Consumer Willingness to Pay for Swiss Chicken Meat: An In-store Survey to Link Stated and Revealed Buying Behaviour

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1 1 Consumer Wllngness to Pay for Swss Chcken Meat: An In-store Survey to Lnk Stated and Revealed Buyng Behavour Bollger C. 1, Révron S. 1 1 ETH Zurch (Swss Federal Insttute of Technology), Agr-Food & Agr-Envronmental Economcs Group, Swtzerland Abstract In a global economy food orgn s ganng ncreasng attenton as determnng purchase crteron n food consumpton. Consequently, for many consumers a product s country-of-orgn (COO) s an mportant cue n evaluatng both domestc and foregn products. A double-bounded dchotomous choce approach n an n-store settng was used to assess consumers preference and wllngness-to-pay (WTP) for the product attrbute Swss orgn relatve to European orgn for chcken meat. Data collecton took place n the poultry secton of sx grocery stores n Francophone Swtzerland. Sample selecton was based on the consumer s purchase decson, that s only actual chcken buyers were questoned. Durng the survey product data of partcpants actual purchase were recorded. Thus, both hypothetcal stated and revealed consumer behavour data were collected. Based on 450 records we hghlght four dfferent consumer segments, notably Loyal Swss, Low Prce Swss Zappers, Prce Orentated, and The Gourmets. At an equal prce, 90% of the entre sample prefers Swss chcken meat. To elct mean WTP for Swss orgn we used logt analyss. The results ndcate that mean WTP dffers sgnfcantly between the hghlghted consumer segments. Loyal Swss medum to hgh prced Swss chcken meat consumers are wllng to pay a premum of about 7.40 Euros per klo chcken breast of Swss orgn. Ths premum corresponds wth actual prce dfferences of at most 7.50 /kg for Swss chcken breast relatve to European found n the researched grocery stores. Low Prce Swss Zappers are wllng to pay a premum of 2.10 /kg chcken breast of Swss orgn. In contrast, the Prce Orentated and The Gourmets are not wllng to pay any premum for Swss orgn. Ths corresponds wth ther revealed purchase behavour as they bought mported European chcken. Consderng mean WTP for the entre sample of 3.00 /kg for Swss orgn, we conclude that ths s not a good predctor for specfc consumer segments. It over-, or underestmates mean WTP of the hghlghted consumer segments. Usng both stated and revealed consumer behavour data, we are able to calculate consumer group specfc mean WTP whch leads to more approprate results for agrbusness and marketng purposes. Keywords contngent valuaton method, country-oforgn, wllngness-to-pay I. INTRODUCTION Food orgn s an mportant product characterstc for many consumers. It affects the sgnfcance whch consumers assocate wth dstnct foods. Wth the expandng global economy, aspects concernng country-of-orgn (COO) and ts communcaton are ganng n mportance especally n the agro-food sector. For many consumers worldwde, orgn s a determnng purchase crteron n food consumpton ([1], [2]). Felzensten et al. [3] even consder COO as the ffth element n marketng-mx. In Swtzerland, aspects concernng country-of-orgn of foods currently draw addtonal attenton because of a free trade agreement n the agro-food sector whch s beng consdered between Swtzerland and the European Unon (EU). Such an agreement would put Swss value-added chan n the food sector and Swss agrculture n partcular under a strong pressure regardng przng and product placement on domestc market. Consequently, Swss agrculture needs to evaluate the potental of ther produce on domestc market under such a new framework, consderng the fact that comparable EU-products at partally multple reduced rate push on Swss market. From ths perspectve t s of vtal mportance to know domestc consumers and ther needs, preferences and wllngness-to-pay (WTP) wth regard to Swss agrcultural and food products. If consumers prefer domestc agrcultural products and assocate Swss orgn wth an addtonal beneft n connecton wth a hgher WTP, potentals arse regardng product postonng and marketng. We nvestgated ths ssue n regard to chcken meat n an n-store consumer survey n French speakng Swtzerland. The results of our nvestgaton are the subject of ths contrbuton. To estmate consumers preference and WTP regardng the product attrbute Swss orgn we used a double-bounded dchotomous choce approach

