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TASTE TEST OF ORGANIC VERSUS CONVENTIONAL PRODUCTS AND WHAT INFLUENCES THE CONSUMERS’ DECISION TO PURCHASE
By
DANIELLE S. THOMAS
A THESIS PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF SCIENCE
UNIVERSITY OF FLORIDA
2009
2
© 2009 Danielle S Thomas
3
To my family
4
ACKNOWLEDGMENTS
I would like to thank everyone on my committee. They have all worked very hard in
helping me put this thesis together. Especially big thanks are due to Dr. House, whose patience
and willingness to help has really made this process much easier. I would like to thank Dr. Gao
for his tireless efforts in helping me with SAS, without him I would have no analysis. Thanks go
out to Dr. Sims for his help in running the taste test at the Food Science Sensory Lab. Thanks
also go out to Lorenzo, who helped me write my survey in the necessary computer program. To
Kristina, thanks are due for her wonderful editing.
My family also deserves thanks; they have always been there for me. Thanks go out to my
parents for all of their love and support and to my brothers for always listening. Also, to Adam,
thank go out for all of your love and support. These past few months have been much easier with
you supporting me and urging me to fight and finish strong.
Lastly, I would like to thank the Food and Resource Economics Department and the
University of Florida for giving me the chance to pursue this research. Thanks go out for the
monetary support and the support of all of the Food and Resource Economic and Food Science
professors who have helped me in five years at UF.
5
TABLE OF CONTENTS page
ACKNOWLEDGMENTS ...............................................................................................................4
LIST OF TABLES ...........................................................................................................................7
LIST OF FIGURES .........................................................................................................................8
ABSTRACT .....................................................................................................................................9
CHAPTER
1 INTRODUCTION ..................................................................................................................11
Organic Demand .....................................................................................................................11 Problem ...................................................................................................................................12
Objective ..........................................................................................................................12 Testable Hypotheses .........................................................................................................13
Thesis Outline .........................................................................................................................13
2 LITERATURE REVIEW .......................................................................................................16
Demand for Organic Products ................................................................................................16 Conjoint Analysis Research ....................................................................................................19
3 DATA .....................................................................................................................................21
Introduction .............................................................................................................................21 Science of Sensory Evaluation ...............................................................................................21 Data Collection Process ..........................................................................................................22 Data .........................................................................................................................................24
Demographic Profile of Panelists ....................................................................................24 Organic Purchase Behavior ..............................................................................................25 Sensory Test Results ........................................................................................................27
Carrots .......................................................................................................................27 Orange juice ..............................................................................................................29
Summary Results of Conjoint Analysis Questions ..........................................................30
4 THEORETICAL MODEL ......................................................................................................43
Conjoint Utility Theory ..........................................................................................................43 Logit Model ............................................................................................................................43 Model Specification ................................................................................................................44
5 EMPIRICAL MODEL............................................................................................................47
6
Introduction .............................................................................................................................47 Analysis of Model ...................................................................................................................47
Carrots .............................................................................................................................48 Orange juice .....................................................................................................................50
6 CONCLUSION.......................................................................................................................56
Summary .................................................................................................................................56 Hypothesis Summary ..............................................................................................................57 Study Limitations....................................................................................................................58 Further Research .....................................................................................................................59
APPENDIX
A SURVEY INSTRUMENT DAY 1 AND DAY 2 ...................................................................60
B CONJOINT ANALYSIS QUESTIONS FROM DAY 1 AND DAY 2 .................................73
LIST OF REFERENCES ...............................................................................................................77
BIOGRAPHICAL SKETCH .........................................................................................................78
7
LIST OF TABLES
Table page 1-1 Total foods and organic foods consumer sales and penetration, 1997-2005. ..............15
3-1 Conjoint questions and percentage of panelists who selected each choice. (Day 1) ....38
3-2 Conjoint questions and percentage of panelists who selected each choice. (Day 2) ....40
4-1 Definition of carrot and orange juice variables from logit models. .............................46
5-1 Carrot logit model with factor score. (Model 1)..........................................................53
5-2 Price premium for organic carrot product based on different demographics. X indicates a 1 used for the dummy variables. ...............................................................53
5-3 Orange juice logit model with factor score. (Model 1) ................................................54
5-4 Price premium for organic orange juice product based on different demographics. X indicates a 1 used for the dummy demographic variables. ............................................55
8
LIST OF FIGURES
Figure page 1-1 Organic food category share. ............................................................................................15
3-1 Bar graph showing the age breakdown of panelists for both Day 1 and Day 2. ................31
3-2 Bar graph showing income breakdown of panelists from Day 1 and Day 2. ....................31
3-3 Bar graph showing the race/ethnicity breakdown of panelists from Day 1 and Day2. .....32
3-4 Bar graph showing what percent of organics the panelists purchase from Day 1 and Day 2. .................................................................................................................................32
3-5 Bar graph showing what organic products panelists purchase from Day 1 and Day 2. ....33
3-6 Bar graph showing what factors influence decision to buy from Day 1 and Day 2. .........33
3-7 Attribute averages of carrots from Day 1. .........................................................................34
3-8 Averages of attributes for organic carrots split by gender. ................................................34
3-9 Averages of attributes for conventional carrots split by gender. .......................................35
3-10 Averages of carrot attributes for males. .............................................................................35
3-11 Averages of carrot attributes for females. ..........................................................................36
3-12 Attribute averages of orange juice from day 2...................................................................36
3-13 Averages of attributes for organic orange juice split by gender. .......................................37
3-14 Averages of attributes for conventional orange juice split by gender. ..............................37
3-15 Averages of orange juice attributes for males. ...................................................................38
3-16 Averages of orange juice attributes for females ................................................................38
3-17 Bar graph showing frequency of choices picked for each question (Day 1). ....................40
3-18 Bar graph showing frequency of choices picked for each question (Day 2). ....................42
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Abstract of Thesis Presented to the Graduate School of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Master of Science
TASTE TEST OF ORGANIC VERSUS CONVENTIONAL PRODUCTS AND WHAT INFLUENCES THE CONSUMERS’ DECISION TO PURCHASE
By
Danielle S Thomas
May 2009 Chair: Lisa House Major: Food and Resource Economics
The previous research on willingness to pay does not take into account the consumer’s
taste preference for each product. The purpose of this research was to test if there was a taste
difference or explicit preference for an organic product versus a conventionally produced
product. For this research participants were asked their taste preference for a product and then
asked conjoint questions about their willingness to pay. Participants were given either a sample
of an organic orange juice and a conventional orange juice or an organic baby carrot and a
conventional baby carrot. The participants were then asked to taste each product and rate how
much they liked or disliked the overall flavor and other attributes, such as texture, sweetness, etc.
Once the participant picked which product they preferred the most they were given conjoint
questions which asked what product they would buy based on the characteristics of price and
production. They also used their preference for one product or the other to answer the questions.
The purpose of this type of test was to determine if participants are purchasing the product based
on their preference (taste) or on price or production method. The results of the rating taste test
were analyzed using descriptive statistics and an Analysis of Variance. The results of the carrot
rating test showed many significant differences between the attributes of the two products.
10
Overall the Analysis of Variance showed a significant difference between the overall
appearance, color, overall flavor and sweetness. When the results were separated between males
and females there were very few significant differences between the products attributes. The
results of the ranking test showed that there was no overall significant difference between the
panelist’s preferences for the two products. The results of the orange juice test showed very few
significant differences between the attributes. Overall the only attribute that had a significant
difference between the products was the sweetness; this attribute was also significant when the
results were separated into males and females. The results of the questions using conjoint
analysis were analyzed using a model that was created with eighteen variables and then from this
model the willingness to pay was calculated. For the carrots the largest price premium was $0.79
and the largest discount needed to purchase the product was $0.25. In the model used for the
orange juice data the price and whether the product was organic or not were both significant. The
significance of the price variable can be attributed to the large price difference between organic
and conventional orange juices. The demographic interaction variables were also significant. The
price premiums calculated for organic orange juice were much larger and were strongly
influenced by the race of the consumer. The largest price premium was $1.15 and the largest
discount rate was $1.56. The implications for this research show that it is possible to test
willingness to pay using a taste test. It adds an extra attribute that participants will take into
consideration when they are choosing which product to purchase, which is not often found in
previous research on a consumer’s willingness to pay.
