The role of price as a product attribute in the organic food context: An exploration based on actual purchase data (D.6.7)

Summary

High prices are often reported as an obstacle that inhibits the purchase of organic food products. The aim of this paper is to investigate how organic food products perform at different price levels and whether high prices are an advantage or a disadvantage for consumers’ repeat purchase of organic food. Based on analyses of actual purchase data, this study explores the effect of two product attributes (production method and price) on repeat purchase. The analysis is based on purchase data for four product categories (red meat, chicken, milk and hard cheese) registered by the GfK panel in 2011 in Denmark. The results show that within product categories, repeat purchase is linked more to production method than to price, and it is more prevalent for organic compared to conventional food, and for high price compared to low and medium price. Cross-purchasing of both organic and high price products is high. Low price leads to highest repeat purchase within individual organic product categories. High price is linked to the highest levels of cross-purchase across organic products. However, other market performance criteria are better for the organic medium price tier. These findings have several practical implications. For producers, it is important to know that low price actually stimulates repeat purchase. For retailers, high price levels might stimulate cross-purchases in a wider organic assortment.