Measuring Consumer Acceptance and Willingness-To-Pay for Specialty Tomatoes: Impact of Product, Taste, and Health Features

The increasing public health awareness and the promotion given to healthy eating habits as a measure to prevent obesity and chronic diseases have pushed consumer?s attention towards differentiated products. Many of the differentiated products, such as those with environmental, local, and other health and quality claims, are categorized as credence goods. Credence attributes, such as nutritional characteristics, are unobserved by consumers even after consumption, making the use of information crucial for marketing the benefits of such products. While there have been numerous studies examining the potential impacts of these attributes on consumer demand, few studies combine consumer valuation of credence attributes with sensory analysis of products and information treatments. This study attempts to shed more light on this area by considering both the impact of various attributes on consumer demand and the consistency in consumer valuation under different information treatments. The information treatments refer to tasting, health information, and the location of origin and production system of the products.

A non-hypothetical second-price Vickrey auction was conducted in the Bryan-College Station area of Texas in order to collect the data. Several econometric models were developed to estimate consumers? willingness-to-pay (WTP); however, special attention was paid to the random parameters tobit model as it accounts for unobserved individual heterogeneity as well as bid-censoring. Results show that knowledge of location of origin of tomatoes does have an impact on consumer valuation. The same holds true for the taste attribute (experience) and the health attribute (credence). Each information treatment was applied to several products and some treatments had contradictory results between products which prevented generalizing the effects of that treatment. In addition, estimates indicate there exists unobserved heterogeneity in valuations across individuals.

Finally, using a Latent Class Analysis, consumers were segmented based on health-related behaviors, and the differences in the valuation of products and information treatments among those classes were measured using random parameters tobit models. Two latent classes were found and characterized as: ?Health Conscious?, and ?Health Redeemers?. The findings indicate that the classes differed significantly in terms of their preferences, willingness to pay, socio-economic profile, and health-driven motivations.