11
CHAPTER 1 INTRODUCTION
Organic Demand
The demand for the organic food market is expanding rapidly. Zepeda and Li (2007) found
the demand for organic food products is growing at a rate of 10-20% annually while the demand
for conventional food products only grows at a rate of 2-4% annually. The organic food industry
represents 2.5% of total U.S. food sales, totaling $14.6 billion in 2005 (Heiman and Peterson
2008). With many large food companies such as Tyson and General Mills now producing
organic products, more than two-thirds of U.S. households buy some organic products. “Once
you have Kraft marketing an organic product… you really can't be more part of the mainstream
than that,” said Don Montuori, editor of Packaged Facts, an industry publication. The certified
organic production is increasing at an average of 11% from 3,587 farms in 1992 to 8, 035 farms
in 2003 (Heiman and Peterson 2008). Table 1-1 shows the growth of organic products and its
penetration into the market.
Organic produce is considered a “gateway” product with consumers who are entering the
organic market (Dettmann 2008). Many consumers purchase organic produce before widening
their purchases to include other organic products. Figure 1-1 shows what percentage of organic
food categories the consumers purchase from. Almost 40% of consumers choose to purchase
organic fruits and vegetables. For this study organic carrots and organic orange juice were used.
The products were chosen based on the data which shows almost 40% of consumers choose to
purchase organic fruits and vegetables.
The growth in the demand for organic foods can be attributed to many different factors.
Today’s consumers who desire a healthier way of life are looking for healthier food products to
fit into their new lifestyle choice. Organic foods are perceived by the consumer to be healthier
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for them and for the environment. Since organic foods lack any pesticides the average consumer
believes they are healthier. They are also healthier for the environment because the soil and
water runoff from these plants does not contain any of the inorganic matter that is used to grow
conventional products. Recent food scares and the growing introduction of genetically modified
organisms into the food supply have also aided in the increase in demand for organic products. It
is not required to label any genetically modified organisms (GMO’s) and many consumers must
purchase organic products to ensure they are not eating any GMO’s. This growing demand for
organic foods will require the supply of organic foods to grow. Understanding the types of
consumers who purchase organic produce is extremely important to producers, processors and
retailers.
Problem
Objective
The overall objective of this study is to determine what factors influence the consumers’
decision to purchase a product while shopping. The factors will be determined using both a taste
test and conjoint analysis including price information. The specific objectives of this study are
To determine any sensory differences between an organic product and a conventional product, through the use of a taste test.
To determine the panelists preference for one product over another.
To determine the influence of both taste and price on the consumers willingness to pay for the organic product.
To achieve these objectives, consumers will be surveyed using a sensory evaluation where
they will be asked to taste an organic product and a conventional product. While tasting they will
be asked to rate five characteristics about the products: overall appearance, color, overall flavor,
texture or mouthfeel and sweetness. The results of these questions will explain whether the
panelists found the organic product or the conventional product to appear or taste better. The
13
second part of the taste test requires the panelists to choose which product they prefer more than
the other. The survey will then ask the panelists why they choose to purchase organic products
and what food categories they purchase organic foods from. These responses will verify the
results from the literature about why consumers choose to purchase organic foods.
To determine how price influences the consumer’s decision to purchase organic food,
conjoint analysis will be used. The panelists will be asked which of the two products they would
purchase based on the taste or their preference, the price and whether it is produced organically
or conventionally. The results of this test will show what has more of an influence on the
decision to purchase, price, taste or how the product is produced.
Testable hypotheses
From the stated objectives hypotheses can be determined.
In determining the sensory differences between the products, there will be no significant differences between the attributes of the products.
The preferences for the products will have a fifty-fifty split with no significant difference between the products the panelists choose.
The price of the product will have more of an influence on the panelists’ decision to purchase than the taste or how the product was produced, either conventionally or organically.
Thesis Outline
Chapter 1 introduced the current problems in the organic food market. It discussed why
the producers need to be more knowledgeable about the consumers purchasing their products.
Chapter 2 begins with more information about the growing demand for organic foods. Chapter 2
also explains previous studies that have used sensory analysis to show the taste differences
between organic and conventional products. Other studies explain how the use of contingent
valuation can help in showing how the consumers’ willingness to pay can be found. Chapter 2
14
goes on to explain studies done using conjoint analysis as an effective way of finding the
consumers’ willingness to pay for the product.
Chapter 3 begins by explaining the science behind sensory analysis. Chapter 3 then goes
on to discuss the data collection process. How the data was collected and what the panelists were
required to do during the testing process is explained in this section. The summary results of the
data collected are also shown in Chapter 3. Demographic results and organic buying behavior
results are first explained. The results of the taste test are also laid out in Chapter 3. Chapter 3
shows the significant differences between the products. Chapter 3 concludes with summary
results from the questions using conjoint analysis.
Chapters 4 and 5 explain the theory behind conjoint utility theory and the theory behind
logit models. After explaining logit models, the specified logit model for this study is explained.
Each variable used in the model is explained, followed by analysis of the results from the logit
model.
Chapter 6 draws conclusions about the results and analysis. Chapter 6 also summarizes
the testable hypotheses and the results of these hypotheses. Finally, Chapter 6 explains any
limitations to this study.
15
Table 1-1. Total foods and organic foods consumer sales and penetration, 1997-2005.
Organic food ($
Mil) Organic food
growth Total food
sales ($ Mil) Organic
penetration
1997 $3,594 Na $443,790 0.81%
1998 $4,286 19.20% $454,140 0.94%
1999 $5,039 17.60% $474,790 1.06%
2000 $6,100 21.00% $498,380 1.22%
2001 $7,360 20.70% $521,830 1.41%
2002 $8,635 17.30% $530,612 1.63%
2003 $10,381 20.20% $535,406 1.94%
2004 $11,902 14.60% $544,141 2.19%
2005 $13,831 16.20% $566,791 2.48%
Adapted from Nutrition Business Journal estimates based on OTA’s 2006 Manufacturer Survey, annual Nutrition Business Journal surveys of manufacturers, SPINS, and other sources.
Organic Food Category Share, 2005
15%
10%
14%
39%
5%
13%
2%
2%
Dairy
Bread and Grains
Beverages (incl. non-dairy)
Fruit and Vegetables
Snack Foods
Packaged/Prepared Foods
Sauces/Condiments
Meat/Fish/Poultry
Figure 1-1. Organic food category share. Adapted from OTA’s 2006 Manufacturer Survey.
Category and growth estimates derived from survey responses, Nutrition Business Journal’s organic industry model, SPINS retail data, and other sources.
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CHAPTER 2 LITERATURE REVIEW
Demand for Organic Products
The demand for organic foods has increased dramatically in the last twenty years. Some
research has shown that an increase in the demand for organic food products is due “to concerns
about the environment, health, genetically modified foods and the recent series of highly
publicized food scare” (Zepeda and Li 2007 p. 17). Zepeda and Li, 2007, analyzed a 2003
consumer survey with probit and ordered probit models to determine who is buying organic food
and why. In order to estimate their variables for the model they used Weinstein’s Precaution
Adoption Process. This process "offers insights into how individuals make behavior changes"
(Zepeda and Li 2007 p. 19). The process uses five stages to show what an individual goes
through before actually changing their behavior. The five stages for the model are information or
awareness (the consumer needs to be aware of organic foods), personal connection (the
consumer must perceive a need for the product), intention to act, opportunity to act and act on
the preference. Zepeda and Li chose to drop the second stage and focus only on personal benefits
and costs of changing behavior. From their data they found significant demographic
characteristics that affect the consumers’ decision to purchase organic produce or not. The most
significant characteristics were religious affiliation, education level and age. Lack of religious
affiliation, higher levels of education and younger age respondents were more likely to buy
organic products.
