State Branding of Gift Shop and Restaurant Menu Items: Consumer Willingness to Pay for Local Product

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State Branding of Gift Shop and Restaurant Menu
Items Consumer Willingness to Pay for Local
Products

• Symposium 2003 Branding, Labeling and Identify
  Preservation Whats in it for Agribusiness?
• Department of Rural Economy / University of
  Alberta
• Tim J. Burkink
• Paul Patterson
• Agribusiness An
• International Journal
• (Forthcoming)

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State Branding Programs

• Arizona Grown, Jersey Fresh
• Effectiveness?
• Depends on successful differentiation
• Price premium - brand loyalty (inelastic demand)
• Previous studies - Grocery Products
• New Jersey Study - Effective Differentiation
• Arizona Study - No shift in demand

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Branding Gift Shop Restaurant Menu Items

• Potential for successful differentiation
• Tourists are less price sensitive (price
  inelastic) and more willing to spend additional
  increments of income (income elastic)
• Important part of states economy
• Important attribute for tourist/consumer?
• Arizona experience
• Potential for licensing fees

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Study Objective

• Determine the value consumers (tourists) place on
  the state branding attribute
• First study on state branding to establish such a
  value

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MethodologyConjoint Analysis

• How consumers develop preferences
• Value is developed by combining separate amounts
  of utility provided by each attribute
• Products, attributes, levels
• Respondents provide overall evaluation
• The importance of each attribute and each
  attribute value is determined from overall
  ratings via the respondents preference structure
• Regress overall utility on product attributes,
  including price
• Marginal willingness to pay, or the implicit
  price for a certain attribute is obtained

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MethodologyConjoint Analysis

• Present consumers with depictions of products
  with attributes systematically varied - price,
  labeling information - Arizona Grown or Pride of
  Arizona
• Consumer provides rating on product
• Can determine consumers willingness to pay
  (implicit price) for Arizona Grown or information
  on product origin

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Experimental Products

• Restaurant Menu Items
• Beef with vegetables
• Lamb with vegetables
• Ostrich with vegetables
• Gift Items
• Wine
• Salsa
• Candy

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Example Beef Card
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Example Lamb Card
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Example Ostrich Card
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Example Wine Card
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Example Salsa Card
13
Example Candy Card
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Experimental DesignMenu Items

• Product - Beef, Lamb, Ostrich
• Logo
• Origin Description
• Price - 13, 16, 19
• Fractional factorial - subset of factor levels is
  orthogonal and balanced (each level in a factor
  appears the same number of times)
• Nearly orthogonal design - 18 cards

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Experimental DesignGift Items

• Wine
• Logo (Arizona Grown), origin description,
  organic, price - 13.95, 16.95, 19.95
• Salsa
• Logo (Pride of Arizona), origin description,
  price - 5.50, 7.50, 9.50
• Candy
• Logo (Pride of Arizona), origin description,
  price - 4.95, 6.95, 8.95
• Orthogonal design - 6 cards each

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Methodology

• Rating scaling - likelihood of purchase
• 1Extremely unlikely,.., 10Extremely likely
• Surveys
• Phoenix Sky Harbor Airport, Biltmore Fashion
  Square
• Incentive gift - Arizona Highways
• Gift survey - February-March, 2001
• Menu survey - March-April, 2001

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Survey Respondents

• Menu - 79 respondents
• Gift - 86 respondents
• 22 states, 6 foreign countries
• Nearly evenly divided between men and women
• Middle-aged
• Middle to upper income

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Menu ItemsWillingness to Pay
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WineWillingness to Pay
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SalsaWillingness to Pay
21
CandyWillingness to Pay
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Summary of ResultsRestaurant Survey

• Tourists do value origin
• New marketing opportunities
• Similar to existing restaurant promotions
• Challenges
• Must insure origin
• Menu changes for seasonal products

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Summary of ResultsGift Items

• Consumers do value origin
• Logo more effective
• Challenge
• Logo for all production?