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In relatively unknown products, consumers use prices as a quality reference. Under such circumstances, the utility function can be non-negative for a specific price range and generate an inverted U-shaped function. The extra virgin olive oil market in Chile is a good example. Although domestic production and consumption have increased significantly in the last few years, consumer knowledge of this product is still limited. The objective of this study was to analyze Chilean consumer preferences and willingness to pay for extra virgin olive oil attributes. Consumers were segmented taking into account purchasing frequency. A Random Parameter Logit model was estimated for preference heterogeneity. Results indicate that the utility function is nonlinear allowing us to differentiate between two regimes. In the first regime, olive oil behaves as a conspicuous good, that is, higher utility is assigned to higher prices and consumers prefer foreign products in smaller containers. Under the second regime, Chilean olive oil in larger containers is preferred.
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Heterogeneity and nonlinearity in consumers’
preferences: An application to the olive oil
shopping behavior in Chile
Rodrigo Alejandro Romo-Muñoz
, Juan Herna
´n Cabas-Monje
, He
´ctor Manuel Garrido-
, Jose
´a Gil
1Agribusiness Research Group, Business Management Department, Universidad del Bı
´o, Chilla
´n, Chile,
2Center for Agro-food Economy and Development (CREDA-UPC-IRTA), Parc Mediterrani de la Tecnologia,
Edifici ESAB, Castelldefels, Barcelona, Spain
In relatively unknown products, consumers use prices as a quality reference. Under such
circumstances, the utility function can be non-negative for a specific price range and gener-
ate an inverted U-shaped function. The extra virgin olive oil market in Chile is a good exam-
ple. Although domestic production and consumption have increased significantly in the last
few years, consumer knowledge of this product is still limited. The objective of this study
was to analyze Chilean consumer preferences and willingness to pay for extra virgin olive oil
attributes. Consumers were segmented taking into account purchasing frequency. A Ran-
dom Parameter Logit model was estimated for preference heterogeneity. Results indicate
that the utility function is nonlinear allowing us to differentiate between two regimes. In the
first regime, olive oil behaves as a conspicuous good, that is, higher utility is assigned to
higher prices and consumers prefer foreign products in smaller containers. Under the sec-
ond regime, Chilean olive oil in larger containers is preferred.
Chile only represents 0.2% of the world olive tree cultivated area and 0.6% of world olive oil
production. However, establishment of this crop has been remarkable and with exponential
growth rates (from 192 tons in 1997 to 21 600 tons in 2012). This significant increase has been
favored by foreign investment from producer countries that have established themselves in
Chile, which have been attracted by suitable climatic conditions and relatively low land prices
compared with European countries.
Consumption (per capita) has also exhibited significant growth, going from 77 mL in 1997
to 824 mL in 2011; these figures are still far from those found in the main producer countries
such as Spain, Italy, and Greece. Extra virgin olive oil is a relatively new product in Chile and it
is at the introduction stage. Olive oil was initially imported from Spain or Italy at a price that
was much higher than sunflower oil (the most consumed oil in the country). Increased pro-
duction has allowed the Chilean consumer to obtain a high-quality product at a competitive
PLOS ONE | September 11, 2017 1 / 13
Citation: Romo-Muñoz RA, Cabas-Monje JH,
´quez HM, Gil JM (2017)
Heterogeneity and nonlinearity in consumers’
preferences: An application to the olive oil
shopping behavior in Chile. PLoS ONE 12(9):
Editor: Pablo Brañas-Garza, Middlesex University,
Received: May 15, 2017
Accepted: August 26, 2017
Published: September 11, 2017
Copyright: ©2017 Romo-Muñoz et al. This is an
open access article distributed under the terms of
the Creative Commons Attribution License, which
permits unrestricted use, distribution, and
reproduction in any medium, provided the original
author and source are credited.
Data Availability Statement: All relevant data are
within the paper and its Supporting Information
Funding: This work was supported by the
Research Council at the University of Bio Bio.
Competing interests: The authors have declared
that no competing interests exist.
price compared with the imported product. Most producers have targeted the domestic
market although the Chilean consumer is somewhat ignorant about this product.
The objective of this study was to analyze Chilean consumer preferences for extra virgin
olive oil by focusing on price and origin attributes and the possibility of preference heterogene-
ity. The knowledge generated about attribute valuation in the different markets is relevant for
companies wishing to enter these markets or for local producers interested in developing their
own new market. Companies can use this information to develop appropriate marketing strat-
egies and minimize the possibility of a product launch failure. This is the first attempt to ana-
lyze consumer preferences towards extra virgin olive oil in Chile.
The methodological approach was based on conducting a Choice Experiment (CE) with a
representative sample of 221 consumers from the Biobı
´o Region in Chile, which is the second
most important region after the Metropolitan Region in terms of economy and population. It
is also the region with the highest potential for growth of olive oil production mainly due to its
climatic and agronomic conditions [1]. The CE method has been used extensively in the litera-
ture. It has been proved to be very useful for collecting information from consumers about
their preferences and how they assess each product attribute and its different levels, especially
when dealing with complex goods such as food products [2]. Its popularity has increased over
the last few years because: i) it is easy to implement; ii) it mimics real shopping scenarios by
also including a no-choice alternative, which reduces bias that might exist when applying it
[3]; and iii) preference heterogeneity can be easily considered [4]. Despite these interesting
advantages, the CE also presents certain limitations, among which the most relevant is that in
many applications the CE does not consider person’s budget constraint, which can overesti-
mate participants’ WTP [5]. In any case, [6] has suggested some ex ante survey design to
reduce hypothetical bias in CE.