However, Rodriguez, Lacaze and Lupin, 2007, found the opposite. In their study,
“consumers with lower educational instruction considered fresh organic products as of higher
quality than conventional ones” (Rodriguez, Lacaze and Lupin 2007 p. 191). Those consumers
who felt personal health and family health were the most important issue were 7% less likely to
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purchase organic products. Those interested in convenience also typically did not buy organic
products. Surprisingly, economic variables such as income or amount of food expenditures had
no affect on purchasing organic products. The conclusions of this study indicate that there is less
interest in purchasing organic products because it is not as readily available to purchase as
conventional foods. The increasing availability of organic foods in conventional shopping venues
will likely increase the consumption of these products.
Some who purchase organic products do so because of a perceived higher quality and
taste. Lester, Manthey and Buslig, 2007 led a study that researched the differences between
organic and conventionally grown whole grapefruit and juice. They compared the production
inputs, market quality, consumer acceptance and human health-bioactive compounds. In this
study Lester, Manthey and Buslig grew the grapefruits so that there would be no doubts about
how they were produced. The purpose of this study was to determine if there would be a sensory
difference due to the different production methods. The study found that the organic grapefruit
had a thinner rind and was considered to be a better quality whole fruit compared to the
conventional fruit.
However, they also tested the juice from each fruit and found that the juice from the
conventional fruit was less bitter and tart. Consumers accepted this juice over the juice from the
organic fruit. The study used a group of untrained panelists to taste test the juice. The juice was
graded on sweetness intensity, tartness, and overall acceptability. The observations of the whole
fruit proved that whole “grapefruits marketability qualities are greatly affected by production
system inputs” (Busli, Lester and Manthey 2007, p 4477).
Another test of quality was done at the University of Alberta. This study also controlled
the products they would be using for a sensory test. The purpose of this study was to “examine
18
the size and the determinants of the price premium a sample of consumers are willing to pay for
organic wheat bread” (Boxall, et al. 2007). This study performed sensory tests with both trained
and untrained panelists. Boxall, et al. also used a contingent valuation method to determine the
panelist’s willingness to pay for the wheat bread.
These two studies combined show that sensory variables can play a significant role in
consumers’ decision of their willingness to pay for food products. At the end of the sensory test
in the Boxall et al. study, the consumers were asked if they would be willing to pay some amount
more for the organic bread over the conventional product. The results of the study found that
increasing prices reduced the probability that the consumer will purchase the organic bread. The
average price the respondents were willing to pay was $1.50. This question provides evidence of
what the consumer is willing to pay for the product. Findings have shown that contingent
valuation methods can “induce overstatement of real economic value due to hypothetical biases”
(Boxall, et al. 2007).
Rodriguez, Lacaze and Lupin, found that consumers’ perceptions about organic food
quality are “more accurate willingness to pay predictors” than other demographic characteristics
such as age or gender. This study found that for organic, leafy vegetables consumers would be
willing to pay more for the product if available. A difficulty of performing this type of test in
Argentina is their small organic food supply. Of the organic food grown in this country, 94% is
exported (Rodriguez, Lacaze, Lupin 2007, p. 188). This study also found that for most products
consumers were willing to pay a premium for the organic product for health issues. There is
more confidence in the lack of health risks in organic products. This could be due to Argentina’s
inability to regulate fresh food production. Consumers believe that organic food will be more
19
regulated since Argentina was one of the first Developing Countries to have a national regulation
for organic foods (Rodriguez, Lacaze, Lupin 2007 p. 188).
Conjoint Analysis Research
One of the better ways to test a consumer’s willingness to pay is to use a method known
as conjoint analysis. A study by Wang and Sun used conjoint analysis to determine the consumer
preference and demand for organic food in Vermont. The major purpose of their study was to
“examine consumer preference and valuation of organic food and to provide information that is
needed for the organic food industry to expand its market and improve its profitability” (Wang
and Sun 2003 p. 2). Conjoint analysis was used to assess the consumer’s evaluation of important
attributes and the relative importance of each attribute. This study chose to investigate the
consumer’s willingness to pay for organic apples and organic milk because they are the most
important farm products in Vermont. According to Wang and Sun “conjoint analysis has been
used extensively in marketing research to estimate the impact of selected product or service
characteristics on customer preferences for the product or service.” They conducted a mail
survey which included four major sections: general questions about the purchasing behavior of
organic foods; a conjoint valuation of apple profiles, a conjoint valuation of milk profiles, and a
section on the opinions about the organic food industry and demographic information about the
respondent’s household. Wang and Sun’s study found that there were significant differences in
the average ratings between the people who have purchased organic food and people who have
not purchased any organic food. The results from the conjoint analysis also showed that price
was an important attribute for Vermont consumer’s followed by production method and location
for apple consumers and production method and certification for milk consumers.
This study used conjoint analysis to determine the consumer’s willingness to pay for
organic products based on certain attributes. However, they collected their data in a mail survey
20
which implies that the consumer may have never tasted the product before. The purpose of this
study is to determine the consumer’s willingness to pay for organic products using taste as an
additional attribute in determining the consumer’s preference.
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CHAPTER 3 DATA
Introduction
This chapter introduces the purpose of sensory evaluation and its relevance to this study.
The chapter goes on to explain the method of data collection. The chapter also reports the
summary statistic results from the demographic data, the taste test and the paired comparison
test. The chapter ends by explaining how the conjoint analysis was done and the summary
results of the questions asked in the survey.
Science of Sensory Evaluation
Sensory evaluation has been conducted for centuries. The methods developed serve
economic interests; the results of the tests can determine the worth of a commodity or even its
acceptability. “Sensory testing evaluates alternative courses to select the one that optimizes value
for money” (Meilgaard, Civille and Carr 2007). Using humans in sensory analysis is necessary
because there is no machine that can accurately predict how a consumer will perceive the
product in the store. Only human sensory data can provide the best model for how consumers
may perceive and react to food products in real life. Sensory evaluation is a “scientific method
used to evoke measure, analyze, and interpret those responses to products as perceived through
the senses of sight, smell, touch, taste and hearing” (Lawless and Heymann 1999). The uses of
sensory evaluation are used as a set of techniques to accurately measure the human responses to
foods and to minimize the biasing effects of brand identity and other information that may
influence the consumers’ perception of the product.
Sensory tests are most commonly used for product development and improvement. They
can also be used in cost cutting, quality control, and processing or packaging concerns. Before a
22
company can make any advertising claims about their products they must first test it and analyze
the results.
The three main types of sensory testing are discrimination tests (are the products
different), hedonic (likeability or preference of the products), and descriptive (quantifying
specific characteristics of the products). Before determining what type of test should be used it is
necessary to determine the project and test objectives. In this study the objective was to
determine both the likeability and the preference for the products. This type of test uses untrained
panelists to collect the data. The results of the sensory test should reflect the opinions and
perceptions of consumers who might buy the product in the general population.
Data Collection Process
Sensory evaluation surveys were conducted with 200 people over a two-day period. The
surveys averaged fifteen minutes in length, with panelists answering questions about the taste
characteristics and willingness to pay for carrots or orange juice.
The survey was pre-tested prior to data collection. The majority of the questions for this
survey were formed using examples from previous research. Many of the demographic questions
and response choices were taken from the U.S. Census to ensure the proper descriptors were
used in the responses. Questions on the organic buying behavior of the respondents were based
on previous research about organic product consumption. Conjoint analysis questions were
developed. The survey instrument is shown in Appendix A.
