Consumers’ Risk Perceptions, Risk Reduction Strategies and Willingness to Pay Premium Prices for Organic Products

Abstract

Over the past three decades the demand for organic products has risen steadily, as has their price. Consumers belief that organic products are better for their health than conventional products. However, differentiating between organic and conventional products is difficult. Skepticism about the virtues of organic products increases consumers' risk perceptions, which affects their purchasing decisions. Consumers' risk perceptions and their risk reduction strategies influence their behaviour and impact upon their willingness to pay premium prices (WTPpp) for food products. However, there are no studies on consumers' risk perceptions and their risk reduction strategies, including their WTPpp for organic products. This study investigates consumers' purchasing behaviour in the context of their risk perceptions, risk reduction strategies and their WTPpp for organic products. A self-administered questionnaire was used to collect data from 784 respondents who purchased organic products in Bangkok, Thailand. Structural equation modelling (SEM) was used to analyse the survey data. This study's finding is the first to confirm that consumers' WTPpp for organic products is driven by their risk perceptions and risk reduction strategies. The study shows that while consumers' risk perceptions have a positive influence on their WTPpp for organic products, their risk reduction strategies have a negative influence. Consumer lifestyles and attitudes towards organic products have positive influences on their risk perceptions.