Examining Consumer Preferences and Willingness to Pay for Organic Vegetable Attributes: Using a Discrete Choice Experiment
Heptari Elita Dewi1*, Anisa Aprilia2, Andrean Eka Hardana3, Imaniar Ilmi Pariasa4
Department of Socio-Economics, Faculty of Agriculture, Brawijaya University, Veteran Street, Malang (65145), Indonesia
Received: 30 March 2022; Revised: 1 April 2022; Accepted: 20 May 2022
ABSTRACT
This research aims to identify consumer attitudes toward organic green vegetables by estimating the degree of Willingness To Pay (WTP) for various attributes to evaluate the position of these organic vegetables and determine preferences for organic green vegetables based on income. This study used an online survey with 191 respondents on Java Island. The Discrete Choice Experiment was used to investigate product selection, WTP, and the relationship between the four characteristics of vegetables and income. The findings showed that consumers prefer organic and pesticide-free vegetables that are good for health, have low chemical emissions and a lower environmental impact, and are less expensive than non-organic vegetables. This is a challenge for producers and marketers to develop responsible input management strategies to produce high- quality vegetables at a low cost and with minimal environmental impact.
Keywords: ecological; impact; health; product; choice How to cite :
Dewi, H. E., Aprilia, A., Hardana, A. E., & Pariasa, I. I. (2022). Examining Consumer Preferences and Willingness to Pay for Organic Vegetable Attributes : Using a Discrete Choice Experiment.
HABITAT, 33(2), 112–121. https://doi.org/10.21776/ub.habitat.2022.033.2.12
1. Introduction
Consumer concerns about healthy lives and the environment have become a driving force in changing food purchasing intentions over the previous few decades (Ghvanidze et al., 2017). In reality, due to worries about food safety and increased disposable income, consumers in developing countries are willing to pay extra for safe and high-quality goods such as organic vegetables (Ha et al., 2019). Food safety awareness and income classification have a substantial impact on vegetable expenditure in various consumer distribution groups (Amfo et al., 2019). Consumer preferences and Willingness To Pay (WTP) for organic food, on the other hand, differ by product category (Drugova et al., 2020).
Organic goods are generally preferred over conventional goods, and domestic goods are preferred over imported goods (Thøgersen et al., 2019).
Consumer perceptions of organic vegetables, label trust, and disposable family income all contribute to an increase in the WTP
for organic vegetables in both urban and rural areas. Meanwhile, the extremely high cost of organic vegetables, as well as a lack of trust in organic labels, are the primary impediments to organic purchases (Ha et al., 2019).
Environmental concerns, trust in the country as an organic food producer, and ethnocentrism all influence the extent to which organic labels and country of origin influence consumer choices (Thøgersen et al., 2019). Meanwhile, information regarding price and nutrition has significantly more influence on consumer food choices than information about manufacturers' social responsibility or the environmental impact of production. Customers who are concerned about the environment and the creation of goods value product features that highlight the environmental impact of production and the social responsibility of food producers (Ghvanidze et al., 2017).
The most important psychological factor influencing buyers' Willingness To Pay for products is health awareness, which is followed by product quality, flavor, packaging, and price.
Consumers prefer convenience when purchasing health and wellness food products and are less influenced by market offerings and in-store sales help (Ali & Ali, 2020). Consumers' perceived
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*Correspondence Author.
E-mail: [email protected]
benefits from organic food (environment and health) are the factors driving demand for organic food. Furthermore, more information about organic food products is critical to increasing demand because it increases consumers' organic knowledge (Gracia & de Magistris, 2008).
Because of the harmful health effects of conventional agricultural goods, consumers are advised to purchase organic products (Bhattarai, 2019). Health is a significant motivator for purchasing organic food products (Ditlevsen et al., 2019).
At a time when organic food is becoming more popular, both manufacturers and retailers are grappling with the issue of how to properly price their products. WTP for organic food is frequently driven by environmental concerns, health awareness, quality, and proximity (Katt &
Meixner, 2020). WTPs for organic claims are higher than for local production claims, and personal characteristics can be a source of heterogeneity in consumer preferences for local production (Bazzani et al., 2017). Higher levels of organic knowledge will increase the likelihood of purchasing organic food and, to a lesser extent, the level of consumption among current consumers (Gracia & de Magistris, 2008). In organic food promotion activities, age characteristics and consumer motivation to consume organic food are important factors to consider (Septianto &
Kemper, 2021).