The survey was conducted at the University of Florida Sensory Lab. The survey begins
with a standard introduction of the research to the panelist. Following the introduction the
panelists are asked a series of demographic questions and questions about the panelists
purchasing behavior of organic products. A set of questions about the taste characteristics of the
23
products and the panelist’s preference for the products followed the demographic question. The
final section of the survey was a series of questions using conjoint analysis.
The sensory evaluation was conducted on November 6th and November 7th, 2008. On the
first day of the survey, respondents were presented with an organic baby carrot and a
conventional baby carrot; each carrot was labeled with a random 3-digit code. The samples are
labeled with a 3-digit random number so that the panelists do not form judgments based the
labels but rather on their sensory experiences. Panelists were asked to rate the samples based on
five different characteristics: overall appearance, color, overall flavor, texture, and sweetness
using a 9-point hedonic scale ranging from dislike extremely (1) to like extremely (9). A paired
preference question was used at the end of the taste test to determine the panelists’ preference of
one product over the other. The panelist was forced to choose which product they preferred after
tasting them one final time.
On the second day, orange juices were tested, with each panelist receiving a sample of
organic orange juice (Uncle Matt’s Organic Orange Juice) and a sample of conventional orange
(Simply Orange) juice. The panelists were asked to rate the samples on five different
characteristics: overall appearance, color, overall flavor, mouthfeel, and sweetness using the
same 9-point hedonic scale as in the carrot test. Once the panelists were finished rating the
characteristics, they were asked to rank the samples from most preferred to least preferred.
The last series of questions answered by panelists were questions about their willingness
to pay for the products. The questions used conjoint analysis and preference, production method
and price were used as the categories for purchasing decisions. For the carrot test the panelists
answered nine questions asking which product the panelists would be willing to purchase based
on the three characteristics. The prices were chosen based on the actual prices of the products in
24
the stores. There were eleven conjoint analysis questions for the orange juice test. The prices
were chosen the same way as for the carrot test. There were more conjoint questions for the
orange juice survey because the price difference between the organic and conventional products
was much bigger than the price difference between the organic and conventional carrots. The
significant price difference between the products made it necessary to have more price options
for each question and therefore more questions were needed. An example of the conjoint
question would be, “if you had the opportunity to purchase a 1.75 liter (about ½ gallon) of
orange juice with the following properties, which would you select,” and the following options
would be listed as sample 270, conventional, $2.94 or sample 978, $2.94 or neither. For every
question the panelists were given the option to purchase neither of the choices. The properties of
each option were placed using a statistical computer program that randomly ordered the
characteristics by price and production method. The questions using conjoint analysis can be
seen in Appendix B.
Data
Demographic profile of panelists
For the carrot test conducted on day one, there were 100 panelists, of which 54% (n=54)
were male and 46% (n=46) were female. This compares to the average University of Florida
population, which contains 54% females and the U.S. general population, which contains 51%
females. Of these 100 panelists, 84% (n=84) were under the age of 30. This differed slightly by
gender, with 20% males (n=11) over age 30 compared to 11% females (n=5). Figure 3-1 shows
the total age breakdown of the panelists. Over 60% of the panelists had an income of less than
$20,000 a year (Figure 3-2). The majority of the sample was white, non-Hispanic (54%,n =54)
followed by 19% who identified themselves as white, Hispanic and 19% who identified
themselves as black, Hispanic (Figure 3-3)
25
On the second day of testing 99 panelists completed the survey (one participant withdrew
before the end of the survey).The gender of the panelists was 57.5% male (n=57) and 42.4%
female (m=42), very similar to the results from day one (Table X). Of the 99 panelists, 84.8%
(n=84) were under the age of 30. For males, 19.2% (n=11) were over 30 and 9.5% (n=4) females
were over 30 (Figure 3-1). Over 80% of the panelists had an income of under $20,000 (Figure 3-
2). More than half of the panelists were white, non-Hispanic (53.5%, n=53), 19.2% (n=19) were
white, Hispanic, 18.1% (n=18) were black, Hispanic (Figure 3-3).
Organic purchase behavior
Panelists were asked if they currently purchase organic food items, and if so what
percentage of their food items purchased are organic. Eighty-two panelists (82%) responded that
they purchase at least some organic foods during their trips to the grocery store. More than a
third of the panelists (31%) responded that more than 10% of the food they purchase is organic
(Figure 3-4). On day two 83.2% of the panelists (n=83) responded that they purchase at least
some organic foods during their food shopping and 65.6% of the panelists (n=65) responded that
during their trips to the grocery store at least 10% of the food they purchase is organic (Figure
X).
Panelists who indicated they purchase organic products were then asked to select from a list of
product categories to indicate which types of organic foods are purchased (Figure 3-5). Of the
eighty-two panelists who said they do purchase organic foods, 68.3% (n=56) purchased organic
fruits and 61.0% (n=50) purchase organic vegetables. Thirty-six (44.0%) of the panelists indicted
they purchase organic dairy products, and 37.8% (n=31) purchase some type of organic juice.
For meats, processed foods and other products, less than 30% of those that purchased organic
foods indicated they selected organic products in these categories. Panelists were asked to
identify other organic food products purchased. The majority of other items purchased were
26
grains, pastas and eggs. For day two, 73.5% (n=61) purchase fruits and 63.8% (n=53) purchase
vegetables. More than a third of the panelists chose dairy (42%) and juices (37.3%) as an organic
product they purchase. Twenty-one panelists (25.3%) purchase meats and 20.5% (n=17)
purchase processed foods. Eight of the panelists chose (8.6%) other and wrote in that they
purchase items such as oats, herbs and nuts.
Next, panelists who purchased organic products were asked why they purchase organic
products by selecting from a list of nine factors that might influence their decisions to purchase
organic products (Figure 3-6). The list included: taste, the use of fewer pesticides, more
nutritious, cost, to support local farmers, the emergence of Genetically Modified products, recent
food scares, food safety and other reasons. On day one more than 50% of the panelists indicated
they purchase organic products for the taste (57.3%) and reduced use of pesticides (51.2%). The
next reasons most selected were because organic products are more nutritious (39.0%), cost
(37.8%) and food safety (33.0%). Nearly one quarter (24.4%, n=20) of the panelists chose the
support of local farmers as at least one reason they choose to purchase organic products. Less
than 14% of the panelists chose the emergence of Genetically Modified products (13.4%), recent
food scares (9.6%) and other (3.7%) as reasons for purchasing organic products. Of the three
panelists (3.7%) who chose other as a factor that influences their decision to purchase, one of the
panelists responded they purchase due to a training on organic foods, another purchases because
they have a small child and the third purchases because of the nutrients and ingredients. The
results of day two were similar to day one. On day two, more than 45% of the panelist who chose
to purchase organic products chose taste (59.0%), less use of pesticides (48.2%), and more
nutritious (48.2%) as factors that influence their decisions to purchase. Of the panelists who do
purchase organic products, 38.6% (n=32) chose cost as a reason they choose to purchase organic
27
products. Twenty-one of the panelists (25.3%) chose that food safety is one of the factors that
influence their decisions to purchase. Less than 10% chose the emergence of Genetically
Modified products (6.02%), the recent food scares (4.8%) and other (4.8%) as factors that
influence their decision to purchase organic products. Those who chose other listed having a
small child, the use of antibiotics in non-organic products, and health reasons as factors that
influence their decision to purchase organic products.
Sensory test results
Carrots
The third section of the survey contained the questions on the taste test of carrots or
orange juice. The average overall appearance for the organic carrot was 7.13. The average
overall appearance for the conventional carrot was 6.73 (statistically significant difference at the
95% confidence level). Interestingly, there were significant differences by gender when rating
appearance of the organic carrots versus the conventional carrots. The average rating by males
for overall appearance was 6.9 compared to 7.4 for females. Average ratings by males for the
conventional carrot was 6.8 (not statistically different from the organic ratings), but for the
females the average for the conventional carrot decreased to 6.7 (statistically significant
difference. Figures 3-7 through 3-11 show the averages for this attribute.