2 2 whch was adopted by Lourero et al. [4]. Unlke Lourero et al. [4], sample selecton n our approach was solely based on the actual consumer s purchase decson, meanng that only actual chcken buyers were questoned. Ths enabled us to collect both stated and revealed consumer behavour data. The man objectves of the paper are twofold: Frst, we ntroduce our sample selecton approach, second, we analyse factors nfluencng consumers preferences and WTP for Swss chcken. The artcle s structured as follows: An overvew of relevant country-of-orgn lterature s gven. Then data collecton and methodologcal aspects are presented followed by presentng emprcal results. We end wth a short concluson. II. COUNTRY-OF-ORIGIN FOR FOOD Food products have a hgh proporton of experence and an ncreasng share of credence attrbutes ([5], [6]). Consumers make decsons about the qualty of products based on a systematc process of acquston, evaluaton and ntegraton of product nformaton or cues. For ths reason t becomes apparent why extrnsc product cues gan n mportance wthn food. Country-of-orgn s regarded as such a cue. In the lterature however, COO has been dentfed as both extrnsc ndcator and credence attrbute respectvely. The dstncton between extrnsc cue and credence attrbute n the COO lterature depends largely on the use of dfferent theoretcal frameworks. Past research shows that the orgn of food nfluences consumers decson-makng n substantal and complex ways wth regard to atttudes, evaluaton, and wllngness-to-pay [7]. A. Atttudes In regard to atttudes Gürhan-Canl and Masheswaran [8] examne COO percepton under dfferent degrees of motvaton to process avalable nformaton. The authors conclude that COO percepton s more favourable under low motvaton because less effort s needed n attrbute processng. Based on a mxed logt model, Alfnes [9] showed, that on average, Norwegan consumers preferred domestc or Swedsh beef to beef from more dstant countres. In addton, beef from developed countres was preferred to beef from less developed countres such as Botswana. These fndngs are n lne wth Jurc and Worsley [10] who found that food from neghbourng countres are perceved as beng superor to food from more dstant countres whch are due to smlar cultural belefs and areal proxmty. Thus, atttudes toward COO s nfluenced by personal degree of motvaton, cultural and areal proxmty and the country-of-orgns development status. B. Evaluaton In a meta-analyss Lefeld [11] found a generally postve mpact of COO wth regard to product evaluaton. Becker [12] nvestgated n a large European consumer survey 3000 partcpants n sx EU countres (Germany, Ireland, Italy, Span, Sweden, and the UK) consderng the helpfulness of ntrnsc and extrnsc cues n assessng the eatng qualty of meat (beef, pork, and chcken) whle shoppng. On average, COO, alongsde colour and place of purchase, are regarded as most helpful n assessng both eatng qualty and food safety concerns of meat. But dstnct dfferences between the researched countres were observed. In Germany and Sweden COO s the most mportant factor determnng both eatng qualty and safety aspects. In the UK, however, colour, leanness, or place of purchase was regarded as most mportant. Usng data from mal surveys n France, Germany and the UK, Roosen et al. [13] determned European consumers preference for beef labellng strateges assocated wth orgn-labellng, prvate brands, and mandatory labellng of beef from cattle fed genetcally modfed corn. Consumers n France and Germany ndcated that the orgn of ther beef was more mportant than any other product attrbute such as brand, prce, marblng, or fat content. In the UK however, colour, prce and fat content were most mportant. These fndngs are n lne wth Becker [12]. Verbeke and Ward [14] conducted a survey to explore the mportance of traceablty, COO, and several beef qualty cues n Belgum. Survey partcpants expressed more nterest n labellng cues denotng qualty and qualty standards than n labellng cues related to traceablty and orgn. Verlegh and Steenkamp [15] found that the value of COO nformaton n product evaluaton tends to decrease as nformaton s provded about other product attrbutes. In ther meta-analyss of COO-studes, the authors ndcate that besdes cogntve qualty related nformaton, COO nformaton also provdes affectve and normatve

3 3 nformaton. In a conjont experment, Tanner Ehmke et al. [16] elct consumers preferences of nformaton on COO, on organc producton, and genetc modfcaton (GM) n developed (France, USA) and developng countres (Chna, Nger). The authors found that COO nformaton s not as mportant as genetcally modfed content nformaton (France, USA, and Nger) or organc producton (Chna). Thus, for ndvduals wth qualty and food safety nformaton needs, COO nformaton s relatvely less mportant wth regard to GM or organc food nformaton. C. Wllngness-to-Pay Whether for safety, qualty or an orgn-based deology, country-of-orgn for foodstuff has been assocated wth postve wllngness to pay for the own country ([17], [18], [19], [20], [21], [22], [23]). In a sample of Colorado (USA) consumers, Lourero and Umberger [19] estmated n a dchotomous choce set mean wllngness to pay for a US mandatory labellng program, as well as for US Certfed steak and hamburger. The authors conclude that respondents ndcated they were wllng to pay on average large premums to obtan US Certfed steak and hamburger. In another WTP study on COO-Labellng, expermental aucton method was