Consumers who prefer organic versions of products exhibit prosocial characteristics (Luomala et al., 2020). When their first choice is organic, men with low levels of health awareness are more likely to choose unhealthy foods (Shin &
Mattila, 2019). Education has a significant impact on the likelihood of purchasing organic products (Dimitri & Dettmann, 2012). Adolescents' preference for healthy food, on the other hand, appears to be related to their level of food literacy.
The proclivity of respondents to read labels and nutrition facts is positively related to their preference for healthier foods. Peers have little influence, whereas family has a positive influence on adolescents' healthy choices (Corazza et al., 2021). Meanwhile, the two most important food indicators in consumer preferences for fruit and vegetable imports are food safety certification and product freshness (Yang et al., 2021).
Chemical contamination is still a source of concern among food vendors. Organic vegetable marketing efforts should focus on popular high- end restaurants. The food vendor sector will likely
find it difficult to shift vegetable production toward a more sustainable strategy (Probst et al., 2012). The three primary perceived benefits of safe vegetables for consumers are food safety, stringent production and processing, and a healthy environment. Family food expenditure, children, familiarity, differential cognition, safety awareness, nutritional health, packaging, label trust, and online shopping experience all influence customer buy intention for safe vegetables, but price level, safety status, and freshness had no negative effect (Zhang et al., 2018).
The objectives of this research are to better understand consumer attitudes toward organic green vegetables, estimate their Willingness To Pay (WTP) for green vegetables with various attributes to evaluate the position of these organic vegetables, including ecological impact and health benefits, and determine income-based preferences for organic green vegetables. The findings of this study can assist players in the organic vegetable industry in better understanding consumers' motivations for purchasing organic vegetables. As a result, players in the organic vegetable industry can develop new strategies for better positioning.
Furthermore, they can identify the best customer segments and assess potential opportunities (Güney, 2020).
2. Theoretical Underpinning
Consumer acceptability of fruits and vegetables provides insight into the evolution of consumer perceptions of fruit and vegetable quality (Brückner, 2022). Consumer choice is based on health, nutrition, and taste benefits.
Meanwhile, health and nutrition statements had the greatest impact on consumer choice, followed by taste benefits. However, consumers found shelf-life extension to be less important for non- thermally processed fruits and vegetables (Song et al., 2022). Moreover, the primary influencing factors affecting consumers' buying intentions, purchase behavior, and Willingness To Pay for green vegetable intake are their belief in protein content, mineral content, vitamin content, organic vegetable safety, freshness, and taste (Yin et al., 2022).
Choice Experiments (CE) are increasingly used to analyze customer preferences in marketing, environmental economics, transportation, and health economics. Consumer theory, random utility theory, and psychology underpin CE. The main assumption is that consumers maximize utility and will choose items
that maximize utility among bundles (Troiano et al., 2016). The goal of discrete choice experiments is to determine the trade-offs underlying customer choices. Discrete Choice Experiments follow the random utility theory, which argues that people acquire product preferences based on utilities (i.e., perceived values). Consumers choose products with more attractive traits, which influences customer choices (Czoli et al., 2016). DCE is a quantitative technique to uncover individual preferences. This helps researchers to discover how people value specific features of a software, product, or service by asking them to express their preferences. DCE has been used in high-income economic, health, planning, and resource allocation choices (Mangham et al., 2009). DCE asks respondents to choose from a hypothetical alternative set. Each alternative is explained by a set of traits, and the response determines the importance of each attribute. Unlike other preference procedures that require participants to rank or assess alternatives, DCE is more analogous to real-world decisions (Mangham et al., 2009). DCEs are a popular econometric method for examining population choice distributions. When analyzing the impact of categorical variables on choice (Friedel et al., 2022).
Figure 1. Conceptual Framework
Because organic food is becoming more popular, buyers' health awareness is the most important psychological factor influencing their willingness to make a purchase (Ali & Ali, 2020).
This research focuses on green organic vegetables.
The attributes used include vegetable types based on the production method, price, environmental impact, and health benefits (Gilmour et al., 2019;
Ghvanidze et al., 2017). These four characteristics are used in the DCE analysis, which results in consumer product choice and WTP for organic vegetables. Furthermore, the extremely high cost of organic vegetables, as well as a lack of trust in organic labels, are significant barriers to organic purchases (Ha et al., 2019). As a result, the purposes of this study are to examine the relationship between income and the four studied attributes (Hypothesis 1 in Figure 1) and then discover socioeconomic preferences for organic green vegetables.
