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The effects of organic labels on global, local, and private brands
Journal of Business Research 66 (2013) 1035–1043
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Journal of Business Research
The effects of organic labels on global, local, and private brands More hype than substance? Hans H. Bauer a, Daniel Heinrich a,⁎, Daniela B. Schäfer b a b
Department of Marketing II, University of Mannheim, Germany Department of Marketing and Management, University of Basel, Switzerland
a r t i c l e
i n f o
Article history: Received 1 April 2010 Received in revised form 1 October 2011 Accepted 1 December 2011 Available online 4 January 2012 Keywords: Brand differentiation Organic label Consumer behavior Global brand Local brand Private brand
a b s t r a c t With an ever-expanding market for diversified health food products, marketers can formulate a unique selling proposition by differentiating their brands using organic labels issued by an independent accredited institution for organic product testing. Using in-depth interviews, we verify four main purchasing motives for organic food in Germany: healthiness, hedonism, environmental friendliness, and food safety. Moreover, in two experiments, we show that the use of an organic label affects consumers' perceptions of global, local, and private brands with regard to their main purchasing motives. The positive effects of organic labeling are also supported for consumers' purchase intentions and their willingness to pay a price premium. Notably, private brands are more adept at profiteering from the use of organic labels than global and local brands. © 2011 Elsevier Inc. All rights reserved.
1. Introduction Over the last decade, the global organic food sector has grown substantially within a fairly static total food market (Baker, Thompson, Engelken, & Huntley, 2004). Many countries show annual growth rates of the organic food industry of up to 30% (Krystallis & Chryssochoidis, 2005). From being a niche market, the organic food sector has entered the mainstream, having rapidly gained more and more market share. Many companies are therefore trying to jump on the bandwagon, as they recognize the potential of standing out from the crowd by offering organic food. Organic food products are usually symbolized by an organic certification issued by an independent accredited institution for organic product testing (in the following, also termed as an organic label). In spite of the growing relevance of distinguishing brands by organic labels, research efforts have yet to focus on this differentiation approach. Prior studies in the context of organic food mainly deal with identifying the ‘organic consumer’, analyzing the reasons why consumers fail to purchase organic food, or they investigate purchase motives (Hughner, McDonagh, Prothero, Shultz, & Stanton, 2007). These studies deal with organic products in general and do not focus on products certified by an independent accredited institution for organic product testing.
⁎ Corresponding author. Tel.: + 49 621 1811547; fax: + 49 621 1811571. E-mail address: [email protected] (D. Heinrich). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.12.028
Moreover, Ngobo (2011) highlights the relevance of comparing and contrasting the use of the organic label across different brand types (p. 92): “If the consumer decides to buy an organic product, then s/he must decide which organic brand to choose.” The author finds that consumers are more likely to buy organically produced private brands compared to organically produced local brands. Nevertheless, his study is only a first step in investigating the research topic of organic food and branding, as it (1) does not distinguish between food that is organically produced and organic food that is actually certified by an independent accredited institute for organic product testing; (2) only investigates the actual purchase, and therefore neglects the issue of price premium acceptance, and does not investigate whether brand perception changes when the brand is certified as organic; and (3) does not include further brand types such as global brands. To extend his findings, he calls for more research that focuses particularly on organic labeling in combination with branding. Another literature stream investigates the relationship between other labels in addition to organic ones – such as fair-trade labels – and branding. As few studies deal with this topic, more research is also needed here. De Pelsmacker, Driesen, and Rayp (2005) investigate manufacturers' and private brands and show that, from the consumers' perspective, the brand is the most important attribute of the coffee, followed by the coffee's flavor and the fair-trade label. Thus, while both the brand and the fair-trade label are important when buying coffee, the brand is most important. In contrast to this result, De Pelsmacker, Janssens, Sterckx, and Mielants (2005), in their comparative research on manufacturers' and private brand coffees, show
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that the type of brand is of relatively minor importance. More precisely, their results highlight that ethical labels are more effective when used for manufacturers' brands than for private brands. These study results confirm the need to investigate organic labels at the level of brand-type and call for further research in this domain (De Pelsmacker, Janssens, Sterckx, & Mielants, 2005). In sum, no studies yet exist that assess the impact of organic certification issued by an independent accredited institution of organic product testing on different brand types. The current study contributes to this nascent research gap and responds to the stated calls for more research by looking at organic labels as a brand differentiation strategy. The study discerns whether an organic labeled product generates positive consumer brand perceptions and thus influences consumers' food buying intentions. In addition, it is necessary to assess whether various types of brands benefit differently from organic labeling in the retail market. In order to achieve this, the following research objectives are outlined: (1) Verify the main purchasing motives for organic food in Germany. (2) Investigate consumers' perceptions of global, local, and private brands bearing an organic label. (3) Analyze whether an organic label influences the predictors of brand purchase intention regarding global, local, and private brands. Therefore, our study fundamentally differs from the prior studies by (1) explicitly focusing on an organic label issued by an accredited institution; (2) combining branding and organic labeling and investigating whether an organic label is a successful differentiation strategy for different brand types, namely global, local, and private brands; and (3) taking the complete set of main purchasing motives of organic food in Germany as well as relevant variables of intended behavior into account. Three studies are carried out. In order to assess consumers' perceptions of brands bearing an organic label, it is necessary to examine the relevant perception variables that reflect the key drivers of organic food consumption in Germany, where our study is conducted. This leads to the research objective of study 1, in which in-depth interviews are used to identify the main drivers for organic food purchasing decisions in a German market environment. Based on these results, an experimental study (study 2) is carried out to test how the use of an organic label affects the perceptions of global, local, and private brands concerning the key motivational drivers of organic food purchasing behavior. More precisely, we investigate whether an organic label affects the perceptions of healthiness, hedonism, environmental friendliness, and food safety for global, local, and private brands. Finally, the effect of organic labels on brand-related outcome variables (study 3), namely consumers' purchase intentions and their willingness to pay a price premium, is examined. The results yield implications for marketing practitioners and suggestions for future academic research.
human health are also important buying motives (e.g., Hill & Lynchehaun, 2002). Furthermore, doubts about the safety of food motivate consumers to buy organically produced food (e.g., Soler, Gil, & Sanchez, 2002). Other research suggests that people buy organic food, because they are convinced it supports the local economy or they have ethnocentric tendencies with regard to their food preferences (e.g., Fotopoulos & Krystallis, 2002). Finally, consumers buy organic food, because they perceive it as fashionable (e.g., Hill & Lynchehaun, 2002). In addition, prior research shows that organic food consumption differs between countries (e.g., Squires, Juric, & Cornwell, 2001). Therefore, it is necessary to determine which of the main organic-food purchasing motives identified by prior research are relevant for other countries, where research concerning organic food purchasing behavior is scarce, as in the case of Germany. This leads to the objective of our first study to identify the main purchasing motives of organic food in Germany. With this, we investigate whether the findings of prior work – conducted in countries besides Germany – can also be observed in a German market environment and whether they need to be extended for our testing conditions. This knowledge will extend the generalizability of the findings in a crosscultural context. We conduct qualitative in-depth interviews with twelve German consumers using the laddering technique. Laddering interviews are frequently used in market research and are employed in investigations to analyze organic food consumption (Fotopoulos, Krystallis, & Ness, 2003; Zanoli & Naspetti, 2002). The consumers are randomly selected, being either passers-by in the street or customers in specialist health food shops as well as supermarkets (see Padel & Foster, 2005, for this approach). This ensures that a variety of consumer types are represented. Half of the interviewed consumers are female and the average age is 39.5 years. Five of the interviewed consumers purchase organic food regularly. Seven are occasional consumers. All participants have some knowledge of the concept of organic food; e.g., not processed using pesticides. Participants were first asked to choose organic food attributes themselves and were then asked to rate the attributes on an importance scale (Reynolds & Gutmann, 1988). The general perception of organically grown and processed foods is positive in relation to the product. Based on the in-depth interviews, the main reasons for buying organic food are: (1) Organic food is considered to be more nutritious than non-organic food; (2) Organic farming is believed to be kinder to the environment; (3) There are fewer concerns about pesticide residue in food, because no chemicals are used in the farming process; (4) Organic foods are perceived as tasting better than conventional foods. These purchasing motives are positioned by all interviewed consumers within the first four ranks, although the order of priority differs within these purchasing motives. Rank five and lower were highly individual in depending on the consumer – for instance, some consumers named animal welfare and others named yearning for the past. Because the first four ranks were consistent for all consumers, we included these buying motives in our study 2.