The average color rating for the organic carrot was 7.35 and for the conventional carrot
the average color was 7.14 (statistically significant difference at the 95% confidence level).
There was no significant difference between the products by gender (Figures 3-7 through 3-11)
The average overall flavor for the organic carrot was 7.1 and for the conventional carrot it
was 6.6 (significant difference at the 95% confidence level, Figure 3-7). For males, the average
overall flavor was 7.1 for the organic carrot and 6.5 for the conventional carrot (a statistically
28
significant difference). Females rated the average overall flavor a 7.1 for the organic carrot and
6.8 for the conventional carrot; there was no significant difference between the products (3-8
through 3-11).
Average texture for the organic and conventional carrot was 6.9 and 6.5, respectively
(Figure 3-7). There was no statistically significant difference between the products or by gender.
Average sweetness for the organic and conventional carrots was 6.9 and 6.5, respectively
(statistically significant difference). There were statistically significant different preferences for
males, but not females, with males rating the average sweetness 7.1 for the organic carrot and 6.2
for the conventional carrot and females rating the average sweetness 6.7 and 6.8 for the organic
and conventional carrot, respectively (Figures 3-7 through 3-11).
The average total ratings of the products were also calculated. The total average rating by
the panelists for the organic product was 35.41 out of a total 45 score. The maximum rating for
the organic product was a 45 and the minimum was a 17. For the conventional carrots the
average rating by the panelists was 33.82. The maximum rating of the conventional carrot was a
44 and the minimum was 17.
When the panelists finished rating the five attributes of the carrots they were asked to
choose which of the two samples they preferred the most. Forty-seven of the panelists (47%)
chose the organic carrot as the most preferred and fifty-three panelists (53%) chose the
conventional carrot as the most preferred. These results show no significant difference between
the products. There was also no difference in overall preference by gender, with 52% (n=28) of
males rating the conventional carrot as preferred compared to 48% (n=26) for the organic carrot.
Twenty-five (54%) females preferred the conventional carrot and 21 (46%) preferred the organic
carrot.
29
Orange juice
On day two, the third section of the test also asked the panelists to taste the products and
rate the listed attributes. The average overall appearance of the organic and the conventional
orange juice was 7.09 and 7.11, respectively (no statistically significant difference). There were
no significant differences between the products by gender (Figures 3-12 through 3-16).
Average color for the organic orange juice was rated a 7.35 overall and the conventional
was rated a 7.27 (no statistically significant difference).There was no significant difference
between the products by gender (Figures 3-12 through 3-16).
Average overall flavor of the organic and the conventional orange juice was rated a 6.65
and a 7.05, respectively (no statistically significant difference). There was no statistically
significant difference between the products by gender. (Figures 3-12 through 3-16).
Mouthfeel was the next characteristic rated; this attribute is used for liquids in lieu of
texture. The average mouthfeel was rated a 6.72 by all panelists for the organic orange juice and
a 6.57 for the conventional orange juice. From the overall data and from the results of the data
separated into male and female there were no significant differences between the products
mouthfeel (Figures 3-12 through 3-16).
Average sweetness for the organic and conventional orange juice was 6.59 and 7.19,
respectively (there was a statistically significant difference). The males rated the organic orange
juice a 6.55 and the conventional a 7.13 (statistically significant). The females rated the organic
orange juice a 6.64 and the conventional orange juice a 7.26 (no statistical significance; Figures
3-12 through 3-16).
For the orange juices the average total ratings were also calculated for each panelist. The
total average rating for the organic orange juice was 34.4 out of a possible 45. The maximum
average rating was 43 and the minimum average rating was 21. The results of the average ratings
30
for the conventional orange juice were 35.19 for total rating by panelists. The maximum rating
was 45 and the minimum rating was 19.
At the end of the survey the panelists were finally asked to choose which product they
preferred most over the other. Fifty-eight of the panelists (58.5%) preferred the conventional
orange juice and forty-one (41.4%) of the panelists preferred the organic orange juice (no
statistically significance). There was no significant difference between the genders, 54.4% of
males (n=31) preferred the conventional orange juice to the organic orange juice and 62% of the
females preferred the conventional orange juice over the organic orange juice.
Summary results of conjoint analysis questions
In the conjoint analysis section, panelists were presented with choices between two
“products” with the price, production method, and flavor identified, or they would choose no
preference.
For each question from day one the first choice was the organic sample. The differences
between each questions first choice were the production method and the price. The second
choice for each question listed the conventional sample listed along with varying prices and
different production methods. For question one over half of the panelists said they would
purchase choice two (n=58). More than a third of the panelists chose option one (n=36).
The results of the orange juice conjoint questions show the frequency of panelists who
chose each option for each question. For the first choice of each question the organic sample was
listed. For the second choice the conventional sample was listed. In this model the frequency of
panelists who chose to purchase neither product was much higher. For questions one, eight, nine
and ten more than 25% of the panelists chose to purchase neither product (n=36, n=31, n=42,
n=27) respectively.
31
Age of Panelists
2
31
43
7 5 5
0 2 03 2 0
3
33
40
85 5
0 2 1 0 2 00
510
15
2025
30
35
4045
50
under
18
18-20 21-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 over
65
Age Brackets
Fre
qu
en
cy
Day 1
Day 2
Figure 3-1. Bar graph showing the age breakdown of panelists for both Day 1 and Day 2.
Income of Panelists
64
13
4 2 2
15
80
13
4 2
0
10
20
30
40
50
60
70
80
90
under
$20,000
$20-$35,000 $36-$50,000 $51-$75,000 over $75,000 Decline to
Answer
Income Brackets
Fre
qu
en
cy
Day 1
Day 2
Figure 3-2. Bar graph showing income breakdown of panelists from Day 1 and Day 2.
32
Race/Ethnicity of Panelists
0
10
20
30
40
50
60
White,
non-
Hispanic
White,
Hispanic
Asian Black,
Hispanic
Native
American
or Alaska
Native
Black,
non-
Hispanic
Native
Hawaiian
or Other
Pacific
Islander
Race/Ethnicity Category
Fre
qu
en
cy
Day 1
Day 2
Figure 3-3. Bar graph showing the race/ethnicity breakdown of panelists from Day 1 and Day2.
Percent of Organics Panelists Purchase
0
10
20
30
40
50
60
0% less than
10%
10%-25% 26%-50% 51%-75% More than
75%
Categories
Fre
qu
en
cy
Day 1
Day 2
Figure 3-4. Bar graph showing what percent of organics the panelists purchase from Day 1 and
Day 2.
33
What Organic Products Panelists Purchase
010
20304050
6070
Fruits
Veg
etab
les
Mea
ts
Dai
ry
Pro
cess
ed F
oods
Juices
Oth
er
Product Categories
Fre
qu
en
cy
Day 1
Day 2
Figure 3-5. Bar graph showing what organic products panelists purchase from Day 1 and Day 2.
Factors that Influence Panelists Decision to Purchase
0
10
20
30
40
50
60
Taste
More
Nutr
itio
us
Support
Local
Farm
ers
Recent
Food
Scare
s
Oth
er
Factors
Fre
qu
en
cy
Day 1
Day 2
Figure 3-6. Bar graph showing what factors influence decision to buy from Day 1 and Day 2.
34
Averages for Attributes of Carrots
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance*
Color* Overall Flavor* Texture Sweetness*
Attribute
Avera
ge
Organic
Conventional
Figure 3-7. Attribute averages of carrots from Day 1. * indicates significance at 95%
Averages of Organic Sample Attributes split by Gender
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance
Color Overall Flavor Texture Sweetness
Attributes
Avera
ge
Male
Female
Figure 3-8. Averages of attributes for organic carrots split by gender.
35
Averages of Conventional Sample Attributes split by Gender
5.6
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
Overall
Appearance
Color Overall Flavor Texture Sweetness
Attributes
Avera
ge
Male
Female
Figure 3-9. Averages of attributes for conventional carrots split by gender.
