Consumer choices in agricultural markets with multitier collective labels and private brands

Zhanguo Zhu, Qinyuan Shen and Zhifeng Gao

Agribusiness, 2022, vol. 38, issue 4, 905-922

Abstract: Food labels can convey reputations by containing quality cues, such as variety, region of origin, and producers. A multitier label structure consisting of two collective labels (a product‐specific collective label [e.g., Yantai Apple] and a general collective label [e.g., Shandong Agricultural Products]) and a private brand (an enterprise [e.g., Dole] or cooperative brand [e.g., Yantai Xinnong]) may be used as an effective tool to increase the competitiveness of certain food products. However, little is known about the effects of multitier labels on consumer preferences. We investigate consumer valuation for a single label (a collective label or a private brand), dual labels (two collective labels, or a collective label and a private brand), and multitier labels (two collective labels and a private brand), respectively. The results show that consumers are willing to pay premiums for different labels, particularly collective labels. Consumers' valuation of dual labels is higher than a single label. However, there are significant substitution effects between product‐specific collective labels, general collective labels, and private brands. Moreover, consumers' valuation for dual collective labels is higher than a dual collective label and private brand. The high degree of market recognition for collective labels and private brands aids policymakers and producers in developing appropriate labeling strategies.

Date: 2022
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