used to elct Chcago and Denver consumers preferences and premums for COOL [17]. About 70% of the consumers were wllng to pay an average premum of about 20% for a USA Guaranteed steak over an unlabeled, generc steak. In the most expansve study Lourero and Umberger [20] used dchotomous choce set to assess contnental US consumers to ndcate ther wllngness to pay for COOL program appled to beef steaks, chcken breasts, and pork chops, all labelled as US Certfed. In ths case, consumers surveyed were only wllng to pay average premums of % over the orgnal market prce to obtan US Certfed. Fnally, Mabso et al. [22] found n an expermental aucton that COOL garnered average premums for apples and tomatoes. All of the WTP studes utlzed common contngent valuaton or expermental aucton methods, whch have been shown to be very useful for determnng values for both nonmarket and market goods. Nevertheless, n evaluatng the ablty of the premums elcted n the WTP studes, one should also consder the mportance of country of orgn and source assurance relatve to other experence and search attrbutes [18]. Thus, based on a choce experment Lourero and Umberger [21] concluded that US consumers preference and WTP for COO labelled rb eye beef steak s relatve n comparson wth other meat attrbutes such as traceablty, tenderness, and food safety. Regardng the dfferent studes above, orgn can be consdered as an mportant attrbute or cue n consumers evaluatng process for food qualty and safety aspects. Furthermore, consumers are wllng to pay a certan premum for country-of-orgn. From a marketng pont of vew these fndngs are relevant, but the mpact of orgn along wth dfferent consumer segments, and product postonng has not been assessed. Our research s addressed to ths gap. III. DATA COLLECTION AND PRESENTATION Our survey was tested n December The actual survey took place between 5th and 20th January 2007, therefore just pror to the second brd flu epdemc whch restarted n Europe at the end of January. The survey took place n Francophone Swtzerland, n the poultry sectons of sx grocery stores of the largest Swss retaler Mgros. The stores were nearly dentcal n respect to sze, selecton, and product presentaton. An nterestng characterstc of the grocery stores where we surveyed was the large product and prce varetes offered, ncludng dfferent qualtes (conventonal, organc, anmal frendly, orgn) and dfferent chcken meat types (entre chcken, chcken leg, chcken cutlets). Ths allowed consumers to consder a varety of substtutes among chcken meat. For Swss standards the stores can be characterzed as sem-urban or urban, located ether n the cty centre (e.g. Lausanne) or n the agglomeraton (e.g. Geneva). All n all, 548 poultry buyers were questoned; only those 450 partcpants were consdered for our fnal sample, however, who actually bought chcken meat. Buyers of other poultry such as turkey were excluded. A summary of the statstcal data and a descrpton of the varables are gven n table 1. The majorty of the partcpants was female (66%), Swss ctzens (70%), and man household shoppers (75%), belonged to the age group (25%), and had chldren under the age of 18 lvng n ther households (46%). 36% of the partcpants had an educaton level whch ncluded 9 years of basc educaton as well as an apprentceshp. The monthly average household

4 4 Table 1 Summary Statstcs of the Demographc Varables Varable Name Descrpton Frequency Mean Standard Devaton Gender 1 = female 0 = male = 66.0% = 34.0% Age Groups 1 = years old 2 = years old 3 = years old 4 = years old 5 = > 60 years old = 12.7% = 22.0% = 24.9% = 21.3% = 19.1% Orgn 1 = Swss ctzen 0 = other = 70.2% = 29.8% Educaton 1 = mandatory basc educaton 2 = vocatonal tranng 3 = grammar school 4 = unversty degree = 25.6% = 35.6% = 11.6% = 27.3% Famly Sze 1 = 1 person 2 = 2 persons 3 = 3 persons 4 = 4 persons 5 = > 4 persons = 13.8% = 36.0% = 15.8% = 24.2% = 10.2% Chldren 1 = household wth chldren < 18 years 0 = other 1 = < 1800 / month 2 = / month 3 = / month 4 = / month 5 = > 5700 / month = 46.4% = 53.6% = 6.9% = 28.0% = 29.8% = 20.0% = 15.3% Household Income Shopper 1 = man shopper 0 = other = 75.1% = 24.9% ncome was between 3100 and 4400 Euros. 