Consumers’ willingness to purchase genetically modified products with superior benefit when the conventional alternative is risky, and its relationship to GM food

Amir HeimanDepartment of Agricultural Economics and Management, The Hebrew University

of Jerusalem, Israel.

       

Paper prepared for presentation at the 16th ICABR Conference – 128th EAAE Seminar

“THE POLITICAL ECONOMY OF THE BIOECONOMY :BIOTECHNOLOGY AND BIOFUEL”

Ravello, Italy, June 24-27, 2012

• Given the findings that consumers are willing to trade risk for health benefits, or with even for [the benefit of] improved taste, then:

• One way to facilitate adoption of GM products is to develop high-benefit products

• The other way is to develop products that that will reduce levels of risk associated with the consumption of traditional food products.

• Scholars believe that either way — high benefit or low risk — marketers need to offer GM food at an introductory price and only after consumers get used to the idea of consuming it can its price be raised.

• This recommendation is consistent with consumers’ demand for discounts on GM food products.

• This study analyzes whether the opposite strategy, which begins at a high starting point and reducing the target price is an efficient tactic in introducing biotechnology.

• Starting high and ending at a lower point is termed the reverse foot-in-the-door tactics.

Literature & Hypotheses

• Consumers are willing to purchase vegetables and fruits with enhanced benefits produced by biotechnology (Colson, Huffman, & Rousu, 2011; Uzogara, 2000)

• Consumers showed inclination to purchase GM product with a specific benefit (such as enhanced nutritional value)and pay a price premium (Colson & Huffman, 2011 )

• Using lower pesticide level as a selling point may actually serve to reduce support levels (Krishna & Qaim, 2008)

• H1: The higher the benefit the higher the acceptance rate of GM productsAnd

• H2: Using the reduced pesticide level of GM products as selling argument may actually reduce their acceptance.

The high risk scenario

• Cosmetic surgeries such as lipid (fat) suction and facial lifting, while providing high benefit, are risky.

• Yet unlike the case of food consumption, many consumers are willing to be exposed to high risk in order to improve their physical appearance.

• H3: The acceptance rate of appearance-enhancing products is expected to be higher than that of GM food.

Foot-in-the-door tactics and its reversal

• The foot-in-the-door model is based on the notion that it easier to commit or agree to something that bears a low cost (risk) than to something that involves high risk (cost).

• Agreement to the smaller step increases the likelihood of compliance to commit to (purchase) a larger-scale commitment (Burger, 1999; Freedman & Fraser, 1966)

• The foot-in-the-door strategy has been applied to:

• Auction pricing, i.e., starting low and ending high

• Membership and subscription offers that offer the first period at a reduced price

• To charitable donations.

The reverse foot-in-the-door mechanism

• According to the model, while a high initial offer increases linearly the closure price, it decreases the likelihood of closing the deal since it discourages buyers.

• The model is largely based on encoring, and was studied in the context of personal goals (Mussweiler & Strack, 2000) and negotiation (Galinsky & Mussweiler, 2001).

• Thus it is hypothesized that consumers exposed to a high-risk scenario are more likely to accept low-risk offers, and therefore acceptance of GM food is likely to be higher.

Methodology

• Subjects: The survey included 366 female respondents .

• Most of our respondents are married (61.8%); 28.1% are unmarried; and 10.1% are divorced or widowed.

• Data collection: Questionnaires were distributed to respondents at gyms, workplaces, drugstores, and beauty salons

Empirical Results

• willingness to try biotechnology-based beauty-enhancing products and GM food products

Mean (standard

error)

Willingness to try biotech moisturizer 6.16

(0.21)

Willingness to try GM weight-loss pill 2.59

(0.18)

Willingness to purchase GMF if it is tastier 4.76

(0.186) Willingness to purchase GMF with reduced pesticide

5.35 (0.186)

Comparing our results with previous studies

• Average willingness to purchase GM food in our study is higher than that reported by Krishna and Qaim (2008); Hamilton, Sunding, and Ziberman (2003); Canavari and Nayga (2009) (32%); and Boccaletti and Moro (2000) (30.5% and 34.5% respectively); Knight et al. (2007) and Lusk at al. (2004).

• Some studies, however, reported higher acceptance levels, such as that of Heiman et al. (2011) (60.9% for better-tasting product and 83.7% for lower pesticide vegetables); and Ganier, Chern, & Hahn (2006) (68.4%)

• This result partially supports Hypothesis (4) – the reverse foot in the door

• The difference between the acceptance rate of biotech beauty-enhancing products and GM food products depends on the nature of the product.

• While willingness to purchase is higher for moisturizer than for GM food regardless of their benefits, willingness to purchase the revolutionary weight-loss pill is significantly lower.

• These findings partially support Hypothesis H3 and support Hypothesis H1. Hypothesis (2) is rejected, consistent with Heiman et al. (2011)

Attitude to Risk and WTP GMF

• There is a strong, significant correlation between willingness to purchase GM food grown with less pesticide, and willingness to purchase GM moisturizer (F value 3.96) and GM weight-loss pill (WLP) (F value 6.45)

objects both pill and moisturizer supports moisturizer objects pill supports pill objects moisturizer supports both0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

WTP for GMF as function of WTP beauty biotech products

Object may consider Support

Who are they?

Choice to buy genetically modified vegetables with lower pesticide level as a function of beauty enhancing

biotech product.• Choice of GMF (dependent variable)

Lower pesticide

Better taste

Marginal

effect t Sig. Marginal

effect T Sig.

(Constant) 5.41

(0.87) 6.24 0.00 5.15

(0.79) 6.54 0.00

Age -0.11

(0.15) -0.74 0.46 -0.30

(0.14) -2.11 0.04

Education -0.24

(0.19) -1.31 0.19 -0.41

(0.17) -2.34 0.02

Monthly household income -0.11

(0.23) -0.50 0.62 0.30

(0.04) 7.11 0.00

Willingness to buy GM moisturizer

0.34 (0.04) 8.19 0.00

0.25 (0.05)

5.08 0.00

Willingness to buy GM weight-loss pill

0.20

(0.05) 3.99 0.00

0.26 (0.32)

0.80 0.43

Have read articles on biotechnology

0.46 (0.33) 1.38 0.17

-0.45 (0.19)

-2.36 0.02

Family status -0.55

(0.19) -2.81 0.01 5.15

(0.79) 6.54 0.00

• Willingness to purchase biotechnology-based beauty-enhancing products (moisturizer and weight-loss pill) significantly increased willingness to purchase GMF grown using less pesticide.

• Willingness to try the diet pill affected willingness to purchase GM with less pesticide only, and did not affect willingness to purchase GM vegetables with enhanced taste.

• Having children reduced willingness to purchase GMF with less pesticide, and increased that to buying better-tasting products

• Having read (more) articles on biotechnology reduced willingness to buy the tastier GM product.

Conclusion and future research directions

• This paper shows that the acceptance rate for the GM products is higher than that reported in the literature.

• We found that consumers who are more willing to take the risk and purchase biotech beauty-enhancing products are more likely to purchase GM vegetables. This finding indicates that risk profiling of consumers may prove to be efficient in segmentation, which always increases the efficiency of marketing efforts.

• Using lower risk as the marketing focal point may be dangerous. The recommendation to provide consumers with reliable information that aims at reducing overestimated risk is questionable, as risk stimuli can increase the accessibility to the unsafe nature of the product, thereby actually increasing uncertainty.

• Although we showed in this study that lower-pesticide GM food obtained better acceptance rates than did tastier GM food, a more systematic study needs to be conducted in order to support this direction.

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