Empirical applications of CE cover a wide range of scientific fields: Marketing [7]; Environ-
mental Economics [8]; Transport [9]; Health Economics [10]; or Energy [11]. Applications in
food markets have been concentrated mainly in meat [12] [13] [14] [15]; wine [16] [17] [18]
[19]; milk and dairy products [20] [21]; or fruit [22] [23].
In most studies, the price variable has been introduced as a linear function and results
between utility and price are inversely related as suggested by economic theory. However, in
some cases, such as for prestigious goods or goods that are relatively unknown by consumers,
this negative relationship does not need to be fulfilled [24], at least for the whole price range.
Under these circumstances, price can be perceived as a quality indicator and a positive rela-
tionship can exist between price and utility for low and medium price levels [25] [26]. Never-
theless, taking into account the budget restriction, there will always be a threshold price at
which the relationship will be negative again. The possibility of a nonlinear relationship
between price and utility is the second contribution of the present study.
The empirical applications of CE to the olive oil sector are limited. Our search has identified
78 studies that focus on olive oil consumer preferences, of which 73% have been conducted in
Mediterranean countries, 27% in North European countries, and only 10% in the rest of the
world [27]. Most of the studies carried out in Mediterranean countries are focused on the
largest producing countries [4] [28] [29] [30] [31] [32] [33] [34]. Only three studies have been
conducted in developed and non-producer countries with high purchasing power (high con-
sumption potential), such as the United Kingdom [35], Japan [36], and Canada [3].
Results from previous literature depend on two main issues: 1) the regulations currently in
force for olive oil production in each country; and 2) the consumer’s experience in using olive
oil. The legal regulation determines the different types of intrinsic (e.g. acidity, olive variety)
and extrinsic (e.g. brand, denomination of origin) olive oil attributes, which are reported by
the producers on the product label. This, together with consumer experience in using the
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 2 / 13
product, determines the valuation and importance given to it at the time of purchase. In the
case of studies conducted in traditional countries, the most sophisticated attributes are those
valued by consumers. Some attributes such as the protected designation of origin (PDO), dec-
laration of health properties, production quality certifications, and sensory attributes are the
most valued in these markets [27] [37]. This is evident in some countries such as Greece [31]
[34] and Italy [24] [32], and Spain [30]. In studies carried out in non-producer markets, the
most relevant attributes are price and oil color. These results are given in the context of less
strict regulation and with inexperienced consumers in the use of the product.
The rest of the study is as follows. Section 2 describes the materials and methods. Section 3
outlines the empirical application. Section 4 discusses the main results obtained in this study.
Finally, section 5 presents some concluding remarks.
Materials and methods
The Choice Experiment (CE) is based on the fundamental principles of economic theory
because it is consistent with Lancaster’s microeconomic approach [38] and the random utility
theory (RUT) [39]. Choice experiments assume that individuals are rational and make their
decisions to maximize their utility based on their budget restriction. Individuals select an alter-
native (from various options) in accordance with a function expressed as
Uin ¼VinðZi;SnÞ þ εin ð1Þ
Where U
is the utility provided by alternative ifor individual n. This function has a system-
atic utility component (V
)and a random component (ε
is the attribute of each alterna-
tive and S
is the vector of the socioeconomic characteristics of the survey respondents. Based
on this function, the CE model proposes that an individual nwill always choose alternative iif
it provides higher utility than alternative j. In terms of probability, choosing ican be expressed
Pin ¼Prob½Uin >Ujn ¼ Prob½Vin þεin >Vjn þεjn8ijð2Þ
This expression is equivalent to
Prob½εjn εin <Vin Vjn8ijð3Þ
[39] proposed an econometric framework to estimate discrete choice models based on random
utility models in which consumers were assumed to be homogeneous; this implies that all coef-
ficients for all attributes considered in the utility function are constant across the sample. To
overcome this restrictive assumption, several alternatives have been proposed in the literature:
the Random Parameter Logit Model (RPL); the Latent Class Model (LCM); or the Independent
Availability Logit (IAL) model, among others. In this paper, we have specified the use of the
RPL to be consistent with previous literature on consumer’s preferences for extra virgin olive
oil. The RPL model is a generalization of the Multinomial Logit Model (MNL) that allows
accounting for preference heterogeneity among individuals. In this case, expression (1)
Uin ¼VinðZi;SnÞ þ εin ¼b0xin þεin ð4Þ
The RPL model is based on the assumption that the observed portion of the utility depends
on the vector of parameters βthat are random and distributed across individuals according to
a statistical distribution reflecting preference heterogeneity. The x
is a vector of attributes
corresponding to alternative i. The unconditional probability to choose alternative iat time t,
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 3 / 13
(considering that consumers adopt sequential decisions), is expressed as:
PinðbÞ ¼ Zeb0xin
The distinctive feature of this function is that the parameter distribution is characterized
by the mean and variance (represented by θ) since it is not possible to directly obtain the
parameters. It can be deduced from the above formula that the probabilities of each choice are
weighted by a fixed probability density function set at the discretion of the researcher (usually
uniform, triangular, normal, or lognormal). Parameters are random variables and all possible
values must be integrated to obtain the unconditional probability of P
. Given that the above
formula has no analytical solution, it must be estimated by simulation methods.