2. Study 1: Verifying the main purchasing motives for organic food in Germany
3. Study 2: The impact of organic labels on brand perception
Prior research regarding the main drivers of why consumers purchase organic food may not be applied without verification. This is due to the fact, firstly, that many different purchasing motives have been identified in prior research; and, secondly, that Germany – where we conducted our study – is one of the countries in which research dealing with organic food purchasing behavior is of utmost importance but still in its beginnings. More precisely, prior research suggests that the perceived pleasure of organic food consumption is higher than that of conventional food (e.g., Ureña, Bernabéu, & Olmeda, 2008). Some studies identify environmental concerns as a purchase stimulus (e.g., Honkanen, Verplanken, & Olsen, 2006). Concerns about animal welfare and
The second study tests the effects of organic labels on global, local, and private brand perceptions concerning the identified main drivers for organic food purchasing decisions. Thus, the integrated variables constitute crucial indirect sources of brand strength in the context of organic food (Aaker, 1996). Because of the hot debate on the globalization of branding (e.g., Schuiling & Kapferer, 2004), global brands are chosen for this study. Global brands are important; however, the environmental costs of shipping food great distances might impact consumer perceptions of global organic brands. Furthermore, we take the trend of consuming locally produced products into consideration by including local brands into our study. Finally, as the market share of private brands within the retail market constantly rises, we
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also focus on this brand type. It is of interest whether organic labels might offer a promising differentiation strategy for global, local, and private brands. The study design allows us to analyze the effects of combining brand type and organic label on consumers' organic food purchasing motives.
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link branding and organic certification. Nevertheless, these studies hint at the following hypotheses: H3a/3b/3c. An organic labeled global (H3a)/local (H3b)/private (H3c) brand causes a higher degree of perceived environmental friendliness than the respective global/local/private brand without an organic label.
3.1. Perceived healthiness 3.4. Perceived food safety Perceived healthiness is defined as the consumers' perception of the influence that consuming a brand-name product has on their health (Howlett, Burton, Bates, & Huggins, 2009). A central advantage of organic food seems to be that consumers associate organic foods with a superior health benefit as compared to conventional foods. The product origin, formulated as ‘from organic farming’, affects the perception of further brand features, which can be explained by the halo-effect in terms of cognitive psychology (Han, 1989). Qualitative studies suggest that consumers believe organic food has health benefits surpassing non-organic food (e.g., Baker et al., 2004; Zanoli & Naspetti, 2002). Other quantitative studies indicate that health consciousness positively influences organic food consumption (e.g., Chryssochoidis, 2000; Tarkiainen & Sundqvist, 2009). This implies that officially certified organic brand-name products are perceived as healthier than conventional ones. We propose: H1a/1b/1c. An organic labeled global (H1a)/local (H1b)/private (H1c) brand causes a higher degree of perceived healthiness than the respective global/local/private brand without an organic label. 3.2. Perceived hedonism Brands promise hedonic value whenever they activate feelings like enjoyment, pleasure, and well-being (Babin, Darden, & Griffin, 1994). In the context of food brands, this means that brand-name products provide hedonism if they have an outstanding taste and offer a holistic enjoyment (purchase, cooking, and consumption experience). Tagbata and Sirieix (2008) prove that perceived hedonism is higher if the product is labeled ‘organic’. Premium brand-name products – such as organic products – offer exceptional perceived hedonism (Jonas & Roosen, 2005). Previous empirical work identifies flavor as a buying motive for organic food, as consumers perceive it as having a better taste than its non-organic counterpart (McEachern & McClean, 2002; Roddy, Cowan, & Hutchinson, 1994). Based on our definition, these results suggest a superior degree of perceived hedonism for organic labeled foods as compared to conventional foods. We hypothesize: H2a/2b/2c. An organic labeled global (H2a)/local (H2b)/private (H2c) brand causes a higher degree of perceived hedonism than the respective global/local/private brand without an organic label. 3.3. Perceived environmental friendliness A brand's perceived environmental friendliness is defined as the consumer's evaluation of the degree to which a brand causes negative environmental impact throughout its whole life-cycle (Töpfer, 1985). The relevance of this product feature is intensifying, because of the increasing importance of environmental values within consumer decision making (Brunk, 2010; Diamantopoulos, Schlegelmilch, Sinkovics, & Bohlem, 2003; Zimmer, Stafford, & Stafford, 1994). Rokeach's theory of values (Rokeach, 1969) provides the explanatory framework for the ecology-minded consumer. Studies demonstrate that the more environmentally concerned a person is, the more likely that person is to buy organic foods (e.g., Squires et al., 2001). Organic foods offer consumers an opportunity to improve the environmental situation, due to the low environmental impacts associated with organic food. Studies demonstrate that organically farmed products are associated with environmental friendliness (e.g., Stobbelaar et al., 2009), but they do not
No clear definition of the perceived food safety construct has yet been devised (Hughner et al., 2007). Within the current study, perceived food safety will be defined as the degree to which customers feel that the consumption of the brand-name product is harmless to human health, since it is free of synthetic chemical residues. Consumers' concern about food safety arises from the basic human need for security. Therefore, Maslow's theory of human motivation (Maslow, 1970) constitutes the explanatory framework. Organic farming guarantees that foods are free of chemical residues. Thus, and in terms of signaling theory, an organic label signals food safety to the consumers and provides brand avoidance (cf. Lee, Motion, & Conroy, 2008, for brand avoidance). This is confirmed by qualitative studies (e.g., Essoussi & Zahaf, 2008) which reveal that an organic labeled product is perceived as a safer alternative to conventional foods. Quantitative studies (e.g., Soler et al., 2002) show that the concern over food safety positively influences organic food purchase behavior. Transferring these insights to brands and organic labels, we hypothesize: H4a/4b/4c. An organic labeled global (H4a)/local (H4b)/private (H4c) brand causes a higher degree of perceived food safety than the respective global/local/private brand without an organic label. 3.5. Method and results 3.5.1. Experimental design and data collection An online experiment was carried out to test the proposed hypotheses concerning the impact of organic labels on the main buying motives for organic food. The questionnaire was successfully completed by 630 subjects. The age of the respondents ranged from 18 to 75 years and the average age is 43.9 years. The sample respondents consist of 54.3% females and 45.7% males. 39.5% of the respondents buy groceries in supermarkets, 24.1% in discounters, 26% in selfservice department stores, and 10.4% in specialist health food shops. The experiment simulates the consumer's confrontation either with a global, local, or private brand that differentiates itself from others owing to the addition of an organic label. In order to avoid the danger of the organic label being unreliable and inconsistent with the product category, cereals are used as the object of investigation. The choice of the brand representatives is made on the basis of their being similarly well established within the food market. In each case, one global, one local, and one private brand is chosen. The national organic label of Germany is selected as the organic label representative, because it has gained widespread popularity in Germany as well as in neighboring countries and embodies substantial credibility among consumers (Langer, Eisend, & Kuß, 2008). Our experimental design is based on six treatments: experimental group 1 (organic labeled global brand); experimental group 3 (organic labeled local brand); experimental group 5 (organic labeled private brand); control group 2 (global brand without an organic label); control group 4 (local brand without an organic label); and control group 6 (private brand without an organic label). In all treatment-groups subjects are presented with branded cereal packaging. Advertisements for the fictitious organically-farmed cereals are created and used as stimuli (Fig. 1). With the exception of the organic label and the type of brand, the visual and textual design is identical across all treatment groups. In experimental groups 1, 3, and 5 the product
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local brand
private brand
organic
non-organic
global brand
Fig. 1. Stimuli.
illustration contains a reference to the organic mode of production. The subjects in group 1 (n = 98) are confronted with a global brand, the subjects in group 3 (n = 108) with a local brand, and the subjects in group 5 (n = 105) with a private brand. The branded cereal packaging is presented without an organic label to group 2 (n = 106), group 4 (n = 107), and group 6 (n = 106). The organic label and the type of brand thus constitute the independent variables. The latent constructs are the dependent variables. We test the hypotheses in a between-subjects experiment with a 3 × 2 design. After a short introductory text and questions dealing with sociodemographics, all participants are randomly assigned to experimental and control groups, respectively. Afterwards, brand awareness is surveyed for the brand selection. Brand selection is carried out with an interactive filter. In the following, subjects are presented with the stimuli depending on the experimental group they belong to. Finally, subjects are forwarded to the last part of the questionnaire containing questions about the latent constructs. For measuring the perception of healthiness, hedonism, environmental friendliness, and food safety, scales are developed by drawing on the results of the in-depth interviews with consumers on the one hand, and by drawing on existing measurement scales on the other hand. 7-point Likert scales are used ranging from ‘strongly disagree’ to ‘strongly agree’. A pre-test is conducted to guarantee the internal and external consistency of the measurement instruments. Additionally, based on Cronbach's α and the item-to-total-correlation, scales are optimized. The final results indicate a good construct operationalization (Table 1).
3.5.2. Examination of the hypotheses Prior to the actual examination of the hypotheses, a manipulation check is conducted, which confirmed that the organic brand-name product is actually perceived as certified organic for the subjects of the treatment groups 1, 3, and 5. A second manipulation check is conducted to ensure that the type of brand is actually evaluated by test-
persons as global, local, or private for the subjects in the respective treatment groups. The U-test of Mann and Whitney for comparing independent samples (Hair, Anderson, Tatham, & Black, 1995) shows that the subjects within the treatment groups do not significantly differ from one
Table 1 Construct operationalization for perception variables. Factors
Items
FL
IR
AVE
α
Perceived healthiness
The consumption of […] enhances my health. I believe that […] enables me to live healthy. I am of the view that the consumption of […] has a health-promoting effect. […] and a health-conscious lifestyle match well. By consuming […] I can pamper myself. I can indulge myself by buying […]. The consumption of […] can affect my well-being positively. It is a pleasure to consume […]. The production of […] goes easy on resources. I am of the opinion that during the production of […] the environment is highly valued. […] is an environmentally friendly product. […] and environmentalism match well. I feel that […] is free of chemical residues. I am of the opinion that […] is not contaminated. […] ingredients are free of pesticides. I believe that […] features high food safety.