Average for Attributes for Carrots from Males
5.6
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
Overall
Appearance
Color Overall Flavor* Texture Sweetness*
Attributes
Hed
on
ic S
cale
Organic
Conventional
Figure 3-10. Averages of carrot attributes for males. * indicates significance at 95%
36
Average of Attributes for Carrots from Females
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance*
Color Overall Flavor Texture Sweetness
Attributes
Hed
on
ic S
cale
Organic
Conventional
Figure 3-11. Averages of carrot attributes for females. * indicates significance at 95%
Averages for Attributes of Orange Juice
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance
Color Overall Flavor Mouthfeel Sweetness*
Attributes
Avera
ge
Organic
Conventional
Figure 3-12. Attribute averages of orange juice from day 2. * indicates significance at 95%
37
Averages of Organic Sample Attributes split by Gender
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance
Color Overall Flavor Mouthfeel Sweetness
Attributes
Avera
ge
Male
Female
Figure 3-13. Averages of attributes for organic orange juice split by gender.
Averages of Conventional Sample Attributes split by Gender
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance
Color Overall Flavor Mouthfeel Sweetness
Attributes
Avera
ge
Male
Female
Figure 3-14. Averages of attributes for conventional orange juice split by gender.
38
Averages for Attributes for Orange Juice from Males
6
6.2
6.4
6.6
6.8
7
7.2
7.4
Overall
Appearance
Color Overall Flavor Mouthfeel Sweetness*
Attributes
Hed
on
ic S
cale
Organic
Conventional
Figure 3-15. Averages of orange juice attributes for males. * indicates significance at 95%
Averages of Attributes for Orange Juice from Females
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
Overall
Appearance
Color Overall Flavor Mouthfeel Sweetness
Attributes
Organic
Conventional
Figure 3-16. Averages of orange juice attributes for females
Table 3-1. Conjoint questions and percentage of panelists who selected each choice. (Day 1) Sample Production method
given in question Price Choice
Question 1 311 (organic) 890 (conventional) Neither
Organic Conventional
$2.29 $1.69
36% 58% 6%
39
Table 3-1. Continued. Sample Production method
given in question Price Choice
Question 2 311 (organic) 890 (conventional) Neither
Organic Organic
$1.99 $1.69
61% 33% 6%
Question 3 311 (organic) 890 (conventional) Neither
Organic Organic
$1.69 $1.99
56% 36% 8%
Question 4 311 (organic) 890 (conventional) Neither
Organic Conventional
$1.69 $1.99
45% 51% 5%
Question 5 311 (organic) 890 (conventional) Neither
Organic Organic
$1.39 $2.29
50% 40% 10%
Question 6 311 (organic) 890 (conventional) Neither
Conventional Organic
$2.29 $1.39
51% 40% 9%
Question 7
311 (organic) 890 (conventional) Neither
Conventional Conventional
$1.99 $2.29
48% 36% 16%
Question 8 311 (organic) 890 (conventional) Neither
Conventional Organic
$1.69 $1.69
49% 46% 5%
Question 9 311 (organic) 890 (conventional) Neither
Conventional Conventional
$1.39 $1.99
51% 36% 9%
40
Figure 3-17. Bar graph showing frequency of choices picked for each question (Day 1).
Table 3-2. Conjoint questions and percentage of panelists who selected each choice. (Day 2) Sample Production method
given in question Price Choice
Question 1
978 (organic) 270 (conventional) Neither
Organic Conventional
$6.34 $6.34
31% 33% 36%
Question 2
978 (organic) 270 (conventional) Neither
Organic Organic
$5.49 $2.94
44% 46% 10%
Question 3 978 (organic) 270 (conventional) Neither
Organic Conventional
$5.49 $3.49
39% 47% 14%
Question 4
978 (organic) 270 (conventional) Neither
Organic Conventional
$4.04 $2.94
37% 57% 6%
41
Table 3-3. Continued. Sample Production method
given in question Price Choice
Question 5 978 (organic) 270 (conventional) Neither
Organic Organic
$3.49 $4.04
48% 36% 16%
Question 6 978 (organic) 270 (conventional) Neither
Organic Organic
$2.94 $5.49
48% 37% 15%
Question 7 978 (organic) 270 (conventional) Neither
Conventional Organic
$6.34 $3.49
46% 42% 12%
Question 8 978 (organic) 270 (conventional) Neither
Conventional Conventional
$5.49 $4.04
31% 38% 31%
Question 9 978 (organic) 270 (conventional) Neither
Conventional Organic
$4.04 $6.34
34% 24% 42%
Question 10 978 (organic) 270 (conventional) Neither
Conventional Conventional
$3.49 $5.49
42% 31% 27%
Question 11 978 (organic) 270 (conventional) Neither
Conventional Conventional
$2.94 $2.94
45% 51% 4%
42
Figure 3-18. Bar graph showing frequency of choices picked for each question (Day 2).
43
CHAPTER 4 THEORETICAL MODEL
Conjoint Utility Theory
Conjoint analysis is commonly used to measure price effects. Consumers use price as a
signal for both quality and also as a monetary constraint on choice. Price effects are measured
using conjoint analysis by “describing a number of product alternatives on a small number of
attributes, including price, and collecting some kind of preference data for those product
alternatives” (Gustafsson, Hermann and Huber 2000 p. 47). The economic theory of consumer
behavior says that the consumer will maximize their utility by allocating a limited budget to
alternative products. Conjoint measurement will use the consumer’s perception of prices to
determine if they will purchase a product based on certain attributes including price. In this
research a type of paired profiles comparison test was done to determine the consumer’s utility
for purchasing organic products based on the price and the taste of the sample. In a paired profile
comparison the participant is given two choices (product profiles) and is asked to decide which
of the choices they prefer most. For this survey the participants were also given a third option of
neither if they did not prefer either of the first two choices. Random Utility Theory is used to
enhance the researchers understanding of the consumer’s decision making processes. The term
random is used to account for the randomness of consumers’. There is no way for researchers to
“look” into the consumers head and determine the consumer’s real attractiveness to the choices
and their alternatives. Since the true feelings cannot be measured or observed by researchers,
tests like conjoint analysis are developed in order to give insight into the consumers’ preferences.
Logit Model
Logistic regression is a model used for predicting the probability of an occurrence of an
event. Depending on if the outcomes of the model can be ranked or not gives either an ordered or
44
non-ordered model. In this survey the model will predict the probability of the participant
choosing to purchase either an organic product or a conventional product. These two different
outcomes cannot be ranked, making the model for this research a non-ordered Logit model.
Model Specification
The model created to explain the results of this test includes eighteen variables. The first
two variables are price and org. These are the basic variables that show both how much price and
how the product is produced affect the consumers’ decision to purchase. The model also includes
many interaction variables. The interaction variables are interacted with either price or
production (organic or not). The organic variable is a dummy variable where one equals organic
and zero equals conventional. The other dummy variables included in the model are age (where
one equals over 30 and zero equals under 30), gender (one equals male and zero equals male),
the race variable white (where one equals white and zero equals not white), and the race variable
hisp (where one equals Hispanic and zero equals non-Hispanic). The dependent variable for this
model is whether the respondent will choose to purchase the product or not. If y=1 then the
respondent will choose to purchase the product and if y=0 the respondent will choose not to
purchase.
U(A,B)=β1price+β2org+β3orateorg+β4orateprice+β5crateorg+β6crateprice+β7genderorg+
β8ageorg+β9whiteorg+β10hisporg+β11incorg+β12genderprice+β13ageprice+ (4-1)
β14whiteprice+β15hispprice+β16incprice+β17expendorg+β18expendprice
U(C)= β0+β1price+β2org+β3orateorg+β4orateprice+β5crateorg+β6crateprice+β7genderorg+
β8ageorg+β9whiteorg+β10hisporg+β11incorg+β12genderprice+β13ageprice+ (4-2)
β14whiteprice+β15hispprice+β16incprice+β17expendorg+β18expendprice + ε
The variables in this model are explained in Table 4.1. The variables orateXorg and
crateXorg are the sum of all the organic attributes rated during the taste test for each panelist and
45
the conventional attributes rated during the taste test, respectively. Each of these variables is
interacted with both org and price. The demographic variables are also interacted with org and
price. These interactions were used to show what has more influence on the consumers’ decision
to purchase: the demographics or price or the demographics or if the product is organic or not.