Based on the assumption that price is a linear utility function, willingness to pay (WTP) for
each attribute has traditionally been calculated by dividing the attribute coefficient of the
selected attribute (β
)by the coefficient associated with price (β
), which is expressed as
WTP ¼  bj
bprice [40] [41] [42] [43]. However, as previously mentioned in the introduction, the
utility function is nonlinear in some cases; this occurs mainly in cases where the product is rel-
atively new for consumers. The utility function can therefore be represented by an inverted U-
shaped parabola. For a certain price range, utility increases with price (which is used by con-
sumers as a proxy for quality) up to a price threshold at which the utility function changes to a
negative slope. The Price Threshold (P
)can be calculated by deriving the nonlinear util-
ity function with respect to price [21]:
where Xrepresents the product attributes except price, β
is the price coefficient in the utility
function, and bp2is the coefficient of price squared. If β
>0and bp2<0, the indirect utility
function becomes parabolic. The P
is obtained by equalizing expression (7) to zero:
Pthreshold ¼  bp
The indirect utility function is maximized at the P
. The utility function has a positive
slope in relation to price when price is lower than P
; however, it is positive when price is
higher than P
. In this model, WTP for each attribute was calculated for both regimes of
the utility function.
Empirical application
The sample
To achieve the study objectives, a survey was specifically designed and applied to a representa-
tive sample of the population in the Biobı
´o Region, which is the second most populated region
of Chile (the survey was approved by the Ethics Committee at the University of Bı
´o and
did not contain any identification information) (S1 File). Survey respondents were responsible
for household purchases and declared having bought extra virgin olive oil at least once during
the last three months. A total of 221 valid responses was obtained. The sample was stratified by
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 4 / 13
gender, age, and residential area. The information needed to stratify the sample was obtained
from the Chilean Instituto Nacional de Estadı
´sticas [44]. Respondents were recruited outside
the main mall at the center of the town as well as outside the five more important supermar-
kets. A letter of consent was signed by each participant before starting the survey and after
checking their sociodemographic characteristics to guarantee representativeness (S2 File).
The survey included three sections. The first section characterized consumer olive oil shop-
ping behavior as well as consumption habits. The second section addressed the CE from which
survey respondents had to select the alternative in each choice set that was closest to their real
behavior. In order to reduce the potential hypothetical bias, a specific cheap talk was intro-
duced to remind the respondents that choices have to be made taking into account what they
really buy and not what they would prefer buying. The last section included socio-demo-
graphic information about the survey respondents (lifestyle, marital status, education, type of
occupation, and income). The field work took place between January and March 2012.
Choice experiment design
The final set of attributes and levels in the CE was based on both the literature review of similar
studies carried out in non-traditional producer countries and qualitative research based on the
observation of olive oil products available in different supermarkets throughout the Biobı
Region. Most of the attributes used in previous studies are only applicable in traditional mar-
kets. Attributes such as color, texture, taste, or odor cannot be considered in Chile because
consumers are not sufficiently familiarized with this product. Furthermore, both producers
and retailers only include the minimum label information required by the authorities. In stud-
ies conducted in emergent markets, attributes and attribute levels have been defined by taking
into account the specific location where the study has been carried out. In this framework, two
focus groups were also conducted; each group included eight extra virgin olive oil consumers.
The final set of attributes and attribute levels are shown in Table 1.
Combining attributes and attribute levels resulted in a full factorial design of 162 hypotheti-
cal product combinations or choice sets. Facing respondents with 162 choice sets could place a
high level of cognitive burden on them. To reduce the number of combinations that partici-
pants have to evaluate, we followed [45] and we generated an orthogonal fractional factorial
design in which a random block was also introduced [46], resulting in 27 hypothetical combi-
nations. These 27 combinations were considered as the first option in each choice set. Since
participants were provided with choice sets of 3 options each (plus a no-choice option), the
other two options were obtained using the generators (1, 1, 2, 3) and (2, 2, 1, 4) [45]. This
resulted in a 100% efficient main-effects design. The 27 hypothetical product combinations
were equally divided into three blocks of nine cards (choice sets). Each block was randomly
assigned to one third of the respondents. Fig 1 shows one of the choice sets offered to
Table 1. Attributes and attribute levels for each extra virgin olive oil.
1 2 3 4 5 6
Country of origin Chile Spain Italy
Type of container Glass Plastic Metal
Container size 250 mL 500 mL 1000 mL
Price (CLP) $1900 $2500 $3000 $4100 $5100 $6100
CLP: Chilean peso (1 = CLP $650 on average during the field work)
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 5 / 13
Given that extra virgin olive oil is a relatively new product in Chile, the sample was divided
into two main segments based on their expertise in olive oil. Expertise was estimated by con-
sumption frequency. Thus, the two segments were self-identified in the survey as regular and
occasional extra virgin olive oil consumers. Two types of models were estimated for each mar-
ket segment. The first considered a linear utility function while the second assumed a qua-
dratic function with respect to price.
Parameter estimates from both models are shown in Table 2 (S3 File). It was assumed in
both models that parameters associated with attribute origin, container size, and type of con-
tainer were normally distributed. The normal distribution is suitable for the purpose of this
Fig 1. Example of choice card.
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 6 / 13
study because no a priori assumptions have been made about their sign. Parameters associated
to price have been specified as being fixed.
