Certificates of Origin and Regional Product Loyalty

Koert van Ittersum, Wageningen University
Matthew T.G. Meulenberg, Wageningen University
Hans C.M. van Trijp, Wageningen University
Math J.J.M. Candel, Maastricht University
[ to cite ]:
Koert van Ittersum, Matthew T.G. Meulenberg, Hans C.M. van Trijp, and Math J.J.M. Candel (2002) ,"Certificates of Origin and Regional Product Loyalty", in NA - Advances in Consumer Research Volume 29, eds. Susan M. Broniarczyk and Kent Nakamoto, Valdosta, GA : Association for Consumer Research, Pages: 549-550.

Advances in Consumer Research Volume 29, 2002     Pages 549-550

CERTIFICATES OF ORIGIN AND REGIONAL PRODUCT LOYALTY

Koert van Ittersum, Wageningen University

Matthew T.G. Meulenberg, Wageningen University

Hans C.M. van Trijp, Wageningen University

Math J.J.M. Candel, Maastricht University

[This research was supported by a grant from the European Commission, paid contract no. FAIR1-CT95-0306.]

Introduction

Confronted with the effects of globalization on price, a growing number of small- and medium-sized companies seek for ways to add value to their products. One of the strategies applied concerns the marketing of regional variants of their productS. Products such as California wines, Florida oranges and Parmesan cheese are examples of products marketed as regional products. In this research, the determinants of regional product loyalty are investigated. Further, the role of certificates of origin in the creation of regional product loyalty is analyzed.

During first-trial purchase processes, consumers use their associations with the product’s region of origin to infer their expectations regarding the performance of the regional product (cf., Van Ittersum et al. 2002). If consumers’ expectations match their desires, first-trial purchase probabilities increase. Repeat purchase probabilities increase if the actual consumption experience with a regional product matches or exceeds consumer’s inferred performance expectations. If the product performs equal to or better than expected (positive disconfirmation), satisfaction is experienced (Oliver 1999). The perceived satisfaction and their (modified) expectations determine consumer’s postpurchase attitude towards the regional product, which influences future purchase decision processes. In time, repeat purchase behavior may evolve into actual consumer loyalty towards the regional product. For this to occur, the actual performance of the regional product needs to be consistent and favorable. Based on their experience with the regional product performance and satisfaction experienced, consumers develop a strong, favorable and enduring attitude towards the regional product. Consumers’ attitude towards the regional product, starts driving their purchase behavior regarding the product (Dick and Basu 1994, Oliver 1999). They develop an unconditional intention to purchase the regional product (i.e., loyalty).

As mentioned, for consumers to become loyal to the regional product their experience should be consistent and favorable. Imitator products can easily destroy the development of loyalty. Unfavorable and inconsistent experiences with what appears to be the authentic regional product decrease the strength and favorability of consumers’ attitude towards the regional product. Because of this, the EuropeanCommission introduced legislation to enable companies to protect their regional product against copycating (EEC Council 1992). The protection legislation guarantees that the product is produced in the region denoted by the name and allows marketers to market their product with a label stating 'Protected Designation of Origin’ (PDO).

In this paper, the determinants of regional product loyalty are examined. Further, the role of certificates of origin in the creation of regional product loyalty is investigated.

Theoretical background

The central construct in our conceptual model is consumer’s overall attitude towards the PDO protected regional product, which is a learned predisposition to respond to the PDO protected regional product in a consistently favorable or unfavorable way (cf., Sheth et al., 1999). The relative attitude towards the protected regional product is examined, the attitude towards the PDO protected regional product compared to competing alternatives without a PDO protection label.

Three determinants of consumers’ relative attitude towards the protected regional product are investigated. First, the effect of the perceived quality of the protected regional product relative to competing alternatives on consumers’ relative attitude towards the product is examined. Second, the influence of consumers’ attitude towards the region of origin on consumers’ relative attitude towards the protected regional product is studied (region-of-origin cue). Third, the effect of consumers’ beliefs about a PDO protection label on their relative attitude towards the protected regional product is analyzed (certificate of origin).

Consumers’ relative attitude towards the protected regional product influences future purchase decisions. Consumers may become loyal towards the protected regional product. Loyal consumers are characterized by the fact that they are willing to pay a (higher) premium price for the regional product compared to less loyal consumers (e.g., Keller 1998). Further, the consumption share of the regional product among loyal consumers is higher. Finally, consumers’ response to relative price increases is lower for loyal consumers, relative to less loyal consumers.

Method

To test the hypotheses, one study was conducted in three European countries. Per country two regional products were selected. These were regional cheeses, potatoes, dried ham or apples. For each protected regional product, 200 domestic consumers were randomly selected.

First, the relative perceived quality was measured. Second, consumer’s attitude towards the region of origin was measured. Subsequently, consumers’ beliefs regarding the PDO protection label were determined. Consumers’ relative attitude towards the protected regional product was measured next. Then, the consumption share of the protected regional product in the total consumption of the product category and the premium price consumers were willing to pay for the protected regional product were determined. Finally, questions for establishing consumers’ response to relative price increases were posed.

The data were analyzed using structural equation modeling.

Results and Conclusions

The results suggest that consumers’ relative attitude towards the protected regional product strongly influences consumption behavior. Consumers are willing to pay a higher premium price for the regional product than for competing alternatives. Further, the share of the protected regional product in the total consumption of the product category increases and consumers’ response to relative price increases for the protected regional product reduces.