.93
.86
.83
.95
.94
.87
.90
.81
.88
.79
.92 .86 .88
.84 .74 .78
.77
.93
.86 .84
.73 .70
.81
.94
.94
.87
.96
.92
.86 .95 .96
.73 .89 .92
.84
.95
.93 .82
.86 .68
Perceived hedonism
Perceived environmental friendliness
Perceived food safety
Note: FL = factor loading; IR = indicator reliability; AVE = average variance extracted; α = Cronbach's alpha.
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043 mean
mean
Perceived Healthiness
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Perceived Environmental Friendliness
4.044
5.093
3.816 4.691 4.495
3.397
4.656
3.531 4.024 3.064
local brand
3.158
non-organic
local brand
2.370
global brand
global brand
private brand
private brand
non-organic
organic
organic
Fig. 2. Mean values of perceived healthiness.
Fig. 4. Mean values of perceived environmental friendliness.
another with regard to gender, age, and educational level. The examination of the correlation matrices (Pearson, Spearman, and KendallTau-b) reveals that strong correlations between the dependent variables exist. Bartlett's test of sphericity tests the null hypothesis asserting that the correlation matrix is an identity matrix. This null hypothesis can be rejected (p ≤ .001). The studies' hypotheses are tested with the help of MANOVA (multivariate analysis of variance). The observed data fulfill the requirements for applying MANOVA (Hair et al., 1995). Multivariate test statistics, namely Wilks' Lambda (F = 9.878; p ≤ .001) and Roy's Largest Root (F = 55.724; p ≤ .001), show highly significant results. Analysis of variance reveals a significant difference for all dependent variables. F-test statistics show that the group mean values do not turn out to be equal. This does not necessarily indicate that all mean values significantly differ from one group to another. In order to explore which mean value differences amongst the groups are statistically significant, a multiple comparison test with the Scheffé-test
is conducted. The results are found to be consistent across all the dependent variables with a significant (p ≤ .05) higher mean value for organic labeled brands. Thus, all postulated hypotheses concerning the main motivational drivers for organic food buying behavior are supported (Figs. 2 to 5; Table 2a). In addition, we analyze how consumers comparatively rate these organic brand types. We look again at the main purchasing motives for organic food. The Scheffé-test shows no significant (p > .1) differences between the three groups 1, 3, and 5 (Table 2b). Hence, the results suggest that from a consumer's point of view, it makes no difference whether the brand of the organic product is a global, local, or private one. In contrast, the results concerning the comparison of the non-organic brand types show that private brands are perceived significantly less favorably in terms of health benefits, hedonism, environmental friendliness, and food safety (p ≤ .05), while global and local non-organic brands do not show differences with regard to the main purchasing motives (p > .1; Table 2c).
mean
Perceived Food Safety
mean
Perceived Hedonism
4.850
3.822 3.721
4.600 3.192
3.619 4.136
4.398
3.073 3.859 local brand
2.458
private brand
non-organic
local brand
global brand
organic
Fig. 3. Mean values of perceived hedonism.
global brand
3.226
non-organic
private brand
organic
Fig. 5. Mean values of perceived food safety.
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Table 2a Mean values of perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
3.158
34.20
≤.001
2.458
15.85
≤.001
2.370
20.51
≤.001
3.226
19.26
≤.001
Organic global brand
Non-organic global
Organic local brand
Non-organic local
Organic private brand
Non-organic private
4.656 H1a + (p ≤ .02) 3.721 H2a + (p ≤ .05) 3.816 H3a + (p ≤ .01) 4.600 H4a + (p ≤ .02)
4.024
5.093 H1b + (p ≤ .05) 3.822 H2b + (p ≤ .05) 4.044 H3b + (p ≤ .02) 4.850 H4b + (p ≤ .02)
4.495
4.691 H1c + (p ≤ .01) 3.619 H2c + (p ≤ .01) 3.531 H3c + (p ≤ .01) 4.398 H4c + (p ≤ .01)
3.073 3.064 3.859
3.192 3.397 4.136
Table 2b Organic brand types in comparison regarding perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
4.691
34.20
≤.001
3.619
15.85
≤.001
3.531
20.51
≤.001
4.398
19.26
≤.001
Organic global brand
Organic local brand
Organic global brand
Organic private brand
Organic local brand
Organic private brand
4.656 (p > .2) 3.721 (p > .9) 3.816 (p > .9) 4.600 (p > .8)
5.093
4.656 (p = 1) 3.721 (p > .9) 3.816 (p > .8) 4.600 (p > .9)
4.691
5.093 (p > .3) 3.822 (p > .9) 4.044 (p > .1) 4.850 (p > .3)
3.822 4.044 4.850
4. Study 3: The impact of organic labels on variables of behavioral intention The objective of study 3 is to emphasize the relevance of organic labels in brand differentiation to marketers. For this purpose, we investigate the impact of differentiating a global, local, and private brand by means of an organic label on two marketing-related outcome variables, namely purchase intention and willingness to pay a price premium.
3.619 3.531 4.398
evaluations on that basis. In this sense, an organic label acts as a heuristic for attitude formation. According to the attitude-behavior hypothesis, attitudes have a positive effect on purchase intention (Eagly & Chaiken, 1998). Therefore, it is expected that an organic label positively influences the consumer purchase intention to buy the organic labeled brand: H5a/5b/5c. An organic labeled global (H5a)/local (H5b)/private (H5c) brand leads to a higher purchase intention than the respective global/ local/private brand without an organic label.
4.1. Purchase intention 4.2. Price premium Research results suggest that consumers generally assume that brand managers aim to enhance attitudes towards their brands by means of marketing activities (Friestad & Wright, 1994). If this is the case, consumers should interpret the organic origin of a brandname product as increasing the product's value and therefore derive additional personal benefit from the organic label (Mukherjee & Hoyer, 2001). Likewise, it makes sense that consumers use organic labels as an explanation for better brand performance and form their
A study by Canavari, Bazzani, Spadoni, and Regazzi (2002) indicates that the majority of consumers are willing to pay a price premium for organic produce. Fotopoulos and Krystallis (2001) identify that consumers are willing to pay a price premium of at least 50% for organic products, whereas their actual behavior shows a price premium of 20% compared with conventional produce. These findings are supported by the brand equity literature, which recognize that
Table 2c Non-organic brand types in comparison regarding perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
3.158
34.20
≤.001
2.458
15.85
≤.001
2.370
20.51
≤.001
3.226
19.26
≤.001
Non-organic global
Non-organic local
Non-organic global
Non-organic private
Non-organic local
Non-organic private
4.024 (p > .1) 3.073 (p > .9) 3.064 (p > .7) 3.859 (p > .8)
4.495
4.024 (p ≤ .01) 3.073 (p ≤ .05) 3.064 (p ≤ .02) 3.859 (p ≤ .05)
3.158
4.495 (p ≤ .01) 3.192 (p ≤ .01) 3.397 (p ≤ .01) 4.136 (p ≤ .01)
3.192 3.397 4.136
2.458 2.370 3.226
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043 Purchase Intention
mean
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consumers will pay a higher price for brands that have a greater perceived value for them (Keller, 2003). Hence, from a consumer's point of view an organic label delivers additional value to the brand, such as healthiness, hedonism, environmental friendliness, and/or food safety, compared to their conventional counterparts, thus increasing the consumer's willingness to pay a price premium. We assume:
4.303 4.092
H6a/6b/6c. An organic labeled global (H6a)/local (H6b)/private (H6c) brand leads to a higher willingness to pay a price premium than the respective global/local/private brand without an organic label.
3.806 3.386 3.349
4.3. Method and results local brand
For collecting the data we survey identical groups of subjects who participated in study 2. Existing items (Dodds, Monroe, & Grewal, 1991; Netemeyer et al., 2004) are used for measuring the variables of behavioral intention. This ensures strong reflective measurement models. MANOVA is applied to test the hypotheses regarding the effects of a global, local, and private brand in each case with and without an organic label on purchase intention and price premium (3 × 2 experimental design). The Scheffé-test shows significant (p ≤ .1) differences between group 1 and 2, group 3 and 4, as well as group 5 and 6 regarding the marketing-related variables. Thus, all hypotheses are supported (Figs. 6 and 7; Table 3a). We additionally test differences between organic labeled global, local, and private brands. Regarding consumer purchase intention, the results indicate that the group mean values do not significantly (p > .3) differ from one another. Finally, we focus on the price premium construct. Here, the mean value comparison does not show a significant (p > .1) difference between the three groups (Table 3b). When focusing on non-organic brand types, the private brand shows a significantly minor purchase intention and willingness to pay a price premium compared to the local and global non-organic brand (p ≤ .01). In contrast, the mean values for the global and local non-organic brand do not differ from each other (p > .7; Table 3c).
global brand private brand 2.217
non-organic
organic
Fig. 6. Mean values of purchase intention.