Results indicate (Table 2) that in both models the no-option coefficient is not significant,
indicating that frequently respondents have chosen the option “none of them”. This result is
Table 2. Random parameter logit estimates for the linear and nonlinear models
Estimated Coefficients Standard Deviation
Variable Linear Nonlinear Linear Nonlinear
No-option 27.6224 33.0725 - -
[0.02] [0.01] - -
Spain 1.2927*** 0.573*** 0.3395 -0.459
[7.00] [2.90] [1.13] [-0.96]
Chile 1.8141*** 1.359*** 1.4303 *** 1.011***
[7.05] [5.66] [5.40] [3.47]
Metal 0.1970 -0.473 2.1362*** 2.220***
[0.72] [-1.61] [7.57] [7.86]
Glass 2.9498*** 2.715*** 1.7681*** 2.008***
[9.67] [8.15] [7.57] [7.87]
500 mL 0.8530*** 0.613*** 0.3115 0.538***
[5.86] [4.11] [0.98] [2.33]
1000 mL 0.9564*** 0.655 1.7260*** 1.605***
[4.20] [2.97] [7.24] [5.56]
Price -0.004 1.551*** - -
[-0.13] [7.96] - -
- -0.219*** - -
- [-8.30] - -
-0.1749 -0.353 -1.2819*** 0.763
[-0.43] [-0.92] [3.20] [1.11]
0.986*0.307 0.4857 1.500**
[1.94] [0.65] [1.00] [2.41]
0.2896 0.469 0.4954 -1.131
[0.65] [0.82] [-0.17] [-1.33]
0.6769 0.778 2.027*** 1.369**
[1.32] [1.4] [-4.51] [2.49]
500 mL
0.3084 0.281 0.5748*-0.373
[1.11] [0.96] [1.71] [-0.96]
1000 mL
0.9908** 0.727 -0.5294 ** 2.142***
[2.30] [1.54] [-1.92] [3.27]
-0.1137** 0.293 -
[-2.01] [0.78] -
- -0.053 -
- [-1.05] -
Log likelihood [χ
] -1120.413 [214.93] -1050.03 [216.42]
AIC/BIC 2294.83 / 2473.75 2158.06 / 2350.24
N 5580 5580
*p<0.1; **p<0.05; ***p<0.01.
t ratios in square brackets.
Each model consisted of 1000 random samples, the positive value must be interpreted.
Base categories are Italy, plastic and 250 mL for each attribute level.
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 7 / 13
consistent in an emerging market in which consumers are still not very acknowledgeable
about extra virgin olive oil characteristics. In the linear model, the price parameter is negative
but nonsignificant, making it impossible to calculate the Chilean consumer’s WTP for extra
virgin olive oil attributes based on the expression shown in section 2. In the nonlinear model,
price coefficients are significant at the 1% significance level. The parameter associated to price
is positive while it is negative for price
(squared) indicating that the utility function is repre-
sented by an inverted U-shaped parabola. Consumer utility increases when price increases to a
certain threshold (CLP$3383 and CLP$3536 for regular and occasional consumers, respec-
tively, according to Eq 8) (Fig 2).
It is also interesting to note that in all cases, except for the Spanish origin, standard devia-
tion parameters are positive, thus indicating preference heterogeneity in Chilean consumers in
relation to extra virgin olive oil and the adequacy of estimating the RPL model. Moreover, no
significant differences were found between occasional and regular consumers (all interaction
parameters in Table 2 are nonsignificant in the nonlinear model). Olive oil is still a relatively
unknown product in Chile although some segments show higher frequency and consumption
preferences for product attributes do not differ.
Attribute level parameters show that Chilean extra virgin olive oil consumers prefer domes-
tic olive oil over their Italian and Spanish counterparts. As for containers, glass and metal are
preferred over plastic (with no significant preference between these two materials) as well as
Fig 2. Relationship between utility and extra virgin olive oil price in Chile.
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 8 / 13
larger container size (the 1L container is preferred); this is consistent with Chilean extra virgin
olive oil in retail outlets that are normally in 500 mL or 1000 mL containers.
From the estimated parameters displayed in Table 2, we calculated WTP for the different
attribute levels. Given that utility is nonlinear with respect to price, we cannot use the tradi-
tional expression to calculate WTP values because the slope is not constant. The quadratic
function allows us to differentiate between two different regimes as shown in Fig 2. The first
goes from zero to the threshold price (CLP$3383 and CLP$3536, for regular and occasional
consumers, respectively), exhibiting a positive slope while the second occurs after the threshold
price. In this regime, the slope is negative and utility decreases up to zero, and the price is CLP
$6766 and CLP$7073 for regular and occasional consumers, respectively. From this point on,
utility is negative.
Given this function, WTP was calculated for each regime using the same expression found
in the linear model but substituting the price coefficient by the corresponding slope in each
regime [26] (Fig 3). For lower prices, results indicate that the utility function of Chilean con-
sumers increases with olive oil from Italy and Spain and packaged in plastic or metal and
smaller-sized containers. However, when the price is higher than CLP$3500, their utility func-
tion increases with domestically produced olive oil packaged in 1L glass containers. When the
price is not very high, this attribute is taken as a proxy for quality and consumers place more
value on the foreign product. However, when the price is higher, the Chilean attribute becomes
relevant because the price for domestic extra virgin olive oils is lower.
The present study constitutes the first attempt to calculate the Chilean consumer’s willingness
to pay for extra virgin olive oil attributes. Olive oil is still a new product in Chile in spite of sig-
nificant growth rates of both domestic production and consumption. Chilean consumers are
not very knowledgeable about olive oil attributes and may use price as a proxy for quality.
Under such circumstances, the utility function cannot be linear with respect to price. In the
case of the Chilean olive oil market, results suggest that the utility function can be represented
by an inverted U-shaped parabola. Utility increases when price increases up to a threshold and
then decreases. The threshold was set at CLP$3383 and CLP$3536 for regular and occasional
olive oil consumers, respectively. Results also suggest the existence of preference heterogeneity
among Chilean consumers, as most of the estimates of the standard deviations were significant
Fig 3. Willingness to pay (WTP) for positive and negative slope utility
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 9 / 13
suggesting that a model that accounts for such heterogeneity, such as the RPL, is adequate for
the purpose of the present study.
As for the assessment of different product attributes, there is a systematic consumer prefer-
ence for olive oil that is produced locally and presented in larger glass containers, which is con-
sistent with the existing range of products in Chilean retail stores. Similar results were also
found in a non-traditional olive oil market (the British market) by [35]. Nonsignificant differ-
ences were found between regular and occasional consumers.
