Product Differentiation and Market Segmentation in Applesauce
Product Differentiation and Market Segmentation in Applesauce: Using a Choice Experiment to Assess the Value of Organic, Local, and Nutrition Attributes
Jennifer S. James, Bradley J. Rickard, William J. Rossman
Recently, there has been much interest among horticultural producers concerning the marketing of organic and locally produced food. A consumer survey was administered that asked respondents to choose an applesauce product from a list of products differentiated by price, and by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. Our analysis indicates that consumers were willing to pay more for locally grown applesauce compared to applesauce that was labeled USDA Organic, Low Fat, or No Sugar Added. Furthermore, we find evidence that increased knowledge of agriculture decreases the willingness to pay for organic and locally grown applesauce. Key Words: applesauce, choice experiment, consumer demand, fruit and vegetable markets, local food, multinomial logit model, organic, Pennsylvania, willingness to pay.
Labels continue to be a key strategy for differentiating products in food markets. In recent years, label usage that promotes product attributes has expanded and become increasingly important for many foods, including fruits and vegetables. Products sold in grocery stores are often differentiated by labels that make reference to health claims, nutrient content, information describing production methods, and geographical indicators. Organic labels are commonly used for both fresh and processed fruits and vegetables. Products that are differentiated as locally produced are more likely
Jennifer James is Associate Professor in the Agribusiness Department at California Polytechnic State University in San Luis Obispo, California; Bradley Rickard is Assistant Professor in the Department of Applied Economics and Management at Cornell University in Ithaca, New York; and William Rossman received
Jennifer S. James, Bradley J. Rickard, William J. Rossman
Recently, there has been much interest among horticultural producers concerning the marketing of organic and locally produced food. A consumer survey was administered that asked respondents to choose an applesauce product from a list of products differentiated by price, and by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. Our analysis indicates that consumers were willing to pay more for locally grown applesauce compared to applesauce that was labeled USDA Organic, Low Fat, or No Sugar Added. Furthermore, we find evidence that increased knowledge of agriculture decreases the willingness to pay for organic and locally grown applesauce. Key Words: applesauce, choice experiment, consumer demand, fruit and vegetable markets, local food, multinomial logit model, organic, Pennsylvania, willingness to pay.
Labels continue to be a key strategy for differentiating products in food markets. In recent years, label usage that promotes product attributes has expanded and become increasingly important for many foods, including fruits and vegetables. Products sold in grocery stores are often differentiated by labels that make reference to health claims, nutrient content, information describing production methods, and geographical indicators. Organic labels are commonly used for both fresh and processed fruits and vegetables. Products that are differentiated as locally produced are more likely
Jennifer James is Associate Professor in the Agribusiness Department at California Polytechnic State University in San Luis Obispo, California; Bradley Rickard is Assistant Professor in the Department of Applied Economics and Management at Cornell University in Ithaca, New York; and William Rossman received
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