Price Premium
mean
4.051
3.748
3.419 2.966
2.638 local brand global brand private brand
5. Discussion
1.824
non-organic
This paper contributes to the literature by providing empirical support for the effectiveness of organic labels issued by an independent accredited institute as a source of brand differentiation. It is
organic
Fig. 7. Mean values of willingness to pay a price premium.
Table 3a Mean values of behavioral intention variables. Factors
Purchase intention Price premium
Mean values
F
p
2.217
23.00
≤.001
1.824
31.13
≤.001
Organic global
Non-organic global
Organic local brand
Non-organic local brand
Organic private brand
Non-organic private brand
4.092 H5a + (p ≤ .1) 3.748 H6a + (p ≤ .01)
3.349
4.303 H5b + (p ≤ .01) 4.051 H6b + (p ≤ .01)
3.386
3.806 H5c + (p ≤ .01) 3.419 H6c + (p ≤ .01)
2.638
2.966
Table 3b Organic brand types in comparison regarding behavioral intention variables. Factors
Purchase Intention Price premium
Mean values
F
p
Organic global brand
Organic local brand
Organic global brand
Organic private brand
Organic local brand
Organic private brand
4.092 (p > .9) 3.748 (p > .8)
4.303
4.092 (p > .8) 3.748 (p > .7)
3.806
4.303 (p > .3) 4.051 (p > .1)
3.806
23.00
≤.001
3.419
31.13
≤.001
4.051
3.419
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Table 3c Non-organic brand types in comparison of behavioral intention variables. Factors
Purchase intention Price premium
Mean values
F
p
2.217
23.00
≤.001
1.824
31.13
≤.001
Non-organic global brand
Non-organic local brand
Non-organic global brand
Non-organic private brand
Non-organic local brand
Non-organic private brand
3.349 (p = 1) 2.638 (p > .7)
3.386
3.349 (p ≤ .01) 2.638 (p ≤ .01)
2.217
3.386 (p ≤ .01) 2.966 (p ≤ .01)
2.966
the first study to explicitly link branding to organic labeling as a relevant strategy in marketing practice. Our first study verifies the four key motivational drivers of organic food purchasing behavior in Germany. A qualitative study reveals the main purchasing motives: healthiness, hedonism, environmental friendliness, and food safety. The second objective is to investigate how organic labeling affects the perception of global, local, and private brands in terms of the identified four key motivational drivers of organic food purchasing behavior. The results of study 2 uncover that the use of an organic label leads to an increase in global, local, as well as private brand perception. Thus, companies can add value to their brands by organic labeling. The third research objective relates to the influence of an organic label on brand-related outcome variables. The results of study 3 offer evidence of predictive validity, showing that the addition of an organic label to the features of global, local, and private brands has a strong positive effect on purchase intention and leads to a significant increase in the consumer's willingness to pay a price premium for the brand. In sum, the findings of study 2 and 3 confirm that organic labels prove to be an effective instrument for global, local, and private brand providers in distinguishing their own brand from that of their competitors. Our findings further suggest that private brands are more adept at profiteering in the use of organic labels than global and local brands. More precisely, results suggest no significant difference across the three brand types within the organic food range. Nevertheless, this is not the case for the non-organic food range. Regarding this, findings suggest that in the conventional food range a private brand is perceived as less healthy, less hedonic, less environmentally friendly, and less safe compared to a local and global brand and, furthermore, shows a lower price premium and purchase intention. Continuing with the organic food range, our results reveal that a private brand catches up with the high rank of a local and global brand. A certified organic private brand is perceived as almost equally healthy, hedonic, environmentally friendly, and safe compared to a local and global brand and moreover shows an equal price premium and purchase intention. These results point out that a private brand benefits most from an organic label compared to local and global brands and underpins the different benefits a brand type may reveal by differentiating itself by means of an organic label. Thus, different brand types benefit differently, which makes a brand-type based analysis necessary when investigating the effects of organic labeling. This prompts the conclusion that in the organic market segment the brand itself is becoming less potent in the purchase-decision process. Obviously, it only matters to the consumers whether the product is organic or not: “Personally, I'd rather buy an imported organic apple than a local conventional one, even if it had to travel” (Sirieix, Grolleau, & Schaer, 2008, p. 512). Therefore, our results stand in contrast to the findings of De Pelsmacker, Janssens, Sterckx, and Mielants (2005) and De Pelsmacker, Driesen, and Rayp (2005) on ethical labeling which suggest that the brand is more important than the label and that manufacturers' brands are most adept at profiteering in the use of organic labels. Nevertheless, local brands are still evaluated more positively, although the differences are not significant. Therefore, local brand
1.824
owners should not only communicate the organic mode of production, but also the local origin of the brand. In contrast, global and private brand owners should not communicate the global distribution of their brand or their private status within the range of organic food as this reduces the positive effects of organic labeling. The managerial implications recommend that providers of global, local, and private brands may successfully add an organic label to the brand's characteristics not only for the purposes of brand differentiation, but also for repositioning. Brand providers have to ensure that the organic label is communicated consistently, and they have to know how to exploit any spill-over effects that could be employed to develop further product lines in organic foods. Additionally, with organic labeling there is greater scope for pricing. Nevertheless, providers of strong brands have to critically assess whether organic labeling might erode the brand value of established products or cause the value to stagnate, since, as the present studies show, an organic label outshines the brand itself. The use of organic certification is therefore primarily suited to private brands as well as to providers of products of average and below-average brand strength, who would profit best from the organic-label effect. Future research might investigate whether the results hold for brands in other product categories and other organic labels (e.g., USDA organic seal). An exploration of potential cross-country variations into the effects of organic labels on global, local, and private brands is another valuable direction for future studies. Moreover, an investigation should be made as to whether individual specific factors, such as environmental consciousness, the product category, and the consumption context influence the effects of an organic label in achieving brand differentiation. Researchers are encouraged to address these questions. Acknowledgments The authors would like to thank Managing Editor Michel Laroche and two anonymous reviewers for their valuable feedback. We also thank Colin L. Campbell for his assistance throughout the review process. References Aaker DA. Building strong brands. New York: The Free Press; 1996. Babin BJ, Darden WR, Griffin M. Work and/or fun: Measuring hedonic and utilitarian shopping values. Journal of Consumer Research 1994;20:644–56. Baker S, Thompson K, Engelken J, Huntley K. Mapping the values driving organic food choice. European Journal of Marketing 2004;38:995-1025. Brunk KH. Exploring origins of ethical company/brand perceptions: A consumer perspective of corporate ethics. Journal of Business Research 2010;63:255–62. Canavari M, Bazzani GM, Spadoni R, Regazzi D. Food safety and organic fruit demand in Italy: A Survey. British Food Journal 2002;104:220–32. Chryssochoidis G. Repercussions of consumer confusion for late introduced differentiated products. European Journal of Marketing 2000;34:705–22. De Pelsmacker P, Driesen L, Rayp G. Do consumers care about ethics? Willingness to pay for fair-trade coffee. Journal of Consumer Affairs 2005;39:363–85. De Pelsmacker P, Janssens W, Sterckx E, Mielants C. Consumer preferences for the marketing of ethically labelled coffee. International Marketing Review 2005;22:512–30. Diamantopoulos A, Schlegelmilch BB, Sinkovics RR, Bohlem GM. Can socio-demographics still play a role in profiling green consumers? A review of the evidence and an empirical investigation. Journal of Business Research 2003;56:465–80. Dodds WB, Monroe KB, Grewal D. Effects of price, brand, and store information on buyers' product evaluations. Journal of Marketing Research 1991;28:307–19.
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Mukherjee A, Hoyer WD. The effect of novel attributes on product evaluation. Journal of Consumer Research 2001;28:462–72. Netemeyer RG, Krishnan B, Pullig C, Wang G, Yagci M, Dean D, et al. Developing and validating measures of facets of customer-based brand equity. Journal of Business Research 2004;57:209–24. Ngobo PV. What drives household choice of organic products in grocery stores? Journal of Retailing 2011;87:90-100. Padel S, Foster C. Exploring the gap between attitudes and behaviour: Understanding why consumers buy or do not buy organic food. British Food Journal 2005;107: 606–25. Reynolds TJ, Gutmann J. Laddering theory, method, analysis, and interpretation. Journal of Advertising Research 1988;28:11–31. Roddy G, Cowan C, Hutchinson G. Organic food: A description of the Irish market. British Food Journal 1994;96:3-10. Rokeach M. The role of values in public opinion research. Public Opinion Quarterly 1969;34:547–59. Schuiling I, Kapferer J-N. Real differences between local and international brands: Strategy implications for international marketers. Journal of International Marketing 2004;12:97-112. Sirieix L, Grolleau G, Schaer B. Do consumers care about food miles? An empirical analysis in France. International Journal of Consumer Studies 2008;32:508–15. Soler F, Gil JM, Sanchez M. Consumers' acceptability of organic food in Spain. British Food Journal 2002;104:670–87. Squires L, Juric B, Cornwell TB. Level of market development and intensity of organic food consumption: Cross-cultural study of Danish and New Zealand consumers. Journal of Consumer Marketing 2001;18:392–409. Stobbelaar DJ, Casimir G, Borghuis J, Marks I, Meijer L, Zebeda S. Adolescents' attitudes towards organic food: A survey of 15- to 16-year-old school children. International Journal of Consumer Studies 2009;31:349–56. Tagbata D, Sirieix L. Measuring consumer's willingness to pay for organic and fair trade products. International Journal of Consumer Studies 2008;32:479–90. Tarkiainen A, Sundqvist S. Product involvement in organic food consumption: Does ideology meet practice? Psychology and Marketing 2009;26:844–63. Töpfer A. Die Umwelt- und Benutzerfreundlichkeit von Produkten als strategische Unternehmensziele. Mark ZFP – J Res Manage 1985;7:241–51. Ureña F, Bernabéu R, Olmeda M. Women, men and organic food: Differences in their attitudes and willingness to pay: A Spanish case study. International Journal of Consumer Studies 2008;32:18–26. Zanoli R, Naspetti S. Consumer motivations in the purchase of organic food: A means-end approach. British Food Journal 2002;104:643–53. Zimmer MR, Stafford TF, Stafford MR. Green issues: Dimension of environmental concern. Journal of Business Research 1994;30:63–74.