46
Table 4-1. Definition of carrot and orange juice variables from logit models. (Model 1 and 2) Variable Definition Price Price of product Org If product is organic or conventional Orateorg An interaction of the total of all organic
attribute ratings times if product is organic or conventional
Orateprice An interaction of the total of all organic attribute ratings times price
Crateorg An interaction of the total of all conventional attribute ratings times if product is organic or conventional
Crateprice An interaction of the total of all conventional attribute ratings times price
Genderorg An interaction of gender times if product is organic or conventional
Ageorg An interaction of age times if product is organic or conventional
Whiteorg An interaction of if white or not times if product is organic or conventional
Hisporg An interaction of if Hispanic or not times if product is organic or conventional
Incorg An interaction of if income is below 30,000 or over times if product is organic or conventional
Genderprice An interaction of gender times price
Ageprice An interaction of age times price Whiteprice An interaction of if white or not times price Hispprice An interaction of is Hispanic or not times
price Incprice An interaction of if income is below 30,000
or over times price Expendorg An interaction of amount spent on organic
products times if product is organic or conventional
Expendprice An interaction of amount spent on organic products times price
47
CHAPTER 5 EMPIRICAL MODEL
Introduction
This chapter begins with an analysis of the logit model used to explain the results of this
study. The model used includes data from both the sensory test and the questions using conjoint
analysis. This chapter explains which variables are significant and which variables have an
influence on the consumers’ intent to purchase a product.
Analysis of Model
The logit analysis examined the consumers intent to purchase the product based on
production method of the actual product tasted, production method identified to respondent (may
or may not match actual production method) and price. The study had 100 usable responses for
the carrot model and 99 usable responses for the orange juice model. The dependent variable
represented whether or not the consumer indicated they would choose the specified product in
the conjoint questions of the survey (1 if yes, 0 if no). The model used was the same model for
both the carrots and the orange juice data. The only difference between the two models is the
sum of the attribute characteristics. For carrots the panelists were asked to rate the overall
appearance, color, overall flavor, texture and sweetness. For orange juice the attributes were the
same except for texture, instead the panelists were asked to rate mouthfeel.
The coefficients of each variable in the model show whether or not the variable
influences the dependent variable (the consumers’ decision to purchase). If the parameter is
negative, then that independent variable negatively influences the consumers’ decision to
purchase the product. If the parameter is positive then the independent variable will positively
influence the dependent variable. Most of the eighteen variables used in this model are interacted
with dummy variables. Expenditure is a dummy variable equal to zero if the consumer purchases
48
indicated they purchase organic products less than 10% of the time and one if they purchase
more frequently. Age (equal to 0 if under thirty or one if over thirty), gender (zero if female, one
if male),race (white (1) or non-white (0)), ethnicity (zero if non-Hispanic, one if Hispanic), and
income (zero if less than $30,000 and one if $30,000 or greater) are other dummy variables.
Equation 5-1 shows how the consumers’ willingness to pay is calculated. This equation uses the
coefficients from all of the eighteen variables calculated in the conjoint analysis. The willingness
to pay calculated will show whether the consumer who fits the given demographics is willing to
pay either a premium for the product or will need a discount to purchase the product. If the
consumer is willing to pay a premium for the product the willingness to pay will be positive and
show that the consumer is willing to purchase the product at the base price but would also pay
more than the base price for it. If the willingness to pay calculated is negative the consumer is
not willing to purchase the product unless they are given a discount on the product. The
consumer is not willing to purchase the product at the base price given in the store. They would
need the product to be on sale a certain amount before they would consider purchasing the
product.
WTP= -(β2+β3orate+β5crate+β7gender+β8age+β9white+β10hisp+β11inc+β12genderprice
+β13ageprice+β17expend)/(β1+β4+β6+β12+β13+β14+β15+β16+β18) (5-1)
Carrots
Few variables are significant in the model for carrots. Price, production method and
rating of the products tastes were all insignificant in influencing the decision to purchase the
product. Only two variables were significant in the model at the 95% confidence level. One was
significant at the 90% confidence level. One significant variable was the interaction term
between age and price, the other was the interaction between race and price. The coefficient for
ageXprice was negative and significant. This can be interpreted as if price is held constant and
49
the consumer is over thirty, the respondent is less likely to purchase the product. The coefficient
for whiteXprice was positive and significant indicating if the consumer is white and the price is
held constant, they are more likely to purchase the product. The coefficient for HispanicXprice
was negative and significant at the 90% confidence level, indicating if the consumer is Hispanic
and the price is held constant they are less likely to purchase the products.
The willingness to pay a price premium for the organic carrots was also calculated. The
price premium was calculated by using the coefficients from the regression analysisin equation
5-1 and the average ratings of each product.This identifies the willingness to pay (or discount
needed) based on different demographics.
Holding everything constant except for age allows us to see the influence of age on the
base female case. In this case, the discount is $0.15, indicating a female in the older age
group with the base characteristics will pay less than a female with the same characteristics in
the lower age group.Assuming the age of the panelist is under 30, they are female, they have
an income of less than $30,000 they are not white or Hispanic and they spend 10% or less on
organic foods, the panelists would be need a $0.16 discount on the base price in order for the
panelist to purchase the organic product.
If the panelist was a male and all other characteristics were kept the same as above the
consumer would need a $0.25 discount on the original price to purchase the product.
However, if the panelist is male and over 30, all other factors remaining the same, the
consumer would be willing to pay a $0.07 price premium for the product. This indicates that
holding all other things constant, a male over the age of 30 will pay $0.32 more for the
organic product than a male under the age of 30.
50
Another variable that was significant was race. When the base is changed from non-
White to White the premium they need a t$0.10 discount in order to purchase the organic
product.
The largest price premium a consumer would be willing to pay would be if the
consumer was male, over 30, had an income of less than $30,000 was white, Hispanic and
spent more than 10% on organic products during shopping trips. If the consumer fit these
characteristics the results show that they would be willing to pay a $0.69 over the base price
to purchase the organic product. If the consumer is a male, under 30, with an income of less
than $30,000, white and spends 10% or less on organic products they would need a $0.19
discount on the product to purchase. If the consumer is female and the previous factors remain
the same as above then the consumer would need a $0.10 discount on the product to purchase
it.
Orange juice
The results of the model using the orange juice are very different than that of the carrots.
In this case, the price and production methods are both significant at the 95% confidence level.
The price variable is negative, indicating that as price increases, likelihood to purchase the
product decreases. This is the expected relationship for price. The variable representing
production method is positive, indicating that if the product is organic, the consumer is more
willing to purchase the product.
The rating from the taste test was also significant at the 95% confidence level when
interacted with price and at the 90% level when interacted with production method. The variable
orateXprice (the interaction term of the sum of the organic attribute ratings and price) was
significant and positive indicating that as the ratings of the attributes increase (the respondent
likes the product better) and the price is constant, the respondent is more likely to indicate a
51
willingness to purchase the orange juice. The variable orateXprice was positive. This can be
interpreted as the ratings of the attributes increase and the price remains constant this variable
will have a positive influence on the consumer’s decision to purchase. The variable whiteXorg
has a negative coefficient; if the product is organic and the consumer is white this variable will
have a negative influence on the consumer’s willingness to purchase the product. The HispXorg
variable also has a negative coefficient; if the consumer is Hispanic and the product is organic
this variable will also have a negative effect on the consumers’ decision to purchase. The
variable incXorg shows the interaction between income and an organic product; the coefficient is
positive. If the income is over $30,000 and if the product is organic the consumer will be more
willing to purchase the product. The variable ageXprice has a positive coefficient; if the
consumer is over thirty and as price is held constant the decision to purchase will increase. The
coefficient of the variable whiteXprice is positive also; if the consumer is white and the price is
kept constant the consumer will be more willing to choose the product. The final significant
variable in this model is the variable incXprice. The coefficient of this variable is negative; as
price is held constant and if the consumers’ income is more than $30,000 there will be a negative
influence on the consumer’s willingness to purchase the product.