3. Research Methods
The data employed in this study was obtained from the online survey conducted on the island of Java during the period of May-June 2021.
Java Island was chosen purposefully because this area has the largest population in Indonesia. In addition, this island is an organic vegetable production center in Indonesia. A total of 191 respondents who are consumers of organic vegetables were selected through non-probability sampling, which is judgmental sampling based on specific criteria (Sekaran & Bougie, 2016), while the sample size was extracted from an infinite population with a maximum estimation (p) of 0.5 and a confidence level of 95%.
The questionnaire was held in several parts to gather respondents' information related to socio-demographic characteristics and their attitudes towards organic vegetables to investigate the attributes of organic vegetable products that have the greatest influence on consumers' purchasing behavior of organic vegetables.
Furthermore, an empirical analysis was conducted using a discrete choice experiment (DCE) design with visual simulation. The Discrete Choice Experiment was used to investigate the impact of attributes of organic vegetable products in the form of green leafy vegetables such as spinach, kale, lettuce, mustard greens, and pak choi (Brassica campestris L.) and the like, where the vegetables are priced similarly. The DCE was made up of four product attributes, each with three levels (see Table 1). In this study, DCE analysis was also used to analyze the consumers' preferences in monetary terms based on Willingness To Pay (WTP) (Ghvanidze et al., 2017).
Information on Product attributes Type
Price Ecological
impact Health benefits
Product choices for
organic vegetables
Willingnes to pay for
organic vegetables
Income H I
Table 1. The Design of Discrete Choice Experiment (Ghvanidze et al., 2017; Rahmani et al., 2019;
Yeh et al., 2020)
Attribute Level Operational
Type Organic Vegetables are grown without the use of synthetic chemical fertilizers and pesticides
Non-Organic Vegetables are grown with (a lot or a little) chemical fertilizers and pesticides
Semi Organic Vegetables are grown using a combination of synthetic and organic chemicals
Price High IDR 1,000 / 250 grams
Moderate IDR 12,500 / 250 grams
Low IDR 6,500/ 250 grams
Ecological impact Minimum chemical emissions and low environmental harm
Vegetables are produced with minimal chemical emissions and low environmental impacts
Minimum chemical emission
Vegetables are produced by reducing chemical emissions
No claim There is no claim about the environmental impact.
Health benefits Free of pesticides and good for health
Vegetables have no chemical emissions and are beneficial to consumers' health.
Minimum pesticide Vegetables contain less chemical emissions
No claim There has been no claim of health benefits associated with chemical emissions.
An extensive literature review and the results of pilot studies were used to select product attributes, such as types of vegetables based on the production method, price, environmental impact, and health benefits. Previous research examined production method attributes (Gilmour et al., 2019), price, environmental impact, and health benefits (Ghvanidze et al., 2017). As a result, a written statement specifically related to product information was used in the operational section to avoid confusion, mistrust, and not understanding the label related to this product attribute. DCE is created by combining factorial and orthogonal designs (Ghvanidze et al., 2017). There were a total of 64 options for four attributes, each with three levels. The 64 possible combinations of these attributes were then divided into four consumer blocks, with each respondent receiving 16 possible combinations. DCE was used to analyze product selection using R software, as well as to determine Willingness To Pay. The P- value was used to test the relationship between the four attributes and income on organic vegetables (answering hypothesis 1); if P is 0.05, the relationship is significant.
4. Results and Discussion
The characteristics of the respondents in this study are shown in Table 2. Consumers of organic products were dominated by women, with a total of 69 percent being between the ages of 20 and 29. This is also supported by the dominance from the level of secondary education to tertiary institutions, which means that consumer preferences in choosing organic products are obtained from education related to the benefits of consuming organic products (Wojciechowska et al, 2021). Furthermore, the income aspect influenced the choice of organic items that better match the needs, such as purchasing organic vegetables as one of the high-quality food ingredients in this situation. The average income of the people who choose to buy organic vegetables is IDR 3,500,000 (Aschemann et. al, 2017 and Popa et. al, 2019) and the majority of the research participants were from the province of East Java, which is Indonesia's top producer of vegetables, including organic vegetables (Permana, 2016).