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Journal of Business Research
The effects of organic labels on global, local, and private brands More hype than substance? Hans H. Bauer a, Daniel Heinrich a,⁎, Daniela B. Schäfer b a b
Department of Marketing II, University of Mannheim, Germany Department of Marketing and Management, University of Basel, Switzerland
a r t i c l e
i n f o
Article history: Received 1 April 2010 Received in revised form 1 October 2011 Accepted 1 December 2011 Available online 4 January 2012 Keywords: Brand differentiation Organic label Consumer behavior Global brand Local brand Private brand
a b s t r a c t With an ever-expanding market for diversified health food products, marketers can formulate a unique selling proposition by differentiating their brands using organic labels issued by an independent accredited institution for organic product testing. Using in-depth interviews, we verify four main purchasing motives for organic food in Germany: healthiness, hedonism, environmental friendliness, and food safety. Moreover, in two experiments, we show that the use of an organic label affects consumers' perceptions of global, local, and private brands with regard to their main purchasing motives. The positive effects of organic labeling are also supported for consumers' purchase intentions and their willingness to pay a price premium. Notably, private brands are more adept at profiteering from the use of organic labels than global and local brands. © 2011 Elsevier Inc. All rights reserved.
1. Introduction Over the last decade, the global organic food sector has grown substantially within a fairly static total food market (Baker, Thompson, Engelken, & Huntley, 2004). Many countries show annual growth rates of the organic food industry of up to 30% (Krystallis & Chryssochoidis, 2005). From being a niche market, the organic food sector has entered the mainstream, having rapidly gained more and more market share. Many companies are therefore trying to jump on the bandwagon, as they recognize the potential of standing out from the crowd by offering organic food. Organic food products are usually symbolized by an organic certification issued by an independent accredited institution for organic product testing (in the following, also termed as an organic label). In spite of the growing relevance of distinguishing brands by organic labels, research efforts have yet to focus on this differentiation approach. Prior studies in the context of organic food mainly deal with identifying the ‘organic consumer’, analyzing the reasons why consumers fail to purchase organic food, or they investigate purchase motives (Hughner, McDonagh, Prothero, Shultz, & Stanton, 2007). These studies deal with organic products in general and do not focus on products certified by an independent accredited institution for organic product testing.
⁎ Corresponding author. Tel.: + 49 621 1811547; fax: + 49 621 1811571. E-mail address: [email protected] (D. Heinrich). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.12.028
Moreover, Ngobo (2011) highlights the relevance of comparing and contrasting the use of the organic label across different brand types (p. 92): “If the consumer decides to buy an organic product, then s/he must decide which organic brand to choose.” The author finds that consumers are more likely to buy organically produced private brands compared to organically produced local brands. Nevertheless, his study is only a first step in investigating the research topic of organic food and branding, as it (1) does not distinguish between food that is organically produced and organic food that is actually certified by an independent accredited institute for organic product testing; (2) only investigates the actual purchase, and therefore neglects the issue of price premium acceptance, and does not investigate whether brand perception changes when the brand is certified as organic; and (3) does not include further brand types such as global brands. To extend his findings, he calls for more research that focuses particularly on organic labeling in combination with branding. Another literature stream investigates the relationship between other labels in addition to organic ones – such as fair-trade labels – and branding. As few studies deal with this topic, more research is also needed here. De Pelsmacker, Driesen, and Rayp (2005) investigate manufacturers' and private brands and show that, from the consumers' perspective, the brand is the most important attribute of the coffee, followed by the coffee's flavor and the fair-trade label. Thus, while both the brand and the fair-trade label are important when buying coffee, the brand is most important. In contrast to this result, De Pelsmacker, Janssens, Sterckx, and Mielants (2005), in their comparative research on manufacturers' and private brand coffees, show
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that the type of brand is of relatively minor importance. More precisely, their results highlight that ethical labels are more effective when used for manufacturers' brands than for private brands. These study results confirm the need to investigate organic labels at the level of brand-type and call for further research in this domain (De Pelsmacker, Janssens, Sterckx, & Mielants, 2005). In sum, no studies yet exist that assess the impact of organic certification issued by an independent accredited institution of organic product testing on different brand types. The current study contributes to this nascent research gap and responds to the stated calls for more research by looking at organic labels as a brand differentiation strategy. The study discerns whether an organic labeled product generates positive consumer brand perceptions and thus influences consumers' food buying intentions. In addition, it is necessary to assess whether various types of brands benefit differently from organic labeling in the retail market. In order to achieve this, the following research objectives are outlined: (1) Verify the main purchasing motives for organic food in Germany. (2) Investigate consumers' perceptions of global, local, and private brands bearing an organic label. (3) Analyze whether an organic label influences the predictors of brand purchase intention regarding global, local, and private brands. Therefore, our study fundamentally differs from the prior studies by (1) explicitly focusing on an organic label issued by an accredited institution; (2) combining branding and organic labeling and investigating whether an organic label is a successful differentiation strategy for different brand types, namely global, local, and private brands; and (3) taking the complete set of main purchasing motives of organic food in Germany as well as relevant variables of intended behavior into account. Three studies are carried out. In order to assess consumers' perceptions of brands bearing an organic label, it is necessary to examine the relevant perception variables that reflect the key drivers of organic food consumption in Germany, where our study is conducted. This leads to the research objective of study 1, in which in-depth interviews are used to identify the main drivers for organic food purchasing decisions in a German market environment. Based on these results, an experimental study (study 2) is carried out to test how the use of an organic label affects the perceptions of global, local, and private brands concerning the key motivational drivers of organic food purchasing behavior. More precisely, we investigate whether an organic label affects the perceptions of healthiness, hedonism, environmental friendliness, and food safety for global, local, and private brands. Finally, the effect of organic labels on brand-related outcome variables (study 3), namely consumers' purchase intentions and their willingness to pay a price premium, is examined. The results yield implications for marketing practitioners and suggestions for future academic research.
human health are also important buying motives (e.g., Hill & Lynchehaun, 2002). Furthermore, doubts about the safety of food motivate consumers to buy organically produced food (e.g., Soler, Gil, & Sanchez, 2002). Other research suggests that people buy organic food, because they are convinced it supports the local economy or they have ethnocentric tendencies with regard to their food preferences (e.g., Fotopoulos & Krystallis, 2002). Finally, consumers buy organic food, because they perceive it as fashionable (e.g., Hill & Lynchehaun, 2002). In addition, prior research shows that organic food consumption differs between countries (e.g., Squires, Juric, & Cornwell, 2001). Therefore, it is necessary to determine which of the main organic-food purchasing motives identified by prior research are relevant for other countries, where research concerning organic food purchasing behavior is scarce, as in the case of Germany. This leads to the objective of our first study to identify the main purchasing motives of organic food in Germany. With this, we investigate whether the findings of prior work – conducted in countries besides Germany – can also be observed in a German market environment and whether they need to be extended for our testing conditions. This knowledge will extend the generalizability of the findings in a crosscultural context. We conduct qualitative in-depth interviews with twelve German consumers using the laddering technique. Laddering interviews are frequently used in market research and are employed in investigations to analyze organic food consumption (Fotopoulos, Krystallis, & Ness, 2003; Zanoli & Naspetti, 2002). The consumers are randomly selected, being either passers-by in the street or customers in specialist health food shops as well as supermarkets (see Padel & Foster, 2005, for this approach). This ensures that a variety of consumer types are represented. Half of the interviewed consumers are female and the average age is 39.5 years. Five of the interviewed consumers purchase organic food regularly. Seven are occasional consumers. All participants have some knowledge of the concept of organic food; e.g., not processed using pesticides. Participants were first asked to choose organic food attributes themselves and were then asked to rate the attributes on an importance scale (Reynolds & Gutmann, 1988). The general perception of organically grown and processed foods is positive in relation to the product. Based on the in-depth interviews, the main reasons for buying organic food are: (1) Organic food is considered to be more nutritious than non-organic food; (2) Organic farming is believed to be kinder to the environment; (3) There are fewer concerns about pesticide residue in food, because no chemicals are used in the farming process; (4) Organic foods are perceived as tasting better than conventional foods. These purchasing motives are positioned by all interviewed consumers within the first four ranks, although the order of priority differs within these purchasing motives. Rank five and lower were highly individual in depending on the consumer – for instance, some consumers named animal welfare and others named yearning for the past. Because the first four ranks were consistent for all consumers, we included these buying motives in our study 2.