Consumers’ relative attitude towards the protected regional product is influenced by their perception of the quality of the protected regional product relative to competing alternatives without a PDO protection label. Further, the results suggest that consumers’ attitude towards the region of origin positively influences consumers’ relative attitude towards the protected regional product both directly and indirectly, through the perceived quality.

Finally, consumers’ image of certificates of origin consists of two dimensions; a quality warranty dimension and an economic support dimension. The results suggest that the quality warranty dimension merely influences consumers’ relative attitude towards the protected regional product indirectly, through the perceived quality of the product. The economic warranty dimension directly influences consumers’ relative attitude towards the protected regional product. Thus besides reducing the probability of consumers experiencing lower quality imitator products, certificates of origin indirectly affect the development of strong and favorable attitudes towards protected regional products.

References

Baumgartner, H., Homburg, C., (1996), Applications of Structural Equation Modelling in Marketing and Consumer Research: A Review, International Journal of Research in Marketing, 13, 139-161.

Belk, R.W. (1975), Situational Variables and Consumer Behavior, Journal of Consumer Research, 2, 157-163.

Boulding, William, Kirmani, Amna (1993), A Consumer-Side Experimental Examination of Signalling Theory: Do Consumers Perceived Warranties as Signals Of Quality?, Journal of Consumer Research, Vol. 20 (June), 111-123

Brislin, R. W., Lonner, W. J., & Thorndike, R. M. (1973), Cross-Cultural Research Methods. New York: Wiley.

Dawson, Scott, Bloch, Peter H., Ridgway, Nancy M. (1990), Shopping Motives, Emotional States, and Retail Outcomes, Journal of Retailing, Vol. 66, Number 4 (Winter), 408-427.

Dekimpe, M.G., Steenkamp, J-B.E.M., Mellens, M., Vanden Abeele, P., (1997), Decline and Variability of Brand Loyalty, International Journal of Research in Marketing 14, 405-420.

Diamantopoulos, Adamantios (1994): Modeling with LISREL: A Guide for the Uninitiated. In: Hooley, G.J. and Hussey, M.K. (eds.), Quantitative Methods in Marketing, Publisher: London [etc.]: Dryden.

Dick, A.S. & Basu, K. (1994) Custmer Loyalty: Toward an Integrated Conceptual Framework, Journal of the Academy of Marketing Science 22 (2). 99-113.

Donovan, Robert J., Rossiter, John R., (1982), Store Atmosphere: An Environmental Psychological Approach, Journal of Retailing, 58 (Spring), 34-57.

EEC Council (1992), Council Regulation (EEC) No. 2081/92: on the protection of geographical indications and designations of origin for agricultural products and foodstuff, Official Journal of the European Community, No. L 208/1-208/8, 24-7-1992.

Engel, James E., Blackwell, Roger D., Miniard, Paul W. (1993), Consumer Behavior, Seventh edition, The Dryden Press, Orlando.

Fishbein, Martin, and Ajzen, Icek. (1975), Beliefs, Attitude, Intention, and Behavior: An Introduction to Theory and Research. Addison-Wesley Publishing, Reading, MA,.

Giese, Joan L., Cote, Joseph A., (2000). "Defining Consumer Satisfaction." Academy of Marketing Science Review [Online] 00 (01) Available: http://www.amsreview.org/amsrev/theory/giese00-01.html

Isen, Alice M., Shalker, Thomas E., Clark, Margaret, Kap, Lynn, (1978), Affect, Accessibility of Material in Memory, and Behavior: A Cognitive Loop?, Journal of Personality and Social Psychology 48 (6): 1-14

J÷reskog, K.G., S÷rbom, D., (1993) Lisrel 8: User’s Reference Guide, Scientific Software International, Inc., Chicago, IL.

Keller, Kevin L. (1998) Strategic Brand Management; Building, Measuring, and Managing Brand Equity, Prentice Hall, New Jersey.

Krishnamurthi. L., Raj, S.P., (1991), An Empirical Analysis of the Relationship Between Brand Loyalty and Consumer Price Elasticity, Marketing Science, Vol. 10, No. 2, 172-183.

Krishnan, H. Shanker (1996), Characteristics of Memory Associations: A Consumer-Based Brand Equity Perspective, International Journal of Research in Marketing, Vol. 13, 389-405.

Oliver Richard L. (1999), Whence Consumer Loyalty?, Journal of Marketing, Vol.63, 33-44

Porter, M.E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York.

Sheth, Jagdish N., Mittal, Banwari and Newman, Bruce I. (1999), Customer Behavior; Consumer Behavior and Beyond, The Dryden Press, Orlando.

Srull, Thomas K., (1983) Affect and Memory: The Impact of Affective Reactions to Advertising on the Representations of Product Information in Memory, in Advances in Consumer Research, Vol. 10, eds. Richard P. Bagozzi and Alice Tybout. Ann Arbor, MI: Association for Consumer Research, 520-525.

Steenkamp, Jan-Benedict E.M. (1990): Conceptual Model of the Quality Perception Process, Journal of Business Research 21 (August): 309-333.

Van Ittersum, Koert, Candel, Math J.J.M., Meulenberg, Matthew T.G. (2002), The Influence of the Image of a Product’s Region of Origin on Product Evaluation, Journal of Business Research, Forthcoming.

----------------------------------------