Table 2. Respondent Characteristics
Characteristics Categories Total Percentage
Gender Female 132 69%
Male 59 31%
Total 191 100%
Age < 20 years 36 19%
20–29 years 118 62%
30–39 years 28 15%
40–49 years 4 2%
>49 years 5 3%
Total 191 100%
Education Low (under high school) 2 1%
Medium (high school) 97 51%
High (college) 92 48%
Total 191 100%
Income <IDR 3,500000 147 77%
IDR 3,500000–5,000,000 21 11%
IDR 5,000,000–6,500,000 7 4%
>IDR 6,500,000 16 8%
Total 191 100%
Domicile Province of the Special Capital Region of Jakarta
17 9%
Province of Banten 10 5%
Province of West Java 10 5%
Province of Central Java 8 4%
Province of East Java 138 72%
Province of the Special Region of Yogyakarta
8 4%
Total 191 100%
The analysis of customer preferences for organic, semi-organic, and non-organic vegetables yielded the following results in Table 3.
Table 3. Results of DCE analysis on organic, semi-organic, and non-organic vegetables
Description coef exp(coef.) se(coef.) z p
ASC 580 1786 166 3488 0.000486
Organic 2231 9314 207 10787 < 2e-16
Semi organic 1137 3116 171 6639 3.15e-11
Pesticide Free 1559 4756 164 9513 < 2e-16
Pesticide minimum 206 1228 165 1246 0.212688
Emission minimum 144 1155 169 1 0.392274
Emission minimum and effect 635 1888 153 4145 3.39e-05
Price -0.09848 1000 0 -11351 < 2e-16
organic: income -67 935 87 -0.772 0.440287
Semi organic: income -89 915 75 -1185 0.236110
Pesticide-free: income -89 915 69 -1290 0.197015
Pesticide minimum: income 50 1051 73 0 0.493908
Emission minimum: income -98 907 75 -1298 0.194162
Emission minimum and effect: income -136 873 64 -2118 0.034217
There are values from numerous factors in the analysis of customer preferences, one of which is the ASC (Alternative Specific Content) value.
The ASC value is a compromise or the consumer's refusal to choose (non-option). The ASC value is 580, according to Table 1. Consumers who have a positive ASC value are less likely to choose between the two alternative products provided in the choice sets.
4.1. Attributes of Vegetable Types Based on Production Method
The following are the results of the analysis of consumer preferences based on the attributes of the types of vegetables based on the production method.
Table 4. Analysis of consumer preferences based on vegetable types
No Description Utility Coefficient (coef.)
1 Organic 2231
2 Semi-
organic 1137
There were three levels of green vegetable types employed in this study: non-organic, semi- organic, and organic. The control variable in choice sets is non-organic, so non-organic green vegetables become the reference from the consumer preference analysis results. Organic vegetables have a utility coefficient of 2231, as can be shown in Table 2. The sorts of organic vegetables that have a positive number (+) in this data. This shows that consumers prefer organic vegetables compared to non-organic vegetables by 2231 utility.
On the other hand, semi-organic vegetables have a positive utility coefficient of 1137.
Consumers prefer semi-organic vegetables over non-organic vegetables by 1137, according to this data. Consumers prefer organic and semi-organic vegetables over non-organic vegetables, according to the findings of the study. Organic vegetables are also preferred by consumers over semi-organic vegetables. In general, people prefer food ingredients that are both healthy and environmentally friendly, which has resulted in a surge in demand for organic products (Vietoris et al, 2016; Massaglia et al, 2019; Martin et al, 2021).
4.2. Attributes of Health Benefits
The following are the findings of a consumer preference study based on health benefit qualities.
Table 5. Analysis of Consumer Preferences Based on Health Benefits
No Description
Utility Coefficient
(coef.) 1 Pesticide-free and
good for health 1559
2 Minimum pesticide 206
The health benefit attributes used in this study consisted of 3 levels, namely no claim; free of pesticides (pesticide-free) and good for health;
and a minimum of pesticides. In choice sets, the control variable is that there is no claim, which is the reference from the analysis of consumer preferences. Based on Table 3, the pesticide-free and good health attributes have a positive utility coefficient of 1559. This shows that consumers prefer vegetables that have pesticide-free attributes and are good for health on the packaging compared to vegetables that do not have a pesticide-free claim of 1559 utilities.
The minimum pesticide label, on the other hand, has a positive utility coefficient of 206. This demonstrates that customers prefer vegetables with the fewest pesticide features to those with no 206 utility claims. Based on the findings of the study, it can be inferred that customers prefer pesticide-free labels and minimal pesticide features to pesticide-free vegetables. In comparison to vegetables with little pesticide qualities, consumers choose pesticide-free vegetables that are also good for their health.
