Consumers' demand for local food products: An investigation into the power of label information

Abstract

The local food movement continues to grow as consumers around the world become increasingly conscientious about where their foods come from. While it has been observed that consumers are willing to pay higher prices for local food products, the reasons driving the premium are not fully understood. The purpose of this research project is to investigate how different locally-related marketing messages and different product-origin information influence consumers’ valuation of locally-produced food products. To do this, we employ an incentive compatible experiment designed to measure participants’ willingness-to-pay (WTP) for five locally produced foods under different information treatments. Results indicate that both product-origin information and local-related marketing information have significant effect on consumers’ willingness-to-pay, with participants willing to pay significantly more for food that they are told originates from their region. These results can inform how local brands develop their value proposition, target valuable customer segments, create effective marketing communications with appealing labels that call-for-action, and come up with profitable pricing strategies.