Determinants and outcomes of price premium and loyalty: A food case study

Abstract

This paper examines determinants and outcomes of price premium and loyalty on a food product.The study attempts to fill this gap by offering new insights into consumer's perspectives, as concerns food marketing, and to empirically test a model that includes five determinants or drivers: awareness, corporate social responsibility, origin, quality, and positioning. Furthermore, the greater or weaker impact of price premium and loyalty on their outcomes have been also studied, specifically, the influence that word-of-mouth has on people's opinions. This study uses a survey research design, and the data were collected from 278 consumers of a specific food product: olive oil. Structural equation modeling with partial least squares regression technique was used to test the hypotheses. The results provide empirical support for the proposed differences on the relationships of price premium and loyalty with their determinants and outcomes. Positioning is the strongest and unique element of the determinants of price premium.Awareness, corporate social responsibility, and quality are the drivers of loyalty. Both constructs have a positive influence on word-of-mouth. The findings reveal important practical implications for food managers, in terms of making a proper design of strategies from the analysis of consumer's behavior. To stay competitive, practitioners should work in an ongoing process. Specifically, they should pay attention to quality, sustainable olive oil, locally made products, or food marketing.

Service Customer Loyalty: An Evaluation Based on Loyalty Factors

“…Over the last four decades, research on customer loyalty factors has been a prolific field. Marketing scholars [9,11,[13][14][15][16][18][19][20] have developed and validated more than one hundred different factors determining customer loyalty. Classifications of factors determining customer loyalty show that researchers' opinions on collections of factors vary.…”

“…Price is viewed as an important factor, especially for middle-income earners and/or in commodity-based sectors [13,47]. Customers tend to compare the price of the service provider of a particular type of service with prices of other providers offering the same service.…”

“…Customers may choose to pick certain providers' services based on their quality [13,14,20]. Berezny and Konecny [51] state that customers judge service quality based on the number of complaints received.…”

“…Customer loyalty evaluation is an important condition for the development of customer loyalty. A range of customer loyalty evaluation instruments has been developed by marketing scholars over the last few decades [3][4][5][6][7][8][9][10][11][12][13][14][15][16]. Instruments for the evaluation of customer loyalty can be classified as behavioral, attitudinal, and multidimensional [4][5][6][7][8].…”

What Killed HTC and Kept Apple Alive? Brand Sustainability Comparison of Two Asian Countries

“…Prior research has indicated that in business markets, a brand can create price premium [73,75,76], especially when the brand has high brand awareness, perceived quality, and perceived prestige value. Thus, even though there is a price increase, consumer's responses towards the brand will stay the same or more elastic.…”