1 In numerous aspects our sample dffers from the demographc structure of the total populaton of francophone Swtzerland: one, the percentage of foregners s slghtly hgher, and two, the number of chldren n one household s sgnfcantly hgher. On the other hand, the educaton level and the household ncome are somewhat lower. In our sample the average household ncome s slghtly above 3100 a month whch s about 500 lower compared to the entre francophone populaton average household ncome. These dfferences can be explaned by the fact that famles, as well as foregners often have a tghter budget and therefore opt for chcken meat, the cheapest meat avalable n Swtzerland (cf. table 2). Besdes the soco-demographc varables, nformaton about partcpants ecologcal and ethologcal concerns, as well 1. Orgnally, all prces, household ncomes, bds, and wllngness-to-pay estmates were collected n Swss Francs. We convert all data nto Euro by dvdng the data gven n Swss Francs wth a factor of 1.6. as the actual purchase decson was collected durng the survey. Addtonally, the partcpants were asked Table 2 Comparson of Soco-demographc Characterstc Soco-demographc Characterstc Sample Francophone Populaton Female 66.0% 51.36% 1) Non-Swss Ctzens 29.8% 26.3% 1) Average Household Sze (Persons) Households wth Chldren < 18 Years Household Income ( / Month) Age Groups 1 = years 2 = years 3 = years 4 = years 5 = > 60 years ) 46.4% 34.67% 2) ) = 12.7% = 22.0% = 24.9% = 21.3% = 19.1% = 18.1% 4) = 18.3% 4) = 20.1% 4) = 16.2% 4) = 27.3% 4) 1) Federal Statstcal Offce (FSO), year 2006; 2) FSO, year 2000; 3) FSO, year 2008; 4) FSO, year 2006; based on the total Swss adult populaton

5 5 about ther three most mportant decson crtera when buyng chcken meat. Further, they were asked to rank them from 1 to 3 (cf. table 3). It became apparent that the product prce was the most mportant prmary decson crteron (27%), followed by product appearance (25%). The orgn and the qualty of the meat were each named by a ffth as ther most mportant decson crteron. Therefore, n the choce of a product, classc search characterstcs take precedence over experence or credence attrbutes. To elct partcpants atttudes toward ecologcal, ethologcal, and santary product aspects trade-off scenaros were used. For ths purpose we used a fve-ter lkert scale. One stood for lowest prce s all mportant, and fve stood for ether short route of transport s all-mportant, anmal welfare s all-mportant, or santary product qualty s all-mportant. For today s customers a conflct of nterest between personal value judgments and prce ncentves has become a daly realty n most purchase decsons, snce nowadays a more expensve, but more ecologcally and/or ethcally produced competng product exsts almost wthout excepton alongsde a standard product. Regardng the ndvdual s ratngs gven to these dfferent product aspects, a clear pcture appears. The more drectly an ndvdual s affected by a product aspect, the more mportant t becomes. Ths s emphaszed n that the hghest average lstng s gven to santary product qualty. In other words, for 73% of the partcpants, product qualty s all-mportant. Concernng anmal welfare, ths number s halved to 46%, and for a mere 28% a short route of transportaton s all-mportant. A summary of the statstcal data and a descrpton of the varables are gven n table 3. Data of the actually purchased chcken product was recorded only wth partcpants consent. Recorded product data conssted of the type of chcken meat (e.g. entre, breast, leg), the prce per klo and prce per packagng unt, the weght, the brand or label, as well as product orgn (cf. table 4). Table 3 Summary Statstcs of Consumer Buyng Crteron and Consumer Concerns Varable Name Descrpton Scaled Values Mean Standard Devaton Rank 1 Rank 2 Transport Anmal Welfare Santary Product Qualty Stated most mportant buyng crteron Stated second most mportant buyng crteron Importance of short transportaton vs. low product prce Importance of anmal welfare vs. low product prce Importance of santary product qualty vs. low product prce 1 = prce per klo or unt = 26.9% 2 = brand or label = 6.4% 3 = appearance = 25.1% 4 = eatng qualty = 20.4% 5 = product orgn = 20.7% 6 = others = 0.4% 1 = prce per klo or unt = 21.1% 2 = brand or label = 6.4% 3 = appearance = 33.6% 4 = eatng qualty = 19.6% 5 = product orgn = 18.7% 6 = others = 0.7% 1 = lowest prce s all mportant = 7.8% 2 = = 7.6% 3 = = 32.0% 4 = = 24.2% 5 = short transport s all mportant = 28.4% 1 = lowest prce s all mportant = 3.8% 2 = = 3.3% 3 = = 20.9% 4 = = 26.0% 5 = anmal welfare s all mportant = 46.0% 1 = lowest prce s all mportant = 3.8% 2 = = 3.3% 3 = = 20.9% 4 = = 26.0% 5 = santary qualty s all mportant = 46.0%

6 6 Table 4 Summary Statstcs of Purchased Chcken Products Varable Name Descrpton Scaled Values Mean Standard Devaton Product Brand Product Prce Product Orgn Product Type Segmentaton based on prce per klo n Swss Francs Fresh chcken meat was only avalable from two orgns Rough dstncton between entre and cut (e.g. breast) chcken meat 1 = Mère Joséphne / Bo = 51.1% 2 = B-Budget = 10.2% 3 = EU-Import / Don Pollo / M-Pc = 27.1% 4 = St. Sever / Le Gaulos = 11.6% 1 = / klo = 22.4% 2 = < and > = 26.4% 3 = and 9.40 = 14.9% 4 = < 9.40 and 8.75 = 4.9% 5 = 8.75 = 31.3% 1 = EU = 39.6% 2 = CH = 60.4% 1 = Cut chcken = 71.6% 2 = Entre chcken = 28.4% IV. METHODOLOGICAL APPROACH Our methodologcal approach to elct wllngness-topay estmates for the product attrbute Swss orgn wth regard to chcken meat orented tself largely along the survey desgn appled by Lourero et al. [4]. To assess WTP for Swss chcken breast we also appled on a double-bounded