The impact of secondary information on consumers’ willingness to pay for differentiated fresh lamb meat products in South Africa

Abstract

The typical South African red meat consumer is spoilt for choice when it comes to the selection of their Saturday braai staples – chops, steak and “boerewors”. Labels (primary information) claiming the meat is Free-Range, Natural, Region-of-Origin or simply a Generic product might cause some uncertainty when all that a consumer wants is a good-looking T-bone. The 2017/18 outbreak of listeriosis in South Africa, along with the previous meat scandals of undeclared meat-based ingredients, is undeniably a significant cause of concern to South African meat producers and consumers. The absence of or incomplete product information in the agricultural and food markets have consumers asking more questions about what is in their meat. This gap in information about the effect of secondary information as a supplement to the labelled (primary source) information became the premise for this study. The effect of information on consumers’ demand has been studied across the globe. On the other hand, little research has been done in a South African context, which only focuses on the effect of positive secondary information on consumers’ purchasing decisions and ultimately their willingness to pay (WTP) for fresh meat’s quality cues and attributes. This study is concerned with examining if and how positive secondary information about differentiated fresh lamb meat products will have an impact on consumers’ willingness to pay. The WTP was elicited through an experimental auction, and the results could potentially be used to help realign the marketing approaches of the industry. The analysis is based on 51 respondents participating in a two-stage experimental auction, three months apart. A random nth-price auction was used to obtain the willingness to pay estimates. During the first stage, a pre-auction survey was done to define the exact demographic structure of the samples as well as gaining an understanding of the sample’s purchasing and consumption behaviour. The first auction sets measured the initial willingness to pay (based on prior knowledge and beliefs) and the immediate effect of positive secondary information on the consumers’ willingness to pay. In the second stage (3 months after the first auction), the willingness to pay values were re-elicited for the same group of participants and products, but this time without providing any positive secondary information. The second stage was conducted to determine the long-term effect of positive secondary information on the participants’ willingness to pay. The results from the experimental auction showed that the provision of positive secondary information is useful and has a positive effect on the consumers’ willingness to pay Free-Range, Natural and Region-of-Origin fresh lamb meat products. In the long-term, the average willingness to pay bids increased after the positive secondary information was presented to the participants.