In order to determine the consumer’s willingness to pay for the organic orange juice the
price premium was calculated using equation 5-1 and the coefficients from the logit model (4-1).
The results from the willingness to pay equation show the price premium that the consumer is
willing to pay for the organic product. In some cases, depending on the consumer’s
demographics they may require a discount of the base price on the organic product in order for
them to purchase it. The coefficients from table 5-3 were used in equation 5-1 to calculate the
price premiums. Using the coefficients and the average hedonic ratings of each product the
52
willingness to pay price premium can be calculated based on different demographics. Assuming
the age of the panelist is under 30, they are female, they have an income of less than $30,000
they are not white or Hispanic and they spend 10% or less on organic foods, the panelists would
be willing to pay $0.94 extra for the organic product. If the panelist was a male and all other
characteristics were kept the same as above the consumer would be willing to pay a $1.15 price
premium for the organic orange juice and if the panelist is male and over 30, all other factors
remaining the same, the consumer would be willing to pay a $0.86 price premium for the
product. The orange juice results also show some demographics that would need a discount on
the organic product to purchase it. If the consumer is female, over 30, white-Hispanic with an
income of less than $30,000 and spends 10% or less on organic products they would not be
willing to purchase the organic product unless the original price was discounted $1.56.
53
Table 5-1. Carrot logit model with factor score. (Model 1)
Variable Coefficient Standard Error b/std.er. p-value
PRICE -0.6209 0.5943 -1.045 0.2961
ORG -0.3339 0.7935 -0.421 0.6738
ORATEORG 0.0271 0.0254 1.068 0.2855
ORATEPRICE 0.01633 0.0186 0.878 0.3802
CRATEORG -0.0222 0.0224 -0.991 0.3218
CRATEPRICE -0.0091 0.0171 -0.569 0.5694
GENDERORG -0.07349 0.2147 -0.342 0.7322
AGEORG 0.2538 0.3302 0.769 0.4420
WHITEORG 0.05333 0.2523 0.211 0.8326
HISPORG 0.3174 0.2255 1.407 0.1594
INCOORG -0.04385 0.2386 -0.184 0.8241
GENDERPRICE 0.0366 0.1613 0.227 0.8207
AGEPRICE -0.5971* 0.2288 -2.610 0.0090
WHITEPRICE 0.5265* 0.1834 2.870 0.0041
HISPPRICE -0.2988** 0.1679 -1.779 0.0752
INCPRICE -0.1247 0.1789 -0.697 0.4859
EXPENDORG 0.1189 0.2748 0.433 0.6652
EXPENDPRICE 0.2832 0.1945 1.456 0.1454 Note: * and ** indicate the variable is statistically significant at the 95% and 90% levels respectively, based on the t-value for OLS. Table 5-2. Price premium for organic carrot product based on different demographics. X
indicates a 1 used for the dummy variables. Age=0 if
under 30
Gender=0
if female
White=0
if not
white
Hisp=0
if not
Hispanic
Inc=0
if under
$30,000
Expend=0
if 10% or
less
Price
Premium
-0.16 x -0.25 x x 0.07 x x x 0.13 x x x x 0.54 x x x x x 0.69 x x x x x x 0.63 x x -0.19
54
Table 5-2. Continued.
Table 5-3. Orange juice logit model with factor score. (Model 1)
Variable Coefficient Standard Error b/std.er. p-value
PRICE -0.7568* 0.1608 -4.706 0.0000
ORG 2.4100* 0.8031 3.001 0.0027
ORATEORG -0.0339** 0.0199 -1.701 0.0890
ORATEPRICE 0.0129* 0.0039 3.264 0.0011
CRATEORG -0.0179 0.0169 -1.052 0.2928
CRATEPRICE 0.0037 0.0034 1.079 0.2805
GENDERORG 0.1352 0.1953 0.692 0.4888
AGEORG -0.1884 0.3170 -0.594 0.5524
WHITEORG -0.8157* 0.2382 -3.424 0.0006
HISPORG -0.6298* 0.2209 -2.851 0.0044
INCORG 0.6900* 0.3022 2.283 0.0224
GENDERPRICE -0.0659 0.0395 -1.669 0.9510
AGEPRICE 0.1511* 0.0663 2.279 0.0227
WHITEPRICE 0.1224* 0.4712 2.598 0.0094
HISPPRICE 0.0360 0.4420 0.814 0.4156
INCPRICE -0.2384* 0.0595 -4.006 0.0001
EXPENDORG 0.4304 0.2682 1.604 0.1086
EXPENDPRICE 0.0831 0.0511 1.627 0.1038 Note: * and ** indicate the variable is statistically significant at the 95% and 90% levels respectively, based on the t-value for OLS.
Age=0 if
under 30
Gender=0
if female
White=0
if not
white
Hisp=0
if not
Hispanic
Inc=0
if under
$30,000
Expend=0
if 10% or
less
Price
Premium
x x 0.23 x x x 0.25 x x x x x 0.48 x x x 0.63 x x 0.31 x -0.10
55
Table 5-4. Price premium for organic orange juice product based on different demographics. X indicates a 1 used for the dummy demographic variables.
Age=0 if
under 30
Gender=0
if female
White=0
if not
white
Hisp=0
if not
Hispanic
Inc=0
if under
$30,000
Expend=0
if 10% or
less
Price
Premium
0.94 x 1.15 x x 0.86 x x x -0.39 x x x x -1.36 x x x x x -0.70 x x x x x x 0.36 x x -0.10 x x -0.60 x x x 1.03 x x x x x -0.30 x x x -1.56 x x -1.28 x -0.31 x x x 0.47 x -0.02
56
CHAPTER 6
CONCLUSION
Summary
The results from the conjoint analysis show us what factors are important in determining
the consumers’ decision to purchase a product. The coefficient of each variable shows whether
that variable will have a positive or negative influence on the consumer’s decision to purchase.
The significance of each variable was also calculated. This value explains how important that
particular variable will be to the consumer’s decision to purchase.
The results from the carrot model show very few significant variables. The price variable
of the carrot model was insignificant. This can be attributed to the price difference between the
organic baby carrots and the conventional baby carrots. The price premium for organic baby
carrots was $0.30. This difference may not be large enough to have an influence on the
consumer’s decision to purchase the vegetable. The organic variable of the carrot model was also
insignificant.
The significant demographic variables from the carrot model were interacted with price.
The ageXprice variable had a negative effect on the consumer’s willingness to purchase the
product. In this case, the price of the product would have a bigger effect on the consumer’s
decision to purchase than the age of the consumer, unless the consumer is less than thirty years
of age in which case this variable will have no affect on the consumer’s willingness to buy. The
whiteXprice variable had a positive influence on the consumer’s willingness to purchase the
product. As price is held constant and if the consumer is white they will be more willing to
purchase the product. However, if the consumer is any other race but white, this variable will
have no influence on the dependent variable. The price premiums for the organic carrots were
small, but in most cases positive. Most consumers were willing to pay a price premium for the
57
organic carrot over the conventional carrot. The largest price premium willing to be paid was
$0.69. This small price premium may be a result of the actual price difference between organic
and conventional carrots. The price difference is usually about $0.50 in the market.
The results from the orange juice model showed remarkably different results. There were
many more significant variables found in this model. For orange juice, the price variable had a
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