dchotomous choce model (cf fgure 1). In ths procedure the partcpants are questoned about two bds. The amount of the second bd s contngent upon the answer of the frst bd. Survey partcpants are asked ntally whether they would be wllng to pay a gven sum of money (b 1 ), or not; then they are questoned about a second sum of money whch s hgher (b 2 H ) than the frst (b 2 H > b 1 ) f the frst bd was accepted and lower (b 2 L ) than the frst (b 2 L < b 1 ) f the frst bd was turned down [24]. The set of possble outcomes, here termed S DR, contans four answer sequences to the two WTP questons: S DR = {( No, No ), ( No, Yes ), ( Yes, No ), ( Yes, Yes )}. The survey structure of the double-bounded dchotomous choce model thus offers four possble ntervals for the actual wllngness-to-pay. Based on the depcted procedure, the followng dscrete outcomes are observable: 1 WTP < L L b 2 2 b S DR 2 WTP < b 1 = D = (1) H 3 b 1 WTP < b 2 4 WTP H b 2 WTP here descrbes the ndvdual wllngness-to-pay for Swss chcken cutlets. The WTP functon can be llustrated as follows: WTP = + βz + ε (2) Here, b represents the last bd level whch the partcpant was offered. The observable characterstcs of the ndvdual are represented by the column vector z (lnearty s presupposed). ε s an random varable accountng for unobservable characterstcs wth ε ~ G(0, σ 2 ), where G(0, σ 2 ) denotes a cumulatve dstrbuton functon wth mean zero and varance σ 2, and α, ρ, and β are the parameters whch are to be calculated. To evaluate the double-bounded dchotomous choce model used here, a log-lkelhood functon s calculated. To calculate the lkelhood functon, the probablty of the four elements of the set S DR, resp. D, are requred, assumng normal dstrbuton ([4], [24]). G( 2 prob(d = j) = (3) yes, no H π = G( for j = {1, 2, 3, 4} π π π no, no n no, yes n n yes, yes n = G( = G( L G( = 1 G( 1 H 2 L

7 7 Double-Bounded Dchotomous Choce Approach Intal Bd: Choce between Product A and Product B wth equal prce (b 1 ) NO = refusng b 1 frst response YES = acceptng b 1 Second Bd (b 2 L ): Reducton of prce for Product A Second Bd (b 2 H ): Increase of prce for Product A second response NO YES NO YES S DR ={ NO, NO ; ; NO, ; YES ; YES, NO ; YES, YES } Fg. 1 Desgn of a Double-Bounded Dchotomous Choce Contngent Valuaton Model The correspondng log-lkelhood functon s: I no, no 1, n + I no, yes 2, n *ln G( *ln [ G( G( 2 ] L = (4) yes, no H + I *ln[ G( + I 3, n yes, yes 4, n G( *ln [1 G( ] ] I C s an ndcator functon for the event C, D = j ndcates the jth alternatve, whch occurred, and represents ndvdual. In the emprcal mplementaton of the model, for G(.) standard logstc dstrbuton wth mean zero and varance π 2 /3 s appled. Compared to the sngle bounded approach, the use of the double-bounded model offers varous advantages. The double-bounded choce model provdes more nformaton about an ndvdual s actual or true WTP, snce the survey of two bds provdes two observaton ponts for the assessment of the WTP [24]. In ths way, a narrower nterval around an ndvdual s unobservable actual WTP can be estmated than s possble wth the sngle-bounded model. If the bds concernng the WTP are twce accepted or twce turned down, however, realstc upper, respectvely lower, WTP lmts are to be qualfed by the observer, as s the case L L H 2 wth the sngle-bounded choce model. Besde, through the lowerng or ncreasng of the bd, dependng on the answer to the frst queston, a rather unnformatve bd desgn for the frst questonng format can be calbrated. Ths s what Kannnen [25] calls the second chance. Moreover, Hanemann et al. [26] show that the double-bounded dchotomous choce model s asymptotcally more effcent than the sngle-bounded model. In comparson to other formats, one key advantage of the dchotomous choce format s ts ncentve compatblty [27], snce emprcal research shows that n hypothetcal WTP surveys, the consumer s statements concernng the same products were sgnfcantly nfluenced by the actual buyng envronment [28]. Carson et al. [29] argue that data collecton on decson-makng processes should preferably take place n a realstc envronment, as consumers often develop ther preferences n reacton to the decson-makng envronment and not based on stable value judgments (also, cf. [30], [31]). Accordng to Hoehn and Randall [32], no ncentve exsts for strategc behavour under realstc condtons n dchotomous choce model surveys. A further advantage of the dchotomous choce format s ts smplcty. The all-or-nothng decson resembles everyday buyng behavour n supermarkets, n whch consumers are confronted wth the choce of buyng a product or leavng t on the shelf [24]. Followng Lourero et al. [4], we used a doublebounded dchotomous choce contngent valuaton

