An empirical study of consumers’ risk perceptions and risk reduction strategies affecting their willingness to pay for organic products : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

This study focuses on the purchasing behaviour of organic product purchasers in relation to their risk perceptions, risk reduction strategies and willingness to pay (WTP) premium prices for organic products. Over the past three decades, the demand for organic products produced without conventional pesticides, chemical fertilisers, bioengineering or ionising radiation has risen steadily, as have their prices. Despite the common belief that organic products are better for people’s health than conventional products, most consumers have difficulty in differentiating between organic and conventional products. Scepticism about the virtues of organic products, especially because they are sold at premium prices, increases consumers’ risk perceptions, which, in turn, affect their attitudes and purchasing decisions. Consumers’ risk perceptions and their risk reduction strategies are considered important in food product marketing. These factors influence consumers’ behaviour and impact their WTP premium prices for food products. However, to date, there are no integrated studies of consumers’ perceptions of risk and their risk reduction strategies, including their WTP premium prices for organic products. This study investigates Thailand consumers’ purchasing behaviour in the context of their risk perceptions, risk reduction strategies and their WTP premium prices for organic products. This is the first study to investigate the relationships between consumers’ risk perceptions, risk reduction strategies and their WTP premium prices for organic products in Thailand. This study explores the relationships between seven latent factors. In addition, this study estimates the mean WTP premium prices for four organic products: organic lettuce, jasmine rice, orange juice and coffee. This study uses a questionnaire to collect data from 1,512 shoppers at 13 grocery stores in Bangkok, Thailand. The single-bounded contingent valuation method, exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modelling (SEM) are applied to analyse the survey data. The estimated WTP a premium price results show that the surveyed respondents are willing to pay a premium price of 26.11 per cent higher for organic lettuce, 24.40 per cent higher for organic jasmine rice, higher 24.12 per cent for organic orange juice and 26.40 per cent higher for organic coffee than the conventional counterparts. The respondents are willing to pay higher prices for organic products if they perceive higher risks, such as worry about being accepted by their family and friends (social risk), fear of being cheated from false organic products (psychological risk), or concern about wasting their time to search for organic products (time risk). They reduce these risks by searching for more information about organic products and their handling processes, selecting trusted certificates and choosing well-known brands when purchasing organic products. However, if the respondents have difficulty using these risk reduction strategies, they are not willing to pay higher prices for organic products. In addition, respondents with healthy lifestyles prefer cooking at home and have high expectations about safety and healthy foods and are more likely to exhibit levels of risk perception (such as social, psychological and time risk) when purchasing organic products