Organic consumers’ price knowledge, willingness-to-pay and purchase decision

Abstract

Purpose The purpose of this paper is to gain insights into organic consumers’ price sensitivity by investigating price knowledge, willingness-to-pay and real purchase decision. Design/methodology/approach Organic food consumers’ price knowledge, willingness-to-pay and real purchase decision were examined in a comprehensive field study with 642 respondents. An innovative method was used to collect data for products that were truly relevant to the respondents: before entering the shop, respondents were asked about the items on their shopping list, the prices they expected to find and the maximum prices they were willing to pay. If respondents stated a willingness-to-pay value below the actual store price, they were approached again after shopping to verify their purchase decision. Findings The great majority of respondents failed to estimate the correct store price. The deviation between the estimated price and the actual store price was on average 19.9 per cent. The respondents were willing to pay on average 52.7 per cent above store prices. It was revealed that in 67.0 per cent of the cases, respondents bought a product even though the store price was higher than the willingness-to-pay they stated upon entering the store. Practical implications Category-specific insights into price knowledge and willingness-to-pay of organic consumers might be used for price differentiation strategies. Originality/value To the authors’ knowledge, this is the first study to investigate organic consumers’ item- and store-specific price knowledge, willingness-to-pay and real purchase decision in a single-source approach.