8 8 method n an n-store-context. In our approach the sample selecton s unlke Lourero et al. [4] solely based on actual consumers purchase decson, meanng that only actual chcken buyers are asked. Specfcally ths means that the ntervewer n the poultry secton remans an observer n the background untl the consumer has revealed hs purchase decson by placng a poultry product n hs shoppng cart. The actual questonng takes place mmedately after ths act of purchase. Durng the survey, the product data (e.g., prce / klo, product orgn) of the actual purchase were recorded. Thus, t enabled us to collect hypothetcal stated and actually revealed consumer behavour data, resp. the partcpant s purchase decson. By collectng data from consumer who actually purchased chcken meat we hoped to better obtan consumers true preferences about food orgn. Besde, we beleve to have establshed an addtonal connecton to realty of the survey context. The actual purchasng behavour, revealed through placng a poultry product n the shoppng cart and thus attractng the attenton of the ntervewer, served as the only crteron to select our sample. Ths way, all non-poultry buyers could be ruled out, thus ncreasng the survey s valdty. Based on the recorded data of partcpants actual purchase durng the survey, hypothetcal statements can subsequently be compared wth actual purchase behavour. The reason for the development of ths survey approach was that the contngent valuaton methods (CVM) typcally led to a systematc overestmaton of the actual WTP, the extent varyng dependng on the product type and survey desgn ([33], [34], [35]). Besdes further methodologcal problems of the CVM, the so called hypothetcal bas seems to be the man cause for ths overestmaton. The hypothetcal bas results from payments that are verbally professed, but not actually made [36]. In the context of usng the drect procedure to survey the WTP (stated preference technques) lke the used double-bounded dchotomous choce model the hypothetcal or fcttous character of the decson stuaton s seen as the strongest drawback, as the professed WTP does not lead to an actual consequence for the partcpant. Meanwhle, however, several technques exst to calbrate the hypothetcal bas ([37], [38], [39], [40], [41]). Wth the dchotomous choce model the certanty calbraton s appled. Here several dfferent forms were developed. The approach by Champ and Bshop [39], whch served to calbrate hypothetcally professed statements when buyng wnd energy, appears to be the most convncng. To calbrate the hypothetcal settng, a certanty queston was posed to all those partcpants who accepted the hypothetcal purchase opportunty. Durng the follow-up queston the partcpant was asked to assess the qualty of hs own answer on a scale from one to ten. We beleve that the strategy that we developed selectng partcpants after ther revealed purchase decson n a realstc buyng envronment and recordng the product data of the chosen product leads to a better correlaton between the actual and the verbally expressed purchase behavour, at the same tme mnmzng the courtesy answers. Besdes, t possesses ex ante and ex post calbraton mechansms. Ex ante, because of the excluson of non-buyers, besdes, the recordng of the actual purchase decson leads the subject to reflect upon hs own behavour pror to the hypothetcal WTP survey questons. Ths pror reflecton could lead to a more realstc assessment of the ndvdual s preferences and WTP. Ex post thus, there s the opton of comparng hypothetcal stated and actual buyng behavour after the survey. In our survey, the bd desgn was set accordng to actual product prces as found n the researched stores. The prce per klogram of the standard chcken cutlets from both places of orgn served as reference level. For the frst bd (b 1 ) the same prce was set for both products, whch mpled a prce dfference of zero to the consumer. Thus, consumers frst could choose ther preferred orgn of chcken cutlet based on equal prce. If consumers expressed a preference for Swss cutlets, they then were offered a second bd (b 2 H ) wth a prce ncrease n favour of the meat of Swss orgn. The consumer was randomly gven one of three bds prce ncrease of +4.40, +6.25, or / kg whch we had prevously set accordng to actual dfferences between the chcken cutlets of the two dfferent orgns. However, f the customer nstead opted for the chcken cutlet of EU orgn, a second bd (b 2 L ) was gven wth a prce reducton for the chcken cutlet of Swss orgn. Here, too, the customer was randomly gven one of three bds prce reducton of -4.40, -6.25, or / kg whch we had prevously set In the researched stores the prce for standard chcken breasts ranged between and / klo. The prce dfference between the standard chcken breasts wth Swss orgn com-

