The role of price as a product attribute in the organic food context: An exploration based on actual purchase data

Abstract

High prices are often quoted as an obstacle to consumer purchase of organic food products. This article investigates the market performance of organic food products at different price levels and whether high price is necessarily a disadvantage for organic food products, especially with regard to generating repeat purchase. Based on analyses of panel purchase data from 2011 in Denmark, the study explores the effects of production method (organic vs. conventional) and price on consumers’ repeat purchase and cross-purchase across four product categories: red meat, chicken, milk and hard cheese. Results show that a high price is a disadvantage for generating repeat purchase of organic food products. Although organic products enjoy higher repeat purchase than conventional products overall, a high price generates less repeat purchase of organic products than a low or a medium price in all product categories; whereas in the case of conventional food products the situation is the reverse. At the same time, the cross-purchase analysis reveals that consumers who buy organic products from the high price tier are less likely to switch to other price tiers than consumers who buy low or medium price organic products (i.e. there is a spillover of high price organic food purchases to other product categories). Implications for pricing strategies for organic food products are discussed.