2. Study 1: Verifying the main purchasing motives for organic food in Germany
3. Study 2: The impact of organic labels on brand perception
Prior research regarding the main drivers of why consumers purchase organic food may not be applied without verification. This is due to the fact, firstly, that many different purchasing motives have been identified in prior research; and, secondly, that Germany – where we conducted our study – is one of the countries in which research dealing with organic food purchasing behavior is of utmost importance but still in its beginnings. More precisely, prior research suggests that the perceived pleasure of organic food consumption is higher than that of conventional food (e.g., Ureña, Bernabéu, & Olmeda, 2008). Some studies identify environmental concerns as a purchase stimulus (e.g., Honkanen, Verplanken, & Olsen, 2006). Concerns about animal welfare and
The second study tests the effects of organic labels on global, local, and private brand perceptions concerning the identified main drivers for organic food purchasing decisions. Thus, the integrated variables constitute crucial indirect sources of brand strength in the context of organic food (Aaker, 1996). Because of the hot debate on the globalization of branding (e.g., Schuiling & Kapferer, 2004), global brands are chosen for this study. Global brands are important; however, the environmental costs of shipping food great distances might impact consumer perceptions of global organic brands. Furthermore, we take the trend of consuming locally produced products into consideration by including local brands into our study. Finally, as the market share of private brands within the retail market constantly rises, we
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also focus on this brand type. It is of interest whether organic labels might offer a promising differentiation strategy for global, local, and private brands. The study design allows us to analyze the effects of combining brand type and organic label on consumers' organic food purchasing motives.
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link branding and organic certification. Nevertheless, these studies hint at the following hypotheses: H3a/3b/3c. An organic labeled global (H3a)/local (H3b)/private (H3c) brand causes a higher degree of perceived environmental friendliness than the respective global/local/private brand without an organic label.
3.1. Perceived healthiness 3.4. Perceived food safety Perceived healthiness is defined as the consumers' perception of the influence that consuming a brand-name product has on their health (Howlett, Burton, Bates, & Huggins, 2009). A central advantage of organic food seems to be that consumers associate organic foods with a superior health benefit as compared to conventional foods. The product origin, formulated as ‘from organic farming’, affects the perception of further brand features, which can be explained by the halo-effect in terms of cognitive psychology (Han, 1989). Qualitative studies suggest that consumers believe organic food has health benefits surpassing non-organic food (e.g., Baker et al., 2004; Zanoli & Naspetti, 2002). Other quantitative studies indicate that health consciousness positively influences organic food consumption (e.g., Chryssochoidis, 2000; Tarkiainen & Sundqvist, 2009). This implies that officially certified organic brand-name products are perceived as healthier than conventional ones. We propose: H1a/1b/1c. An organic labeled global (H1a)/local (H1b)/private (H1c) brand causes a higher degree of perceived healthiness than the respective global/local/private brand without an organic label. 3.2. Perceived hedonism Brands promise hedonic value whenever they activate feelings like enjoyment, pleasure, and well-being (Babin, Darden, & Griffin, 1994). In the context of food brands, this means that brand-name products provide hedonism if they have an outstanding taste and offer a holistic enjoyment (purchase, cooking, and consumption experience). Tagbata and Sirieix (2008) prove that perceived hedonism is higher if the product is labeled ‘organic’. Premium brand-name products – such as organic products – offer exceptional perceived hedonism (Jonas & Roosen, 2005). Previous empirical work identifies flavor as a buying motive for organic food, as consumers perceive it as having a better taste than its non-organic counterpart (McEachern & McClean, 2002; Roddy, Cowan, & Hutchinson, 1994). Based on our definition, these results suggest a superior degree of perceived hedonism for organic labeled foods as compared to conventional foods. We hypothesize: H2a/2b/2c. An organic labeled global (H2a)/local (H2b)/private (H2c) brand causes a higher degree of perceived hedonism than the respective global/local/private brand without an organic label. 3.3. Perceived environmental friendliness A brand's perceived environmental friendliness is defined as the consumer's evaluation of the degree to which a brand causes negative environmental impact throughout its whole life-cycle (Töpfer, 1985). The relevance of this product feature is intensifying, because of the increasing importance of environmental values within consumer decision making (Brunk, 2010; Diamantopoulos, Schlegelmilch, Sinkovics, & Bohlem, 2003; Zimmer, Stafford, & Stafford, 1994). Rokeach's theory of values (Rokeach, 1969) provides the explanatory framework for the ecology-minded consumer. Studies demonstrate that the more environmentally concerned a person is, the more likely that person is to buy organic foods (e.g., Squires et al., 2001). Organic foods offer consumers an opportunity to improve the environmental situation, due to the low environmental impacts associated with organic food. Studies demonstrate that organically farmed products are associated with environmental friendliness (e.g., Stobbelaar et al., 2009), but they do not
No clear definition of the perceived food safety construct has yet been devised (Hughner et al., 2007). Within the current study, perceived food safety will be defined as the degree to which customers feel that the consumption of the brand-name product is harmless to human health, since it is free of synthetic chemical residues. Consumers' concern about food safety arises from the basic human need for security. Therefore, Maslow's theory of human motivation (Maslow, 1970) constitutes the explanatory framework. Organic farming guarantees that foods are free of chemical residues. Thus, and in terms of signaling theory, an organic label signals food safety to the consumers and provides brand avoidance (cf. Lee, Motion, & Conroy, 2008, for brand avoidance). This is confirmed by qualitative studies (e.g., Essoussi & Zahaf, 2008) which reveal that an organic labeled product is perceived as a safer alternative to conventional foods. Quantitative studies (e.g., Soler et al., 2002) show that the concern over food safety positively influences organic food purchase behavior. Transferring these insights to brands and organic labels, we hypothesize: H4a/4b/4c. An organic labeled global (H4a)/local (H4b)/private (H4c) brand causes a higher degree of perceived food safety than the respective global/local/private brand without an organic label. 3.5. Method and results 3.5.1. Experimental design and data collection An online experiment was carried out to test the proposed hypotheses concerning the impact of organic labels on the main buying motives for organic food. The questionnaire was successfully completed by 630 subjects. The age of the respondents ranged from 18 to 75 years and the average age is 43.9 years. The sample respondents consist of 54.3% females and 45.7% males. 39.5% of the respondents buy groceries in supermarkets, 24.1% in discounters, 26% in selfservice department stores, and 10.4% in specialist health food shops. The experiment simulates the consumer's confrontation either with a global, local, or private brand that differentiates itself from others owing to the addition of an organic label. In order to avoid the danger of the organic label being unreliable and inconsistent with the product category, cereals are used as the object of investigation. The choice of the brand representatives is made on the basis of their being similarly well established within the food market. In each case, one global, one local, and one private brand is chosen. The national organic label of Germany is selected as the organic label representative, because it has gained widespread popularity in Germany as well as in neighboring countries and embodies substantial credibility among consumers (Langer, Eisend, & Kuß, 2008). Our experimental design is based on six treatments: experimental group 1 (organic labeled global brand); experimental group 3 (organic labeled local brand); experimental group 5 (organic labeled private brand); control group 2 (global brand without an organic label); control group 4 (local brand without an organic label); and control group 6 (private brand without an organic label). In all treatment-groups subjects are presented with branded cereal packaging. Advertisements for the fictitious organically-farmed cereals are created and used as stimuli (Fig. 1). With the exception of the organic label and the type of brand, the visual and textual design is identical across all treatment groups. In experimental groups 1, 3, and 5 the product
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local brand
private brand
organic
non-organic
global brand
Fig. 1. Stimuli.
illustration contains a reference to the organic mode of production. The subjects in group 1 (n = 98) are confronted with a global brand, the subjects in group 3 (n = 108) with a local brand, and the subjects in group 5 (n = 105) with a private brand. The branded cereal packaging is presented without an organic label to group 2 (n = 106), group 4 (n = 107), and group 6 (n = 106). The organic label and the type of brand thus constitute the independent variables. The latent constructs are the dependent variables. We test the hypotheses in a between-subjects experiment with a 3 × 2 design. After a short introductory text and questions dealing with sociodemographics, all participants are randomly assigned to experimental and control groups, respectively. Afterwards, brand awareness is surveyed for the brand selection. Brand selection is carried out with an interactive filter. In the following, subjects are presented with the stimuli depending on the experimental group they belong to. Finally, subjects are forwarded to the last part of the questionnaire containing questions about the latent constructs. For measuring the perception of healthiness, hedonism, environmental friendliness, and food safety, scales are developed by drawing on the results of the in-depth interviews with consumers on the one hand, and by drawing on existing measurement scales on the other hand. 7-point Likert scales are used ranging from ‘strongly disagree’ to ‘strongly agree’. A pre-test is conducted to guarantee the internal and external consistency of the measurement instruments. Additionally, based on Cronbach's α and the item-to-total-correlation, scales are optimized. The final results indicate a good construct operationalization (Table 1).