9 9 A. Model Specfcaton V. RESULTS The object of ths contrbuton s to analyse and estmate wllngness-to-pay for Swss chcken meat. Based on the frst bd (b 1 = equal prce) we found that 90% of our respondents had a preference for Swss chcken breast. Because of ths strong preference for Swss chcken meat, we smplfed our ntal model (2) by only ncludng consumers who accepted the frst bd. In pursut of ths fact, we estmate a sngle-bounded logt model wth bd (b 2 H ), latent, and contnuous unobservable varable (WTP * ) whch could be nterpreted as consumers desre for Swss orgn (Lourero and Umberger [19]). Thus, observable varable s modelled by the researcher and the latent model s represented by (5): WTP = I ( 0, ) ( WTP *), (5) where I (0, ) s an ndcator varable that restrcts the observable WTP to the postve doman, and WTP = βz + ε. Therefore, 1 > WTP = f WTP = βz + ε 0 wth I (0, ). (6) 0 The ε are unobservable random varables, followng a logstc dstrbuton wth mean zero and varance π 2 /3 (Wagner [24]). A yes response s only observed f the latent varable s greater than zero. Our fnal WTPfuncton (7) follows equaton (2) restrcted by (6): WTP = α 0 + ρb + βz + ε (7) In our WTP-functon, the explanatory varable z s characterzed solely by non soco-demographc factors. The emprcal formulaton of equaton (7) s fnally formulated as: WTP = α 0 + ρbd + β1transport + β 2Rank _1 + (8) β Rank _ 2 + β Pr oduct _ Orgn + ε, 3 4 where Bd represents the random bd (+4.40, +6.25, or / kg) offered to each consumer who denoted yes n the frst bd. Transport s the respondent s transportaton atttude, Rank 1 and 2 stands for the most and second most mportant consumers buyng crteron whereas wthn both Rank_1 and Rank_2 only two crtera of each varable have been sgnfcant. But, these parameters account for the sgnfcance of the varables Rank 1 and 2 n the model as a whole. The parameter-value Product_Orgn represents the orgn of the product whch was actually bought by the consumer. It mght be surprsng that no soco-demographc varable s sgnfcant enough to enter the model. But, these fndngs are consstent wth Karrer [42] who came to the same concluson n her nvestgaton concernng ecologcal beef consumpton n Swtzerland. B. Model Estmate Estmaton results concernng the factors affectng WTP functon are presented n table 5. All coeffcents are sgnfcant at a nomnal.05 level and have the expected sgns. Buyng crteron orgn wthn Rank 1 (β 21 = 1.251) has a postve relatonshp wth the WTP level. That means f a consumer states orgn as hs most mportant buyng crteron, he s also wllng to pay more for chcken breast wth Swss orgn. The same postve effect has been found for the varables Transport und Product_Orgn of actual purchase. Thus, consumers who actually bought Swss chcken meat are revealed to pay a premum for Swss orgn. The same s n effect wth short transportaton whch can be consdered from ecologcal or anmal welfare reasons. On the other hand the bd amount, buyng crteron prce wthn Rank 1 and 2, as well as appearance wthn Rank 2 have a negatve relatonshp wth the WTP level. Ths s consstent snce the hgher the bd amount presented to the consumer, the lower the lkelhood that the consumer wll agree. In addton, the buyng crteron prce means, that the consumer s prce senstve whle purchasng whch results n a negatve effect on WTP. The model predcts 73.3% consumers correctly. pared to EU orgn normally les at / klo. In the case of specal offers on CH chcken cutlets, the klo s approx more expensve than the comparable EU product. In realty a prce mark-up of / kg does not exst, and was merely supposed to assess the upper lmt of the WTP.

10 10 Table 5 Equaton Model for Swss Orgn for Chcken Parameter Estmates Odd-Rato α ρ (Bd) 0.141** β 1 (Transport) 0.422*** β 21 (Rank 1: orgn) 1.251*** β 22 (Rank 1: product prce) 0.847** β 31 (Rank 2: appearance) 0.867** β 32 (Rank 2: product prce) 1.128** β 4 (product orgn of actual 0.559** purchase) Log Lkelhood Restrcted Log Lkelhood Lkelhood Raton Test, χ 2 [7] % of Correct Predctons % Note: Double and trple astersks (*) denote statstcal sgnfcance at least at α = 0.05, and C. Profles of Consumer Segments The nsghts ganed based on our model specfcaton fnally guded us to the hypothess that wthn our sample, dfferent consumer segments wth vared preferences and WTP s mght exst. As a result of recordng actual purchase data we have been able to dentfy dfferent consumer segments. Thus, we used purchased brand or label, orgn, prce per klo and dfferent product type of chcken meat (entre chcken or cut chcken) as segmentaton crtera (cf. Table 4). As a result we found for dfferent consumer segments: Loyal Swss : For these consumers, Swss orgn s the most mportant product attrbute, and purchased product prce s medum to hgh. Low Prce Swss Zappers : Prce senstve consumers who buy low prced or sales promoton products. Nevertheless, Swss orgn nfluence buyng behavour. Thus, some prefer an entre chcken f t s Swss nstead of an mported chcken breast. Prce Orentated : Consumers who look for and buy an mported specfc pece of chcken meat f at a lower prce than the Swss complement. The Gourmets : Consumers who actually buy French labelled products because of reputaton of tasty and superor qualty. Prce s hgh, equal