(Wanwimolruk et al., 2016; Chen et al., 2018;
Peschel et al., 2019); This is in line with the highest preference for organic and pesticide-free vegetables. A new trend in agricultural production is to adopt a healthy lifestyle that is familiar with the previous environment, which uses non-natural chemicals like chemical fertilizers, synthetic chemical pesticides, and growth hormones (Meier et al., 2019; Govindasamy et al., 2020).
4.3. Attributes of Ecological Impact
The following table is the result of consumer preference analysis based on ecological impact attributes.
Table 6. Analysis of Consumer Preferences Based on Ecological Impact
No Descriptions Utility Coefficient (coef) 1 Minimum chemical
emission 144
2
Minimum chemical emissions and low environmental harm
635
Then, for the minimum attribute of chemical emissions and reducing environmental adverse effects, it has a positive utility coefficient value of 635. This shows that consumers prefer vegetables with minimum attributes of chemical emissions and low environmental adverse impacts compared to vegetables without claims of 635 utility. Based on the results of the analysis, it can be concluded that consumers prefer vegetables with the label "minimum chemical emissions" and
"minimum chemical emissions and low environmental harm" compared to vegetables without labels (claims). Consumers also have a higher preference for vegetables with a minimum label of chemical emissions and low environmental impacts compared to vegetables with a minimum label of chemical emissions (Clune et al, 2017; Clark et al, 2019; Sala, 2017).
This is consistent with the greatest preference for organic vegetables and the label is pesticide-free and good for health. This healthy lifestyle by consuming organic vegetables requires guarantees that agricultural products must be safe for consumption, that nutritional content is also maintained, and that environmental friendliness has an impact on sustainable biodiversity. This can be interpreted to mean that organic vegetable cultivation is considered good for environmental sustainability and safer for animal and plant survival (Vivek et al., 2019; Rahman, 2020; Azam et al., 2020).
4.4. Price Attribute
The following are the findings of a consumer preference study based on vegetable prices.
Table 7. Analysis of Consumer Preferences Based on prices
Descriptions Utility Coefficient (coef)
Price -0.09848
One of the most essential factors that people evaluate when purchasing green vegetables is price. On choice sets, the price attribute is in Rupiah per 250 grams of vegetables. There are three levels of this attribute: IDR6,500, IDR12,500, and IDR19,000. The price attribute's control variable is IDR6,500 per 250 grams. At the current price, the utility coefficient value is (- 0.09848). This feature has a negative value, indicating that consumers are willing to pay a lower price for organic vegetables. When the price of organic vegetables rises, consumers' Willingness To Pay for them falls, or they will
continue to buy but the quality suffers (Brzezina et al, 2016); Śliwka, 2017).
4.5. Analysis of Marginal Willingness To Pay The marginal value of Willingness To Pay (WTP) is calculated by comparing the utility coefficient of organic vegetables with prices. The WTP of organic vegetables was (-22.654.34), while the WTP of semi-organic vegetables was (- 11.545.49). Both WTP values for organic and semi-organic vegetables were negative (-). This shows that consumers are willing to pay for organic vegetables, which are IDR22,654.34 cheaper than non-organic vegetables. Consumers are also willing to pay for semi-organic vegetables, which are IDR11,545.49 cheaper than non-organic vegetables (Lu et al, 2018).
4.6. Organic vegetable preference by income The association between the value of income and the features of pesticide-free organic and semi-organic vegetables, minimum pesticides, minimum emissions, and total environmental impact is negative. Only the association between consumer income and the quality of minimum emissions and environmental impact is significant, with a P-Value of less than 0.05. This demonstrates that the lower the consumer's wealth, the higher the likelihood of loving vegetables with low emission qualities and environmental impacts. Consumers favor inexpensive price while also wanting to protect the environment, according to this study. The negative price attribute coefficient and ne both support this conclusion (Salokhe, 2019).
5. Conclusion
This study will contribute to a better understanding of consumer behavior and preferences for organic vegetables, which are part of marketing agricultural products, where consumers have access to a lot of information. A better understanding of consumer perceptions and attitudes towards trends in organic vegetables and environmental stewardship will help producers and marketers to develop appropriate marketing and production strategies (Güney, 2020).
According to the findings of the study, customers prefer organic vegetables since they are pesticide- free and beneficial for their health, emit fewer chemicals, have fewer environmental impacts, and are less expensive than non-organic vegetables.
Producers and marketers face difficulty in developing appropriate input management
techniques to produce high-quality vegetables that are also affordable and environmentally friendly.
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