3.5.2. Examination of the hypotheses Prior to the actual examination of the hypotheses, a manipulation check is conducted, which confirmed that the organic brand-name product is actually perceived as certified organic for the subjects of the treatment groups 1, 3, and 5. A second manipulation check is conducted to ensure that the type of brand is actually evaluated by test-
persons as global, local, or private for the subjects in the respective treatment groups. The U-test of Mann and Whitney for comparing independent samples (Hair, Anderson, Tatham, & Black, 1995) shows that the subjects within the treatment groups do not significantly differ from one
Table 1 Construct operationalization for perception variables. Factors
Items
FL
IR
AVE
α
Perceived healthiness
The consumption of […] enhances my health. I believe that […] enables me to live healthy. I am of the view that the consumption of […] has a health-promoting effect. […] and a health-conscious lifestyle match well. By consuming […] I can pamper myself. I can indulge myself by buying […]. The consumption of […] can affect my well-being positively. It is a pleasure to consume […]. The production of […] goes easy on resources. I am of the opinion that during the production of […] the environment is highly valued. […] is an environmentally friendly product. […] and environmentalism match well. I feel that […] is free of chemical residues. I am of the opinion that […] is not contaminated. […] ingredients are free of pesticides. I believe that […] features high food safety.
.93
.86
.83
.95
.94
.87
.90
.81
.88
.79
.92 .86 .88
.84 .74 .78
.77
.93
.86 .84
.73 .70
.81
.94
.94
.87
.96
.92
.86 .95 .96
.73 .89 .92
.84
.95
.93 .82
.86 .68
Perceived hedonism
Perceived environmental friendliness
Perceived food safety
Note: FL = factor loading; IR = indicator reliability; AVE = average variance extracted; α = Cronbach's alpha.
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043 mean
mean
Perceived Healthiness
1039
Perceived Environmental Friendliness
4.044
5.093
3.816 4.691 4.495
3.397
4.656
3.531 4.024 3.064
local brand
3.158
non-organic
local brand
2.370
global brand
global brand
private brand
private brand
non-organic
organic
organic
Fig. 2. Mean values of perceived healthiness.
Fig. 4. Mean values of perceived environmental friendliness.
another with regard to gender, age, and educational level. The examination of the correlation matrices (Pearson, Spearman, and KendallTau-b) reveals that strong correlations between the dependent variables exist. Bartlett's test of sphericity tests the null hypothesis asserting that the correlation matrix is an identity matrix. This null hypothesis can be rejected (p ≤ .001). The studies' hypotheses are tested with the help of MANOVA (multivariate analysis of variance). The observed data fulfill the requirements for applying MANOVA (Hair et al., 1995). Multivariate test statistics, namely Wilks' Lambda (F = 9.878; p ≤ .001) and Roy's Largest Root (F = 55.724; p ≤ .001), show highly significant results. Analysis of variance reveals a significant difference for all dependent variables. F-test statistics show that the group mean values do not turn out to be equal. This does not necessarily indicate that all mean values significantly differ from one group to another. In order to explore which mean value differences amongst the groups are statistically significant, a multiple comparison test with the Scheffé-test
is conducted. The results are found to be consistent across all the dependent variables with a significant (p ≤ .05) higher mean value for organic labeled brands. Thus, all postulated hypotheses concerning the main motivational drivers for organic food buying behavior are supported (Figs. 2 to 5; Table 2a). In addition, we analyze how consumers comparatively rate these organic brand types. We look again at the main purchasing motives for organic food. The Scheffé-test shows no significant (p > .1) differences between the three groups 1, 3, and 5 (Table 2b). Hence, the results suggest that from a consumer's point of view, it makes no difference whether the brand of the organic product is a global, local, or private one. In contrast, the results concerning the comparison of the non-organic brand types show that private brands are perceived significantly less favorably in terms of health benefits, hedonism, environmental friendliness, and food safety (p ≤ .05), while global and local non-organic brands do not show differences with regard to the main purchasing motives (p > .1; Table 2c).
mean
Perceived Food Safety
mean
Perceived Hedonism
4.850
3.822 3.721
4.600 3.192
3.619 4.136
4.398
3.073 3.859 local brand
2.458
private brand
non-organic
local brand
global brand
organic
Fig. 3. Mean values of perceived hedonism.
global brand
3.226
non-organic
private brand
organic
Fig. 5. Mean values of perceived food safety.
1040
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043
Table 2a Mean values of perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
3.158
34.20
≤.001
2.458
15.85
≤.001
2.370
20.51
≤.001
3.226
19.26
≤.001
Organic global brand
Non-organic global
Organic local brand
Non-organic local
Organic private brand
Non-organic private
4.656 H1a + (p ≤ .02) 3.721 H2a + (p ≤ .05) 3.816 H3a + (p ≤ .01) 4.600 H4a + (p ≤ .02)
4.024
5.093 H1b + (p ≤ .05) 3.822 H2b + (p ≤ .05) 4.044 H3b + (p ≤ .02) 4.850 H4b + (p ≤ .02)
4.495
4.691 H1c + (p ≤ .01) 3.619 H2c + (p ≤ .01) 3.531 H3c + (p ≤ .01) 4.398 H4c + (p ≤ .01)
3.073 3.064 3.859
3.192 3.397 4.136
Table 2b Organic brand types in comparison regarding perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
4.691
34.20
≤.001
3.619
15.85
≤.001
3.531
20.51
≤.001
4.398
19.26
≤.001
Organic global brand
Organic local brand
Organic global brand
Organic private brand
Organic local brand
Organic private brand
4.656 (p > .2) 3.721 (p > .9) 3.816 (p > .9) 4.600 (p > .8)
5.093
4.656 (p = 1) 3.721 (p > .9) 3.816 (p > .8) 4.600 (p > .9)
4.691
5.093 (p > .3) 3.822 (p > .9) 4.044 (p > .1) 4.850 (p > .3)
3.822 4.044 4.850
4. Study 3: The impact of organic labels on variables of behavioral intention The objective of study 3 is to emphasize the relevance of organic labels in brand differentiation to marketers. For this purpose, we investigate the impact of differentiating a global, local, and private brand by means of an organic label on two marketing-related outcome variables, namely purchase intention and willingness to pay a price premium.
3.619 3.531 4.398
evaluations on that basis. In this sense, an organic label acts as a heuristic for attitude formation. According to the attitude-behavior hypothesis, attitudes have a positive effect on purchase intention (Eagly & Chaiken, 1998). Therefore, it is expected that an organic label positively influences the consumer purchase intention to buy the organic labeled brand: H5a/5b/5c. An organic labeled global (H5a)/local (H5b)/private (H5c) brand leads to a higher purchase intention than the respective global/ local/private brand without an organic label.
4.1. Purchase intention 4.2. Price premium Research results suggest that consumers generally assume that brand managers aim to enhance attitudes towards their brands by means of marketing activities (Friestad & Wright, 1994). If this is the case, consumers should interpret the organic origin of a brandname product as increasing the product's value and therefore derive additional personal benefit from the organic label (Mukherjee & Hoyer, 2001). Likewise, it makes sense that consumers use organic labels as an explanation for better brand performance and form their
A study by Canavari, Bazzani, Spadoni, and Regazzi (2002) indicates that the majority of consumers are willing to pay a price premium for organic produce. Fotopoulos and Krystallis (2001) identify that consumers are willing to pay a price premium of at least 50% for organic products, whereas their actual behavior shows a price premium of 20% compared with conventional produce. These findings are supported by the brand equity literature, which recognize that
Table 2c Non-organic brand types in comparison regarding perception variables. Factors
Perceived healthiness Perceived hedonism Perceived environmental friendliness Perceived food safety
Mean values
F
p
3.158
34.20
≤.001
2.458
15.85
≤.001
2.370
20.51
≤.001
3.226
19.26
≤.001
Non-organic global
Non-organic local
Non-organic global
Non-organic private
Non-organic local
Non-organic private
4.024 (p > .1) 3.073 (p > .9) 3.064 (p > .7) 3.859 (p > .8)
4.495
4.024 (p ≤ .01) 3.073 (p ≤ .05) 3.064 (p ≤ .02) 3.859 (p ≤ .05)
3.158
4.495 (p ≤ .01) 3.192 (p ≤ .01) 3.397 (p ≤ .01) 4.136 (p ≤ .01)
3.192 3.397 4.136
2.458 2.370 3.226
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043 Purchase Intention
mean
1041
consumers will pay a higher price for brands that have a greater perceived value for them (Keller, 2003). Hence, from a consumer's point of view an organic label delivers additional value to the brand, such as healthiness, hedonism, environmental friendliness, and/or food safety, compared to their conventional counterparts, thus increasing the consumer's willingness to pay a price premium. We assume:
4.303 4.092
H6a/6b/6c. An organic labeled global (H6a)/local (H6b)/private (H6c) brand leads to a higher willingness to pay a price premium than the respective global/local/private brand without an organic label.