The concavity of the utility function allowed us to differentiate between two regimes. In the
first regime, olive oil behaves as a conspicuous good, that is, higher utility is assigned to higher
prices and consumers prefer foreign products in smaller containers. Under the second regime,
Chilean olive oil in larger containers is preferred.
The role of the price attribute as a proxy for quality has been extensively studied [47] [48]
[49] [50]. For specific studies in food, we can mention [51] [52] or [53] among others. Empiri-
cal evidence usually suggests that the price/quality inference made by the consumer becomes a
strong predictor of consumer behavior when the individual has limited information, but this
factor becomes less relevant when more information about the intrinsic aspects of the product
is available [50]. In non-traditional markets, such as Germany [54] and England [35], price is
also a relevant variable when buying the product.
The preference for Chilean extra virgin olive oil is a result that deserves further attention
because of its important policy implications. The government should focus on supporting
domestic producers in addition to informing the population about the benefits derived from a
more frequent consumption of the product. Efforts in recent years have been directed to pro-
moting exports although the domestic market has important growth opportunities.
Supporting information
S1 File. Questionnaire.
S2 File. Survey technical information.
S3 File. Choice olive oil dataset.
Author Contributions
Conceptualization: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
Manuel Garrido-Henrrı
´quez, Jose
´a Gil.
Data curation: He
´ctor Manuel Garrido-Henrrı
´quez, Jose
´a Gil.
Formal analysis: He
´ctor Manuel Garrido-Henrrı
´quez, Jose
´a Gil.
Funding acquisition: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje.
Investigation: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
´ctor Manuel
´quez, Jose
´a Gil.
Methodology: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
´ctor Manuel
´quez, Jose
´a Gil.
Project administration: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje.
Heterogeneity consumers’ preferences in olive oil shopping behavior in Chile
PLOS ONE | September 11, 2017 10 / 13
Resources: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
´ctor Manuel
Supervision: Jose
´a Gil.
Validation: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
´ctor Manuel
´quez, Jose
´a Gil.
Visualization: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
´ctor Manuel
´quez, Jose
´a Gil.
Writing – original draft: Rodrigo Alejandro Romo-Muñoz, Juan Herna
´n Cabas-Monje, He
tor Manuel Garrido-Henrrı
´quez, Jose
´a Gil.
Writing – review & editing: Rodrigo Alejandro Romo-Muñoz, Jose
´a Gil.
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... However, COO has relatively small importance compared to other attributes. Although previous studies have found that COO is a crucial factor (e.g., references [4,[61][62][63][64][65]), other research has shown that COO was not among the main cues used by consumers when making purchasing decisions [40]. Recently, Tempesta and Vechiatto [41] found that, when a product that is considered to be of high quality is obtained in another region, the preference for the area of residence may be negated. ...
... Krystallis and Ness [62] found that geographical indications for olive oil are relevant cues for several consumer segments in Greece. Romo-Muñoz et al. [65] found that Chilean EVOO consumers prefer domestic olive oil over their Italian and Spanish counterparts. In a study by Al Ganideh and Good [72], consumers from Jordan, a developing nation, perceived their local olive oil to be better and of higher quality than olive oil sourced from developed countries such as Italy and Spain. ...
... In the case of the olive sector, the empirical applications of CE are limited. Romo-Muñoz et al. [65] identified 78 studies that focus on olive oil consumer preferences, with a smaller number of studies including CE as a study variable (e.g., references [72,86,90]). In the case of Spain, some studies have focused on the concept of consumer ethnocentrism in products such as wine [6,91] or ethnic food [92,93], but very few studies have applied this to olive oil [94]. ...
Full-text available
This study is framed within the concept of sustainability of local foods such as extra virgin olive oil (EVOO) and considers the effects of country of origin (COO) and ethnocentrism as relevant factors in decision making about product choice. Our work contributes to the literature regarding the food industry with the main objective of investigating how consumer ethnocentrism may affect not only behavioral intention but also the perception of the quality of the EVOO. The authors of the present paper developed this line of research via a review of the existing literature, leading to the elaboration of the conceptual model proposed in this paper. The research was developed through a laboratory experiment and the modeling of consumer behavior, raising a series of hypotheses, which were contrasted following the different analyses conducted on the data. Results were obtained on factors such as the differences in evaluation according to label type, the effect of ethnocentrism on perception and purchase intention, and structural knowledge of the weight of the different variables that influence this decision making. Several guidelines and conclusions are derived from these results, which refer to the use of COO information as well as the satisfaction of consumer ethnocentrism. Understanding the role played by consumer ethnocentrism in the evaluation of food products in accordance with their origin may yield useful information for local food producers.
... Price is a significant factor in purchasing decisions and is among the extrinsic attributes that have the greatest impact on willingness to buy [76]. Previous studies show that the consumer considers price an important quality index [77]. Ballco et al. [78] examined the willingness to pay for extra virgin olive oil, finding that price is the most influential extrinsic attribute in the purchase decision [79][80][81] followed by the origin and the Protected Designation Origin (PDO) certification [82,83]. ...
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This study aims to examine Italian consumer preferences for extra virgin olive oil (EVOO) enriched with vitamins and to analyze the key drivers that affect consumer choices for this product. Specifically, we assessed consumers’ intention to purchase the enriched product compared to the conventional one. The methodology adopted inferential and multivariate statistical techniques: (1) exploratory factor analysis (EFA), (2) ordinary least squares regression (OLS) and (3) non-hierarchical clustering. This study appears to be the first research project related to exploring consumers’ interest in an extra virgin olive oil enhanced with vitamins, thereby providing preliminary indications. The main results represent a significant starting point for the development of new marketing strategies for the food industry.
