State Branding of Gift Shop and Restaurant Menu Items: Consumer Willingness to Pay for Local Products*: State Branding of Gift Shop and Restaurant Menu Items: Consumer Willingness to Pay for Local Products* Symposium 2003: ‘Branding, Labeling and Identify Preservation: What’s in it for Agribusiness?’ Department of Rural Economy / University of Alberta Tim J. Burkink Paul Patterson *Agribusiness: An International Journal (Forthcoming)


State Branding Programs: State Branding Programs Arizona Grown, Jersey Fresh Effectiveness? Depends on successful differentiation Price premium - brand loyalty (inelastic demand) Previous studies - Grocery Products: New Jersey Study - Effective Differentiation Arizona Study - No shift in demand


Branding Gift Shop & Restaurant Menu Items: Branding Gift Shop andamp; Restaurant Menu Items Potential for successful differentiation Tourists are less price sensitive (price inelastic) and more willing to spend additional increments of income (income elastic) Important part of state’s economy Important attribute for tourist/consumer? Arizona 'experience' Potential for licensing fees


Study Objective: Study Objective Determine the value consumers (tourists) place on the state branding attribute First study on state branding to establish such a value


Methodology:Conjoint Analysis: Methodology: Conjoint Analysis How consumers develop preferences Value is developed by combining separate amounts of utility provided by each attribute Products, attributes, levels Respondents provide overall evaluation The importance of each attribute and each attribute value is determined from overall ratings via the respondent’s preference structure Regress overall utility on product attributes, including price Marginal willingness to pay, or the implicit price for a certain attribute is obtained


Methodology:Conjoint Analysis: Methodology: Conjoint Analysis Present consumers with depictions of products with attributes systematically varied - price, labeling information - Arizona Grown or Pride of Arizona Consumer provides rating on product Can determine consumer’s willingness to pay (implicit price) for Arizona Grown or information on product origin


Experimental Products: Experimental Products Restaurant Menu Items Beef with vegetables Lamb with vegetables Ostrich with vegetables Gift Items Wine Salsa Candy


Example Beef Card: Example Beef Card


Example Lamb Card: Example Lamb Card


Example Ostrich Card: Example Ostrich Card


Example Wine Card: Example Wine Card


Example Salsa Card: Example Salsa Card


Example Candy Card: Example Candy Card


Experimental DesignMenu Items: Experimental Design Menu Items Product - Beef, Lamb, Ostrich Logo + Origin Description Price - $13, $16, $19 Fractional factorial - subset of factor levels is orthogonal and balanced (each level in a factor appears the same number of times) Nearly orthogonal design - 18 cards


Experimental DesignGift Items: Experimental Design Gift Items Wine Logo (Arizona Grown), origin description, organic, price - $13.95, $16.95, $19.95 Salsa Logo (Pride of Arizona), origin description, price - $5.50, $7.50, $9.50 Candy Logo (Pride of Arizona), origin description, price - $4.95, $6.95, $8.95 Orthogonal design - 6 cards each


Methodology: Methodology Rating scaling - likelihood of purchase 1=Extremely unlikely,.., 10=Extremely likely Surveys Phoenix Sky Harbor Airport, Biltmore Fashion Square Incentive gift - Arizona Highways Gift survey - February-March, 2001 Menu survey - March-April, 2001


Survey Respondents: Survey Respondents Menu - 79 respondents Gift - 86 respondents 22 states, 6 foreign countries Nearly evenly divided between men and women Middle-aged Middle to upper income


Menu Items:Willingness to Pay: Menu Items: Willingness to Pay


Wine:Willingness to Pay: Wine: Willingness to Pay


Salsa:Willingness to Pay: Salsa: Willingness to Pay


Candy:Willingness to Pay: Candy: Willingness to Pay


Summary of Results:Restaurant Survey: Summary of Results: Restaurant Survey Tourists do value origin New marketing opportunities Similar to existing restaurant promotions Challenges Must insure origin Menu changes for seasonal products


Summary of Results:Gift Items: Summary of Results: Gift Items Consumers do value origin Logo more effective Challenge Logo for all production?