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Product differentiation via corporate social responsibility: consumer priorities and the mediating role of food labels

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Abstract

This article examines quantitatively the determinants of purchase decisions based on corporate social responsibility (CSR), adopting a hierarchical conceptual model of decision making where the key factors are personal concern, information availability and financial considerations. We use best–worst methods to assess consumer priorities (personal concern) for CSR activities in milk production; and elicit consumer interpretation of four labels (organic, Validus, Colorado Proud and rBST free) in terms of CSR and other outcomes (information availability). We then elicit willingness to pay (WTP) for the labels (financial considerations), and estimate regression models to determine how predictive each label perceptual profile is of WTP for milk. Animal welfare and sustainable agricultural practices are the most important activities, and milk labels do convey CSR-related messages. With the exception of the pair animal welfare-Validus, the link between CSR messages and WTP is tenuous. The discussion emphasizes the central role of each label’s perceptual profile in triggering product differentiation among consumers.

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Notes

  1. We thank an anonymous reviewer for pointing this out.

  2. An anonymous reviewer pointed out how our definition of “sustainable agriculture” emphasizes the environmental aspect of sustainability, and not the other important aspects of economic and social sustainability. We agree that a better descriptor for this activity would have been “environmental sustainability”.

  3. The description of the task reads as follows: “… think about a dairy operation that is producing the milk you consume. In order to align with YOUR priorities and values, which business practices should they focus on? Please choose ONE activity that is MOST IMPORTANT and ONE activity as LEAST IMPORTANT FOR YOU…”. In each choice set, a summarized reminder of what each activity implies was also included.

  4. The reader interested in a comparison of WTP estimates is referred to Loureiro and Hine (2002), Krystallis et al. (2006), Bernard and Bernard (2009), Lusk and Briggeman (2009) and Onozaka and Thilmany (2011); for WTP for local and organics. A meta-analysis by Lagerkvist and Hess (2011) summarizes 24 studies estimating WTP for animal welfare practices.

  5. See USCB (n.d.).

  6. As a balanced experimental designed was adopted, aggregate rankings can be obtained by simply subtracting the total number of ‘worst’ responses from ‘best’ totals for each activity, and then sorting activities based on results.

  7. Consumer segmentation and ranking heterogeneity are further investigated by means of clustering in a companion paper focused on applied marketing strategies.

  8. It is somewhat surprising that rbST-Free is perceived to affect more nutritional than product safety outcomes. This finding may be due to the USDA disclaimer included with the label (see Table 3).

  9. The null hypothesis of equality of all slope coefficients between own and peer models was tested by mean of joint Wald tests. In the aggregate model, this hypothesis is strongly rejected (χ 2 = 66.5, p = 0.000). Differences were statistically significant for the Validus label (χ 2 = 12.81, p = 0.076), marginal for rbST (χ 2 = 11.75, p = 0.11) and Colorado Proud (χ 2 = 6.58, p = 0.16) and insignificant for organic (χ 2 = 4.27, p = 0.51).

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Acknowledgments

We are grateful to Aurora Organic Dairy in Colorado for providing the funding for the experiment and research assistance.

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Authors and Affiliations

  1. Department of Agricultural and Resource Economics, Colorado State University, Clark B-320, Fort Collins, CO, 80523, USA

    Marco Costanigro

  2. Oracle, 500 Eldorado Blvd., Broomfield, CO, 80021, USA

    Oana Deselnicu

  3. Department of Agricultural and Resource Economics, Colorado State University, Clark B-325, Fort Collins, CO, 80523, USA

    Dawn Thilmany McFadden

Authors
  1. Marco Costanigro
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  2. Oana Deselnicu
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  3. Dawn Thilmany McFadden
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Correspondence to Dawn Thilmany McFadden.

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Costanigro, M., Deselnicu, O. & McFadden, D.T. Product differentiation via corporate social responsibility: consumer priorities and the mediating role of food labels. Agric Hum Values 33, 597–609 (2016). https://doi.org/10.1007/s10460-015-9640-9

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