... Furthermore, the economic crisis [42] and the incorporation of young people to the market [44] are new factors that have increased the importance of virgin olive oil price in the consumers' decisions. Thus, the main difference seems to be between normal consumers vs. well-informed consumers, as there is empirical evidence [45] about the role of price/quality factor as a strong predictor of consumer behavior, particularly when the consumer has limited information; it is less important when an intrinsic aspect of the oil (i.e., PDO) is available to consumers. Well-informed consumers are not always associated with producer countries, as a previous survey detected that approximately one-third of the respondents had the misconception that the refining process improves the intrinsic quality and makes olive oil purer [46]. ...
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A survey was launched to understand the current problems and sensitivities of the olive oil market through a series of questions clustered around topics related to quality, traceability, regulation, standard methods and other issues. The questions were selected after a series of interviews with different actors to identify those aspects where some disagreement or different points of view may exist. These questions were grouped in topics such as geographical traceability, consumer perception and quality management. The survey was addressed to eight different olive oil actors independently: producers, retailers, importers, exporters, analysts, workers at regulatory bodies, and consumers. Approximately half of the respondents (67.0% for consumers and 56.0% for the rest of olive oil actors) claimed to understand the importance of the protected designation of origin. In fact, the traceability objectives that were selected as the most relevant were those related with geographical traceability (19.3%) followed by the detection of adulteration (15.6%). Most of the respondents (80%) would agree to share data for a common database; however, some concerns exist about the use of these data and the issue of paying to have access to this database. The respondents mostly expressed an affirmative answer concerning the efficiency of panel test (74%) and a negative answer (90%) concerning the proposal of removing from regulation, although 42% agree with their revision for improvement. The opinions on “best before” date and their relationship with quality and the willingness to apply non-targeted methods were also surveyed.
... Under such circumstances, the utility function can be non-negative for a specific price range and generate an inverted U-shaped function. According to [8], the EVOO market in Chile is a good example. Therefore, minimal and maximal prices can significantly deviate, hitting consumer surplus. ...
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The objective of this study was to analyse the impact of positive externalities of international tourism demand on increasing the market power (MP) of an extra virgin olive oil (EVOO) wholesaler in Croatia. In the context of this article, the MP measures how close the wholesaler can set the actual price of EVOO to the maximum the retailer wants to pay. Our hypothesis explained how the additional demand of tourist consumers for EVOO could stimulate and increase the MP of the wholesalers. Here, it was important to remember that the EVOO market signals relatively asymmetric quality information about products that varies in certain ranges. The selected time-series span the weekly period from 2017 to 2019. We used the Toda-Yamamoto approaches of causality in the relationship between the EVOO price gap and tourism overnights, as well as the autoregressive distributed lag model (ARDL) bounds test for cointegration. For larger EVOO bottles (0,75 l and 1 l), there is unidirectional causality flowing from tourism consumption, which we presume originates from the tourism demand variable, to MP. There is a relevant bidirectional causality in the case of the 0,25 l bottle. Tourism in a purchased bottle of 0,5 l does not manifest any side-effect impact on MP. This pioneering study has investigated the relationship between the MP of EVOO wholesalers in Croatia and tourist demand. An inventive view has been adopted with regard to the theoretical concept of measuring MP, but also due to the steps towards the use of ARDL bound testing.
... Therefore, growers can increase their market share by adopting a local producer identity. This is not a novelty: in fact, respondents often consider a local producer identity as a realistic and reliable quality clue [70]. The development of a sustainable food system is accompanied by local sustainable development policies that take into account different aspects of sustainability [71]. ...
Full-text available
Background: According to Mexican growers of 'Jalapeño' peppers, its commercialization is the primary limitation. Thus, consumer knowledge is critical to develop added-value strategies. The objective of this study was to identify 'Jalapeño' quality attributes to determine consumer preferences and willingness to pay, based on socioeconomic characteristics. Methods: A nationwide face-to-face survey was carried out using the discrete choice experiment method. The survey included 1200 consumers stratified by gender, age and region. Results: Heterogeneity analysis using the probabilistic segmentation model revealed three types of consumers: A price-sensitive segment, non-demanding consumers without specific preferences and selective consumers with a preference shifted toward specific 'Jalapeño' characteristics. Thus, detail-oriented producers must compete through price strategies, based on the marketplace (markets on wheels, grocery stores, or supermarkets) and through some quality attributes preferred by selective consumers. Therefore, results suggest that farmers should grow the correct varieties with appropriate agronomic management to cope consumer preferences. Conclusions: This paper contributes to the growing body of the 'Jalapeño' literature by explicitly investigating consumer preferences and willingness to pay for them.
... Therefore, in order to analyze the market segmentation as well as to assess consumer preferences and the WTP for fresh egg attributes in this study, the Random Utility Theory (RUT) is adopted to describe the consumer utility of product attributes [64][65][66][67]. In addition, the RUT can play a crucial role in supporting the CE model based on the fundamental principles of economic theory [53,68]. ...
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Eggs are the crucial component of daily meals for almost everyone in Taiwan, while the multi-attributes of fresh egg products generate the challenges of marketing and promotions in supermarkets. This study analyzes the market segmentation and consumer willingness-to-pay (WTP) for fresh egg attributes (i.e., color, traceability, animal welfare, brand, and price). In particular, the effect of the unrealistic choice set is considered in this study. The data collection was distributed near markets, schools, and train stations across Taiwan from July to September in 2020. A total of 1115 valid responses were collected, and the Latent Class Model was used. Results show that fresh egg products in supermarkets reveal a strong preference for animal welfare label with the highest WTP, which is about 64.2 NT$ (≈US$ 2.29). Furthermore, traceability label, farm brand, and brown-color egg still exhibit positive WTP of about 33.4 NT$ (≈US$ 1.19), 32.6 NT$ (≈US$ 1.16), and 32.5 NT$ (≈US$ 1.16) in supermarkets, respectively. However, including the unrealistic choice set can potentially alter the final outcomes, and it provides a good example for researchers who may have the same situation. This research helps to know more about the complexity of attributes for fresh egg products in supermarkets, so marketers would be able to adopt the effective marketing strategies for fresh egg products in supermarkets.
