Processor's Preferences and Basic Differentiation Strategies for Potatoes, Milk, and Wheat in Switzerland

Boesch Irene and Weber Michael
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Boesch Irene: ETH Zuerich
Weber Michael: ETH Zuerich

Journal of Agricultural & Food Industrial Organization, 2012, vol. 10, issue 1, 24

Abstract: In this paper, we aim to shed light on processors’ preferences for attributes of wheat, industrial potatoes as well as fresh milk and assess the potential for differentiation strategies for Swiss farmers. Thus, we determine the attributes and levels that drive the buying decisions of Swiss processing companies. We then determine the relative importance of each attribute using adaptive choice–based conjoint analysis and hierarchical Bayes estimation methods. We apply randomized first-choice models to evaluate three differentiation strategies: 1) targeting processor preferences, 2) targeting the final consumers’ preferences, and 3) following a country-of-origin strategy. Results show that although price is an important buying criterion, environmental attributes and country of origin can be used to segment the market if the price difference is held within limits and technical and quality requirements are met. Strategies focusing on attributes valued by final customers prove promising for the milk market, while targeting industrial buyers’ internal preferences is more suitable for the industrial potato market. In the wheat market, the three strategies are almost equally important. Focusing on country of origin is less important in all three markets. Additionally, the different results for the different primary products indicate the need to design strategies by looking closely at the specific market and final good in question.

Keywords: differentiation; preference; conjoint analysis; hierarchical Bayes estimation (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1515/1542-0485.1377

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