Does Production Labeling Stigmatize Conventional Milk?

Abstract

Production labeling is a common approach for differentiating otherwise similar products in the marketplace. While these labels may convey positive messages to consumers about the new product, they may simultaneously stigmatize the conventionally-produced product by highlighting perceived problems. The net economic result for producers can be negative since consumers may decrease their willingness to pay for the conventional product that dominates the market, while the new product has a relatively small market share. This research identifies this stigma effect in the case of milk, where the introduction of rBST-Free and organic milk reduces consumers' willingness to purchase conventional milk.In this thesis, the question of whether production labeling is driving consumer's bias against conventional milk is investigated in an experimental setting by eliciting the willingness to pay in a sample of Cornell University staff and graduate students for milk produced via different production methods and of varying fat contents. Through altering the order in which participants bid for the different types

Demand for functional and nutritional enhancements in specialty milk products

“…However, since soy drink is naturally LFCF, and mostly organic, we observe a significant price premium on soy drink products. Being organic may not be considered as functional or nutritional enhancement, but consumers are willing to pay a premium price for organic milk (Kanter et al, 2009). Also, as expected, vitamin/mineral enhancement labels affect the final prices in a positive way.…”

“…The research mainly concentrates on the scientific benefits of conjugated linoleic acid (Koba & Yanagita, 2013) and other micro contents (Horrocks & Yeo, 1999). Nevertheless limited work has been done on how much consumers are willing to pay for nutritional enrichments in milk products (Dhar & Foltz, 2005;Kanter, Messer, & Kaiser, 2009;Kovalsky & Lusk, 2013).…”

Consumer demand for local honey

“…To enable participants to learn about the auction mechanism and become familiar with the computer software, they first completed two low-stakes rounds: one involving a pencil and one a pen (Kanter et al, 2009;Liu et al, 2013). Participants were given an additional $3 and the range of bids was restricted to $0 and $1.50 for each of these low-stakes items.…”

Combining experimental auctions with a modified home-use test to assess rural consumers’ acceptance of quality protein maize, a biofortified crop

“…A similar negative effect of information on WTP for the conventional varieties was found during an experiment with rural consumers in Ghana with orange maize, biofortified with provitamin A carotenoids (De Groote, Tomlins, et al, 2010b), In Ghana, the message contained positive information on the benefits of vitamin A and biofortified maize, but no explicit negative information about the lack of it in conventional varieties. Still, labels on new products with positive messages to distinguish them can simultaneously stigmatize the conventionally produced product by highlighting perceived problems, and thereby reducing WTP for the conventional product.An experiment in the US identified this stigma for milk, where the introduction of growth-hormone free and organic milk labels reduced consumers' WTP for conventional milk by 33% and 45%, respectively (Kanter, Messer, & Kaiser, 2009). Similarly, another experiment conducted in France showed a reduction in WTP for conventional food products after the introduction of certified products (for heavy metal content), and no increase in WTP for the latter (Rozan, Stenger, & Willinger, 2004).…”