The influence of information and product labels on consumer preferences and willingness to pay for pecans
Kane, Sharon P.
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Pecans, with a $560 million U.S. agricultural production value, remain a largely unexamined area of consumer preferences, willingness to pay (WTP) for attributes, or valuations of mandatory country of origin (COO) labeling requirements. Recent approval of a Federal Marketing Order (FMO) for the U.S. pecan industry highlights the importance of consumer valuation as stakeholders pursue avenues to address marketing and consistency-of-standards challenges in this sector. Key to investigating consumer valuations are product labels, on which vital information is conveyed by producers and manufacturers to consumers at point of sale. Clear and effective labels not only allow consumers to align their preferences with available options, but hold potential economic gains when product information garners a price premium for desired attributes. Employing choice experiments and random nth price experimental auctions in a series of research sessions with adult consumers in two Southeastern U.S. cities, this study assesses how consumers respond to product attributes and label details in different information contexts for purchases of shelled pecan halves. From the data collected in the research sessions, we address the following: 1) consumers’ willingness to pay for select initiatives proposed in conjunction with the FMO regarding pecan attributes, 2) directly eliciting the consumers’ value of obtaining information about attributes vs. WTP for particular attributes in pecan purchases under alternative labeling scenarios, and 3) the influence of consumer risk and ambiguity attitudes on consumer preferences for single or mixed country of origin products. Findings indicate that, in choice experiments, consumer ethnocentric tendencies and purchasing patterns play a role in defining differences among consumer taste preferences and WTP, while efforts to educate consumers about attributes are essential. Overall, despite significant taste heterogeneity, consumers generally are most willing to pay a premium for pecans of U.S. origin over other attributes, though there is some evidence from the experimental auctions that the value of origin information diminishes in a more complex information environment. However, in the presence of risk or ambiguity regarding knowledge of product provenance, consumers prefer mixed origin over any risk of obtaining the single origin product from their lowest ranked preference country.