Assessing the market potential for a local food product: Evidence from a non‐hypothetical economic experiment

Abstract

Purpose

The purpose of this paper is to analyze the market potential of a locally produced and high quality food product (i.e. white bean “Mongeta Ganxet” (MG)) from Catalonia, Spain. Consumers' willingness to pay (WTP) for the product is elicited using a non‐hypothetical economic experiment and then the sensitivity of WTP values is analyzed with regard to additional information provided to participants that includes reference prices, leaflets and tasting. Finally, a sample‐selection model is estimated to assess the factors that significantly affect consumers' WTP for the product.

Design/methodology/approach

To elicit the willingness to pay a premium for the local food product, 90 subjects were invited to participate in a random nth price experimental auction. Before auctioning the product, participants were asked to complete a questionnaire about consumer attitudes and purchase habits.

Findings

Only 7 percent of participants are willing to pay a price higher than the minimum price from which the MG product may be purchased directly from a producer or the local producing market. Also, it was found that providing reference prices of substitute products (both conventional and alternative high quality white beans) positively affects WTP for the MG. Interestingly, however, provision of information on organoleptic, nutritional and cooking characteristics of the MG and product tasting do not significantly influence WTP. Finally, the level of consumption, the degree of knowledge about the product and the participants' previous experience increase the purchasing intention for the MG.

Originality/value

In contrast to traditional market research studies that use hypothetical methods, the authors use non‐hypothetical elicitation mechanism to elicit consumers' valuation for an important local food product in Catalonia, Spain. Since actual products and cash were used in the experiments, the authors provided the respondents with an incentive to reveal their true preferences and valuation for the product of interest. The authors also tested the effect of provision of certain types of information on WTP and analyzed the factors that significantly influence consumers' WTP for the product.

Citation

Akaichi, F., Gil, J.M. and Nayga, R.M. (2012), "Assessing the market potential for a local food product: Evidence from a non‐hypothetical economic experiment", British Food Journal, Vol. 114 No. 1, pp. 19-39. https://doi.org/10.1108/00070701211197347