3.806 3.386 3.349
4.3. Method and results local brand
For collecting the data we survey identical groups of subjects who participated in study 2. Existing items (Dodds, Monroe, & Grewal, 1991; Netemeyer et al., 2004) are used for measuring the variables of behavioral intention. This ensures strong reflective measurement models. MANOVA is applied to test the hypotheses regarding the effects of a global, local, and private brand in each case with and without an organic label on purchase intention and price premium (3 × 2 experimental design). The Scheffé-test shows significant (p ≤ .1) differences between group 1 and 2, group 3 and 4, as well as group 5 and 6 regarding the marketing-related variables. Thus, all hypotheses are supported (Figs. 6 and 7; Table 3a). We additionally test differences between organic labeled global, local, and private brands. Regarding consumer purchase intention, the results indicate that the group mean values do not significantly (p > .3) differ from one another. Finally, we focus on the price premium construct. Here, the mean value comparison does not show a significant (p > .1) difference between the three groups (Table 3b). When focusing on non-organic brand types, the private brand shows a significantly minor purchase intention and willingness to pay a price premium compared to the local and global non-organic brand (p ≤ .01). In contrast, the mean values for the global and local non-organic brand do not differ from each other (p > .7; Table 3c).
global brand private brand 2.217
non-organic
organic
Fig. 6. Mean values of purchase intention.
Price Premium
mean
4.051
3.748
3.419 2.966
2.638 local brand global brand private brand
5. Discussion
1.824
non-organic
This paper contributes to the literature by providing empirical support for the effectiveness of organic labels issued by an independent accredited institute as a source of brand differentiation. It is
organic
Fig. 7. Mean values of willingness to pay a price premium.
Table 3a Mean values of behavioral intention variables. Factors
Purchase intention Price premium
Mean values
F
p
2.217
23.00
≤.001
1.824
31.13
≤.001
Organic global
Non-organic global
Organic local brand
Non-organic local brand
Organic private brand
Non-organic private brand
4.092 H5a + (p ≤ .1) 3.748 H6a + (p ≤ .01)
3.349
4.303 H5b + (p ≤ .01) 4.051 H6b + (p ≤ .01)
3.386
3.806 H5c + (p ≤ .01) 3.419 H6c + (p ≤ .01)
2.638
2.966
Table 3b Organic brand types in comparison regarding behavioral intention variables. Factors
Purchase Intention Price premium
Mean values
F
p
Organic global brand
Organic local brand
Organic global brand
Organic private brand
Organic local brand
Organic private brand
4.092 (p > .9) 3.748 (p > .8)
4.303
4.092 (p > .8) 3.748 (p > .7)
3.806
4.303 (p > .3) 4.051 (p > .1)
3.806
23.00
≤.001
3.419
31.13
≤.001
4.051
3.419
1042
H.H. Bauer et al. / Journal of Business Research 66 (2013) 1035–1043
Table 3c Non-organic brand types in comparison of behavioral intention variables. Factors
Purchase intention Price premium
Mean values
F
p
2.217
23.00
≤.001
1.824
31.13
≤.001
Non-organic global brand
Non-organic local brand
Non-organic global brand
Non-organic private brand
Non-organic local brand
Non-organic private brand
3.349 (p = 1) 2.638 (p > .7)
3.386
3.349 (p ≤ .01) 2.638 (p ≤ .01)
2.217
3.386 (p ≤ .01) 2.966 (p ≤ .01)
2.966
the first study to explicitly link branding to organic labeling as a relevant strategy in marketing practice. Our first study verifies the four key motivational drivers of organic food purchasing behavior in Germany. A qualitative study reveals the main purchasing motives: healthiness, hedonism, environmental friendliness, and food safety. The second objective is to investigate how organic labeling affects the perception of global, local, and private brands in terms of the identified four key motivational drivers of organic food purchasing behavior. The results of study 2 uncover that the use of an organic label leads to an increase in global, local, as well as private brand perception. Thus, companies can add value to their brands by organic labeling. The third research objective relates to the influence of an organic label on brand-related outcome variables. The results of study 3 offer evidence of predictive validity, showing that the addition of an organic label to the features of global, local, and private brands has a strong positive effect on purchase intention and leads to a significant increase in the consumer's willingness to pay a price premium for the brand. In sum, the findings of study 2 and 3 confirm that organic labels prove to be an effective instrument for global, local, and private brand providers in distinguishing their own brand from that of their competitors. Our findings further suggest that private brands are more adept at profiteering in the use of organic labels than global and local brands. More precisely, results suggest no significant difference across the three brand types within the organic food range. Nevertheless, this is not the case for the non-organic food range. Regarding this, findings suggest that in the conventional food range a private brand is perceived as less healthy, less hedonic, less environmentally friendly, and less safe compared to a local and global brand and, furthermore, shows a lower price premium and purchase intention. Continuing with the organic food range, our results reveal that a private brand catches up with the high rank of a local and global brand. A certified organic private brand is perceived as almost equally healthy, hedonic, environmentally friendly, and safe compared to a local and global brand and moreover shows an equal price premium and purchase intention. These results point out that a private brand benefits most from an organic label compared to local and global brands and underpins the different benefits a brand type may reveal by differentiating itself by means of an organic label. Thus, different brand types benefit differently, which makes a brand-type based analysis necessary when investigating the effects of organic labeling. This prompts the conclusion that in the organic market segment the brand itself is becoming less potent in the purchase-decision process. Obviously, it only matters to the consumers whether the product is organic or not: “Personally, I'd rather buy an imported organic apple than a local conventional one, even if it had to travel” (Sirieix, Grolleau, & Schaer, 2008, p. 512). Therefore, our results stand in contrast to the findings of De Pelsmacker, Janssens, Sterckx, and Mielants (2005) and De Pelsmacker, Driesen, and Rayp (2005) on ethical labeling which suggest that the brand is more important than the label and that manufacturers' brands are most adept at profiteering in the use of organic labels. Nevertheless, local brands are still evaluated more positively, although the differences are not significant. Therefore, local brand
1.824
owners should not only communicate the organic mode of production, but also the local origin of the brand. In contrast, global and private brand owners should not communicate the global distribution of their brand or their private status within the range of organic food as this reduces the positive effects of organic labeling. The managerial implications recommend that providers of global, local, and private brands may successfully add an organic label to the brand's characteristics not only for the purposes of brand differentiation, but also for repositioning. Brand providers have to ensure that the organic label is communicated consistently, and they have to know how to exploit any spill-over effects that could be employed to develop further product lines in organic foods. Additionally, with organic labeling there is greater scope for pricing. Nevertheless, providers of strong brands have to critically assess whether organic labeling might erode the brand value of established products or cause the value to stagnate, since, as the present studies show, an organic label outshines the brand itself. The use of organic certification is therefore primarily suited to private brands as well as to providers of products of average and below-average brand strength, who would profit best from the organic-label effect. Future research might investigate whether the results hold for brands in other product categories and other organic labels (e.g., USDA organic seal). An exploration of potential cross-country variations into the effects of organic labels on global, local, and private brands is another valuable direction for future studies. Moreover, an investigation should be made as to whether individual specific factors, such as environmental consciousness, the product category, and the consumption context influence the effects of an organic label in achieving brand differentiation. Researchers are encouraged to address these questions. Acknowledgments The authors would like to thank Managing Editor Michel Laroche and two anonymous reviewers for their valuable feedback. We also thank Colin L. Campbell for his assistance throughout the review process. References Aaker DA. Building strong brands. New York: The Free Press; 1996. Babin BJ, Darden WR, Griffin M. Work and/or fun: Measuring hedonic and utilitarian shopping values. Journal of Consumer Research 1994;20:644–56. Baker S, Thompson K, Engelken J, Huntley K. Mapping the values driving organic food choice. European Journal of Marketing 2004;38:995-1025. Brunk KH. Exploring origins of ethical company/brand perceptions: A consumer perspective of corporate ethics. Journal of Business Research 2010;63:255–62. Canavari M, Bazzani GM, Spadoni R, Regazzi D. Food safety and organic fruit demand in Italy: A Survey. British Food Journal 2002;104:220–32. Chryssochoidis G. Repercussions of consumer confusion for late introduced differentiated products. European Journal of Marketing 2000;34:705–22. De Pelsmacker P, Driesen L, Rayp G. Do consumers care about ethics? Willingness to pay for fair-trade coffee. Journal of Consumer Affairs 2005;39:363–85. De Pelsmacker P, Janssens W, Sterckx E, Mielants C. Consumer preferences for the marketing of ethically labelled coffee. International Marketing Review 2005;22:512–30. Diamantopoulos A, Schlegelmilch BB, Sinkovics RR, Bohlem GM. Can socio-demographics still play a role in profiling green consumers? A review of the evidence and an empirical investigation. Journal of Business Research 2003;56:465–80. Dodds WB, Monroe KB, Grewal D. Effects of price, brand, and store information on buyers' product evaluations. Journal of Marketing Research 1991;28:307–19.
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