... Those results confirm that consumers from non-producing countries rely on the country's image in their olive oil purchase decision which is linked to its history, geography, artistic heritage, famous people and other characteristics [35]. Furthermore, Romo-Muñoz [86] analyzed Chilean consumers' preferences and willingness to pay for extra virgin olive oil attributes. The authors found out that these consumers valued more foreign olive oils since olive oil was considered a new product in Chile despite significant increasing rates of the domestic production and consumption. ...
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Citation: Erraach, Y.; Jaafer, F.; Radić, I.; Donner, M. Sustainability Labels on Olive Oil: A Review on Consumer Attitudes and Behavior. Sustainability 2021, 13, 12310. https://doi. Abstract: Product labeling is a way to inform consumers and increase their awareness about sustainability attributes of products. It guarantees the use of specific production conditions, promotes market incentives and highlights environmental, social and/or ethical product attributes. This study provides a literature review of sustainability labels on olive oil including consumer attitudes and behavior towards this product. Results show that consumers have positive attitudes towards olive oil carrying sustainability labels and are willing to pay more for olive oil carrying those labels. However, the major drivers of this behavior are far from being related to sustainability. This insight jeopardizes the main objective of those labels and suggests more clarifications about the information delivered by them. More in-depth investigations are needed about the drivers of consumer behavior towards olive oil carrying sustainability labels.
... De igual forma, el tamaño del envase tampoco se incorporó en la especificación final del modelo de elección, al igual que apuntan otros estudios (Matsatsinis et al., 2007), si bien en otros casos sí resulta significativa esta variable (Di Vita et al., 2013;Romo-Muñoz et al., 2017). ...
... The results of the LCM segmentation suggest the presence of a consumer segment who is positively impacted by the price coefficient. This is not a novelty: in fact, according to Romo-Muñoz et al. [98], respondents often consider price as a realistic and reliable quality clue. ...
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The paper investigates Italian consumers’ behavior towards characteristics of extra virgin olive oil, in particular organic production methods and geographical origin. On the basis of the existing literature, the concepts of sustainability of food systems, diets, and the olive oil supply chain are analyzed. A choice experiment (CE), using a face-to-face questionnaire with over 1000 participants, was conducted to quantify the willingness to pay (WTP) for these two attributes. Findings show positive preference for origin attributes, while the organic attribute is not highly valued. The article also offers some perspectives on future research to improve the competitiveness and sustainability of the Italian olive oil supply chain.
European virgin olive oil with geographical indications are strictly regulated and are of importance for the producing member states, Spain, Italy, Greece, Portugal, France, Slovenia and Croatia. These products are consumed locally, or within the European Union but are also exported worldwide. The chapter stresses on the importance of combining origin indications with other certifications or opportunities raising from European legislation in the agri-food sector so that to tighten consumer loyalty for this category of products. Emphasis is given to the richness of virgin olive oil in bioactive compounds that are already covered by nutritional and health claims (oleic acid, vitamin E, “polyphenols”) and to those compounds that can be exploited in the future toward the same direction (squalene, oleanolic and maslinic acids).
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Meat is expensive to produce, making it is essential to understand the importance consumers pay to different meat cuts. Previous research on consumers' meat choices has mainly focused on meat species, while consumer preferences for meat cuts has so far only received limited interest. The aim of this study is to shed some light into this relatively unexplored area by answering four research questions. First, this study intends to show the relative importance meat cuts play in relation to other extrinsic product attributes. Secondly, this paper looks into differences in choice criteria between regular and special occasions. Third, consumer segments that differ in their preferences and beef purchase are identified, and, finally, the meat purchase portfolios of these segments are revealed. A stated preference methodology of a discrete choice experiment with cut-specific prices covering several meat cuts simultaneously is proposed to answer the research questions. The sample consists of 1,500 respondents representative of the Italian population in terms of age, gender and geographic location The results shows that meat cut is the most important factor when choosing bovine meat followed by quality certification (origin), production technique, the type of breed and price. In terms of consumption occasions, we observe significantly lower price sensitivity for marbled steaks and cutlets for special occasions compared to normal occasions. Segmentation analysis shows that while the choices of two segments (comprising about 40% of the sample) are mostly driven by extrinsic product attributes, the remaining segments are mostly driven by meat cuts. These varying preferences are also reflected in the purchase portfolios of the different segments, while less variability is detected from a socio-demographic perspective.
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The literature on food economics has extensively analyzed consumer preferences for extra-virgin olive oil attributes. In order to summarize and systematize the information gained in recent years, it seems appropriate to make a critique of the existing literature. First, we carry out a narrative systematic review of the literature on the topic. Subsequently, using only the empirical contributions which provide estimates of consumer willingness to pay for quality attributes including a measure of the goodness of the estimation (20 papers with 78 estimates), a meta-analysis was conducted to synthesize the empirical results obtained.