to Swss orgn. C. Mean WTP Followng a more marketng orentated approach whle usng dchotomous choce models, we assume that the dentfed consumer segments have dfferent mean WTPs for Swss orgn. Thus, nstead of estmatng one sngle mean WTP based on the entre sample we consder t reasonable to elct a dfferent mean WTP for each hghlghted consumer segment. As Fgure 2 shows, the frequency of acceptng a gven bd for Swss orgn dffers between the consumer segments. The frequency of acceptng a gven bd for Loyal Swss s much hgher than for the Entre Sample. In order to calculate the mean WTP, we follow Hanemann s [43] and Wagner s [24] approach. The lkelhood functon (7) s restrcted by settng all β s equal zero, leavng only the constant term and the bd term n the model. Then the parameters α and ρ are estmated va maxmum lkelhood, and the mean WTP s calculated as α / ρ. Ths formula allows for the mean WTP to be negatve whch wll be the case, f consumers on average are not wllng to pay a premum for Swss orgn [4]. Frst we calculated mean WTP for the entre sample, second for each consumer segment. In Table 6 the dfferent mean WTP s are presented. We found that the Loyal Swss are wllng to pay a premum of about 7.40 per klo for a chcken breast wth Swss orgn. Consderng actual prce premum of at most 7.50 per klo for Swss vs-à-vs EU chcken breast our estmate seems realstc. Besdes, we found that Low Prce Swss Zappers are also wllng to pay a small prce premum for Swss orgn of 2.10 per klo. Ths was not expected, but seems rather logc consderng the fact that entre Swss chcken are sold n ths segment. Both, the Prce Orentated and The Gourmets are not wllng to pay any premum. Takng the mean WTP of the entre sample n account, whch shows a general WTP a prce premum (3 ), some consumer segments are under, some overestmated. Table 6 WTP estmates for dfferent consumer segments Parameter α ρ α / ρ n CHF Entre Sample Swss Zappers Loyal Swss Prce Orentated The Gourmets

11 11 Frequency of of Acceptng a a Gven Gven Bd Bd 0.7 Frequency of Wllngness to Pay n = 128 n = 405 n = 136 n = 39 n = Fr Fr Fr. Bd n Bd Swss n Euro Francs TOTAL Entre Sample YES SWISS Swss Zappers ZAPPERS YES LOYAL Loyal Swss SWISS YES PRICE Prce Orentated ORIENTA TED Y ES THE The GOURMETS Gourmets YES Fg. 2 Frequency of acceptng the gven wllngness-to-pay-bd, gven that Swss orgn was chosen as the frst alternatve VI. CONCLUSION In ths paper, we consder factors that nduce consumers to pay a premum for Swss chcken meat. Our sample ncludes shoppers at sx grocery stores n Frenchspeakng part of Swtzerland. Based on a doublebounded dchotomous choce model we found that 90% of our sample prefers chcken meat of Swss orgn at an equal prce. Because of ths strong preference for Swss chcken meat, we then estmated, based on the second bd, a sngle-bounded logt model to calculate consumers mean WTP for Swss orgn, and to analyze the factors affectng the decson to pay a premum. We found that the explanatory varable n the wllngness-to-pay functon s characterzed solely by exogenous, non socodemographc varables lke product orgn of actual purchase, atttudes toward short transportaton, and stated man buyng crtera (parameters of RANK 1 and 2). Dchotomous choce approach used n our research has been shown to be very promsng for determnng nonmarket values such as country-of-orgn. Consumers buyng desre n favour of ths nonmarket product attrbute or cue s contrasted by budget restrcton and atttude toward product prce. The method used allows for relable measurng ths weghng up aganst each other of country-of-orgn and prce and makes the measurng of the terrtory qualty rent for Swssness possble. Anchorng our sample selecton to actual purchase enforce relablty of our methodologcal approach and ts measurement. Questons concernng country-of-orgn aspects are very senstve, emotonal, and depend largely on the product nvestgated. Because of that, such questons are hardly to assess far away from actual purchase decson. Besdes, recordng of actual purchase enables us to hghlght four dfferent consumer segments whch have dfferent preferences for Swss orgn. We fnd large dfferences n WTP between the four consumer segments. Mean wllngness to pay for the entre sample of 3.00 per klo over-, or underestmates wllngness to pay of the four dfferent consumer segments, respectvely. In contrast, Loyal Swss are wllng to pay a hgh premum of about 7.40 per klo for own country chcken meat and value Swss orgn as most mportant buyng crtera. Thus, we fnd that chcken meat s largely dfferentated based on the product characterstc country-of-orgn. The product attrbute COO s for a certan consumer segment an mportant characterstc when purchasng chcken meat. The results are consstent wth prevous results found n the lterature (e.g. [12], [19], [20], [21]. Thus, own COO s wthn meat purchase a hghly rele-

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