesauce product from a list of products differentiated by price and four attributes. The products were differentiated by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. The survey was distributed to 3,000 residents in rural Pennsylvania and over 1,500 responses were collected yielding a response rate of 56%. Survey results were used to assess consumers’ willingness to pay for the product attributes in applesauce, and we found that consumers were willing to pay more for locally-grown applesauce compared to applesauce that was labeled organic or low fat and low sugar. Furthermore, the analysis incorporated the effects of consumer characteristics on the demand for applesauce attributes and we find evidence that increased knowledge of agriculture decreases the willingness to pay for organically- and locally-grown applesauce.

Suggested Citation

  • James, Jennifer S. & Rickard, Bradley J. & Rossman, William J., 2009. "Product Differentiation and Market Segmentation in Applesauce: Using a Choice Experiment to Assess the Value of Organic, Local and Nutrition Attributes," Working Papers 48916, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:48916
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    Cited by:

    1. Grebitus, Carola & Peschel, Anne & Hughner, Renee Shaw, "undated". "Drivers of Demand for Specialty Crops: The Example of Arizona-Grown Medjool Dates," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235545, Agricultural and Applied Economics Association.
    2. Martinez, Steve & Hand, Michael & Da Pra, Michelle & Pollack, Susan & Ralston, Katherine & Smith, Travis & Vogel, Stephen & Clarke, Shellye & Lohr, Luanne & Low, Sarah & Newman, Constance, 2010. "Local food systems: concepts, impacts, and issues," MPRA Paper 24313, University Library of Munich, Germany.
    3. Schroeter, Christiane & Nicholson, Charles F. & Meloy, Margaret G., 2016. "Consumer Valuation of Organic and Conventional Milk: Does Shelf Life Matter?," Journal of Food Distribution Research, Food Distribution Research Society, vol. 47(3), November.
    4. Wirth, Ferdinand F. & Stanton, John L. & Wiley, James B., 2011. "The Relative Importance of Search versus Credence Product Attributes: Organic and Locally Grown," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(1), April.
    5. Shi, Wei & Halstead, John & Huang, Ju-Chin, 2016. "Consumers’ Willingness to Pay for Locally Grown Produce: Comparison of New Hampshire and Massachusetts Results," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236109, Agricultural and Applied Economics Association.
    6. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, 2016. "Consumer’s comparison between local and imported organic products: a hedonic analysis of the Japanese table wine market," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 405-415, December.
    7. Chen, Xuqi & Gao, Zhifeng & House, Lisa, 2015. "Willingness to Pay for Niche Fresh Produce across the States: Why Are Consumers Willing to Pay More for the Less Favorite?," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196901, Southern Agricultural Economics Association.
    8. Perla, Joseph M. & Rickard, Bradley J. & Schmit, Todd M., 2014. "Looking for Locapours: Using Zagat Survey Data to Examine Restaurant Demand for Local Wine," Agricultural and Resource Economics Review, Cambridge University Press, vol. 43(01), pages 69-86, April.
    9. Lefèvre, Mélanie, 2014. "Do Consumers Pay More for What They Value More? The Case of Local Milk-based Dairy Products in Senegal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(1), April.
    10. Uwamariya, Beatrice, 2014. "Assessment of Consumer Awareness and Preferences for Quality Certification and Origin-Labeling in Fruit Salads in Kigali,Rwanda," Research Theses 198512, Collaborative Masters Program in Agricultural and Applied Economics.
    11. Grebitus, Carola & Printezis, Iryna & Printezis, Antonios, 2017. "Relationship between Consumer Behavior and Success of Urban Agriculture," Ecological Economics, Elsevier, vol. 136(C), pages 189-200.
    12. Azucena Gracia, 2014. "Consumers’ preferences for a local food product: a real choice experiment," Empirical Economics, Springer, vol. 47(1), pages 111-128, August.
    13. Costanigro, Marco & Kroll, Stephan & Thilmany, Dawn D. & Bunning, Marisa, 2010. "Do Taste Buds Trump Labels and Information? A Sensory Test and Economic Experiment on Organic and Local Apples," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61668, Agricultural and Applied Economics Association.
    14. Linhai Wu & Xiaolin Liu & Dian Zhu & Hongsha Wang & Shuxian Wang & Lingling Xu, 2015. "Simulation of Market Demand for Traceable Pork with Different Levels of Safety Information: A Case Study in Chinese Consumers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(4), pages 513-537, December.
    15. Dobbs, Leah & Jensen, Kimberly & Leffew, Megan & English, Burton & Lambert, Dayton & Clark, Christopher, 2015. "Willingness to Pay for Tennessee Beef among Tennessee Consumers," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196672, Southern Agricultural Economics Association.

    More about this item

    Keywords

    Applesauce; Choice experiment; Consumer demand; Fruit and vegetable markets; Locally grown; Multinomial logit model; Organic; Pennsylvania; Willingness to pay; Agribusiness; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Q13;

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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