The aim of this paper is to investigate the role of psychological factors on building the consumer’s behavioural decision process towards extra virgin olive oil, with special attention paid to the organic attribute. The paper hypothesises that differences in consumers’ personality traits, such as food-related personality traits, purchasing habits and lifestyles, affect consumers’ preferences for extra virgin olive oil. The methodological framework is based on the specification of an extended hybrid choice model (HCM), which was estimated following a two-step procedure. In the first step, a structural equation model was estimated to test for hierarchical relationships between latent variables to explain purchasing intentions towards an organic olive oil. In the second step, the predicted latent variables were introduced in a random parameter logit (RPL) model to investigate the main determinants of consumers’ choices related to extra virgin olive oil and the specific role of the organic attribute. The results from this study reinforce the need to include the psychological characteristics of consumers, such as attitudes, food-related personality traits, purchase habits and lifestyle orientation, to better explain how individuals make food choices and to better understand the decision maker’s process. Interestingly, Catalan consumers perceive a disutility from the organic attribute compared to other production system alternatives (conventional and PDO), while subjective norms and a higher perception of behavioural control only partially mitigate this effect. Environmental or health concerns seem to not be relevant to consumers’ choices related to olive oil as the conventional olive oil is already perceived as a healthy product per se.
The relationship between price and objective quality is important for consumers who perceive that high prices signal high quality. Several studies in the past have attempted to measure the relationship. This study focuses on brands of food products in a variety of categories in an attempt to measure the correlation between price and quality, and to report the outcomes if the highest and lowest priced brand in category are selected. This study also considers the findings of earlier food product studies, as well as earlier studies of non-food products.
Even though sustainability has become an omnipresent mega-trend, very little related research has been done in Europe. The objective of the present paper is to discover consumers' perceptions concerning sustainably produced bananas. To this end, 316 German consumers participated in a discrete choice experiment and filled in a questionnaire. The results confirm that trust in the standard setter plays a particularly important role for the success of a label. Generally there is need for further simplification and information. © 2014 International Food and Agribusiness Management Association (IFAMA).
The paper presents some results from a stated-preference study that compares three samples of urban consumers of extra-virgin olive oil from three representative Italian cities: Naples (South), Rome (Centre) and Milan (North). A series of multinomial logit models are estimated from choice experiments responses and tested for unobserved heterogeneity for EU labelling informing on PDO/PGI, organic and place of origin attributes. The consequences of such form of heterogeneity are flashed out with respect to issues of market segmentation on the basis of the pattern of correlation across preferences as estimated from mixed logit models. Results indicate that product origin matters differently in different cities, while the sample from Naples is the least heterogeneous the Milan and Rome samples display highest taste heterogeneity, but also stronger intensity of taste.
The dairy industry, and along with it the milk collection system, are still in the course of modernizing structures and technologies in Albania. As milk is a very important component of the Albanians diet, this study explores consumer preferences for milk in Albania and also tries to determine consumer types based on their preferences and socio-demographic factors. The objective of this study was to inform stakeholders in the milk industry about consumer preferences, so that they can focus their final product towards a specific market share. A Conjoint Choice Experiment (CCE) survey was designed and primary data were collected in the most populated cities of Albania. Then the data were analyzed using latent class approach to determine milk consumer classes based on the product attributes. Conjoint choice experiment with latent class analysis indicates that the most important attribute for Albania consumer is fat level and Albanian consumers prefer fresh milk towards UHT milk. Also four consumer groups, 9.2, 28.1, 42.6 and 20.1%, were identified with their specific characteristics for each group. This study provides useful information to different stakeholders including milk producers and importers. The milk industry and its marketers may benefit from this information by using it to strategically market their milk to different groups. Enforcement of origin identification should be a priority for the government and other stakeholders, while producers should consider introducing and promoting their own brands such as producer associations' brands.
In some, but not all, contexts, respondents to stated preference valuation studies state a willingness to pay (WTP) higher than what lab or field experiments indicate is the actual amount they would pay. However, several ex ante survey design strategies and ex post calibration techniques can be used to minimize or eliminate hypothetical bias. This article reviews and presents evidence on the effectiveness of these ex ante and ex post approaches. The ex ante approaches lead to recommendations to modify survey designs to minimize the bias up front. If the analyst desires, ex post calibration of WTP using certainty scales can be used to reduce stated WTP to the point at which it will match actual cash contributions.
A survey was conducted among 1489 consumers in seven pilot cities designated by the Chinese Ministry of Commerce for constructing a meat circulation traceability system. This study set four attributes for pork: traceability information, quality certification, appearance, and price. The preferences and willingness to pay (WTP) of consumers for traceability information, quality certification, appearance attributes, and influencing factors were investigated using choice experiments. According to results from both mixed logit and latent class models, quality certification was the most important characteristic, followed by appearance, and traceability information. "Government certification," "very fresh-looking," and "traceability information covering farming, slaughter and processing, circulation and marketing" were the most preferred levels of quality certification, appearance, and traceability information, respectively. Significant heterogeneity was observed in the consumer preferences for these attributes. The preferences and WTP of consumers for traceability information and quality certification were significantly influenced by age, monthly family income, and education level.
At present, electricity generated from power plants using renewable sources costs more than electricity generated from power plants using conventional fuels. Consumers bear these expenses directly or indirectly through higher prices for renewable energy or taxes. The number of studies published over the last few years focusing on people’s preferences for renewables has increased steadily, making it more and more difficult to identify key explanatory factors that determine people’s willingness-to-pay (WTP) for renewables. We present results of a meta-regression on valuation of consumer preferences for a larger share of renewable energy in their electricity mix. Our meta-regression results reveal a number of important factors that explain the differences in WTP values for renewable energy. Different valuation methods show widely different values, with choice experiments producing the highest estimates. Our results further indicate that consumers’ WTP for green electricity differs by source, with hydropower being the least valued. Variables that are often omitted from primary valuation studies are important in explaining differences in values. These variables describe individual and household characteristics as well as information on the type of power plant that will be replaced by renewables. Further, the marginal effect of a survey conducted in the US is pronounced. We also assess the potential for using the results for out-of-sample value transfer and find a median error of 21%.