Market segmentation or collective reputation? Experimental evidence from traditional foods confronting novel alternatives

Novel processed foods are increasingly developed as plant-based alternatives to traditional animal products such as eggs, milk, and meat, which often exhibit a lower environmental footprint. Concurrently, traditional animal production sectors are implementing initiatives aimed at improving their environmental performance. In this context, two marketing strategies are commonly considered: (i) market segmentation based on differences in otherwise-similar products' environmental footprint, or (ii) collective effort emphasizing the entire sector's commitment to continuous environmental improvement while maintaining product homogeneity. The first strategy may quickly offer various options for consumers with different preferences but can risk stigmatizing the entire product category especially when novel alternatives emerge. The second strategy may preserve collective reputation but could foster free-riding behavior among producers. We will present the design and preliminary results of a lab-in-the-field experiment measuring consumers' preferences using an incentive-compatible Becker–DeGroot–Marschak (BDM) mechanism. Participants are asked to bid on three products: two traditional animal-based products from different brands and one plant-based alternative. In the control condition, participants receive no additional information. In the first treatment, they are informed about differences in environmental performance between the two animal-based products, representing the segmentation strategy. In the second treatment, they receive information regarding the sector's collective commitment to continuous environmental improvement. Using a between-subject design, this experiment aims to quantitatively assess the effectiveness of the two common strategies used by traditional markets when they confront novel alternatives.