Organic Chocolates Industry Analysis

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Table of Contents

Introduction
Research Aims and Objectives
Justification for Hypotheses
Justification for Study
References

Introduction

As consumers, we play a vital role in the growth and development of companies and national economies. The decisions we make about different products affect the value chain processes that characterize the production of the same (Mittal & Ravinder, 2012). For example, consumer decisions could affect the demand for raw materials and the deployment of workers in different workplace processes.

The chocolate industry is not immune to these intrigues. Although this multi-billion dollar industry is complex and wide, the development of niche products within the last decade has characterized recent developments in the sector. The niche is for locally grown and organic foods (Young, Hwang, McDonald, & Oates, 2010).

Different studies have reported contradicting reports regarding the impact of organic labeling on the purchase and consumption of consumer products (Young et al., 2010). While some research studies show that most consumers are insensitive to organic labeling, others show that such labeling could affect the purchasing behaviors of up to 55% of customers (Aertsens, Verbeke, Mondelaers, & Van Huylenbroeck, 2009).

Kollmuss and Agyeman (2002) also say that most consumers who understand the term “organic foods” are likely to support their production. However, studies from Janssen and Hamm (2012) dispute this fact by suggesting that an understanding of the term “organic” does not have a strong effect on consumer support, or disapproval, of organic products.

Based on this assertion, some researchers suggest that the knowledge/understanding of organic foods is not important in the formulation of purchasing foods; instead, they suggest that consumer perceptions and attitudes towards a product’s label are important in influencing such decisions (Zander & Hamm, 2010).

Based on these insights, there is a consensus among many researchers who suggest that taste and knowledge are the greatest determinants of consumer perceptions and attitudes about products. This consensus is mostly dominant in the chocolate industry.

Indeed, for a long time, people have associated chocolates with “good taste, positive feelings, sweetness, feelings of warmth and calories/energy” (Gámbaro & Ellis, 2012, p. 15). Different types of chocolate (white, creamy, and milky chocolates) have different types of taste perceptions. For example, many customers have associated milky chocolates to be creamy, while others have associated dark chocolates to have an intense taste (Mittal & Ravinder, 2012).

Taste is an important factor in the understanding of consumer purchasing decisions because researchers rank it as being among the most relevant factors in the development of consumer purchasing behaviors (Fernqvist & Ekelund, 2014). According to Zander and Hamm (2010), ethical factors surrounding the conception of the term “organic” also ranks high in the list of factors that affect consumer purchasing decisions.

At the same time, the researchers say the taste of chocolates and their health issues affect consumers’ purchasing decisions. Based on this understanding, Aertsens et al. (2009) say that organic labeling could potentially share a close relationship with taste factors when developing consumers’ purchasing decisions.

According to Fernqvist and Ekelund (2014), organic foods have a negative correlation with the taste of chocolates because researchers have demonstrated that many consumers perceive organic foods as having a “less positive” taste than non-organic foods. For example, some studies have shown that many consumers perceive organic cookies as being “less tasty” than “regular” cookies (Fernqvist & Ekelund, 2014).

Nonetheless, some studies have shown that 30% of consumers often perceive organic and regular foods as having the same taste (Mittal & Ravinder, 2012). Based on this understanding, taste is a major factor in the development of consumer purchasing decisions.

Knowledge is also an important concept in understanding consumer-purchasing decisions because many researchers have demonstrated that understanding the constituents of organic products affects consumer perceptions of foods (Ajzen, Joyce, Sheikh, & Cote, 2011). In this regard, it is important to investigate whether such knowledge affects consumer-buying decisions for chocolate products.

Similarly, it is important to investigate whether consumers need such knowledge when making the decision to purchase organic or “regular” chocolates. Relative to this view, understanding why consumers purchase specific goods or services helps to explain why some customers have a liking for certain types of products.

The current study will focus on expounding on this assertion by investigating how the knowledge of organic foods could influence the purchasing decisions of customers of varying knowledge. It also seeks to examine the extent of its influence on the purchase of foods that have the organic label and those that do not have this label. The research aim is as follows

Research Aims and Objectives

Research Aim

Understanding the influence of organic labeling on consumer willingness to pay (WTP) for chocolate, relative to knowledge and taste factors.

Research Objectives

To investigate the impact of organic labeling on their willingness to pay for chocolates
To find out the effect of consumers’ understanding of the term “organic” on their willingness to pay for chocolates
To investigate the influence of organic labeling on consumers’ ranking of WTP

Hypotheses

Hypothesis 1: Consumers would give a high WTP for products labeled as organic

Hypothesis 2: Consumers that understand the concept of organic foods would have the highest WTP for chocolate products

Hypothesis 3: Consumers would have the highest WTP for tasty chocolate foods, regardless of whether the products have the organic label, or not.

Justification for Hypotheses

The first hypothesis stems from research studies that have demonstrated the strong impact of organic labels on consumer purchasing decisions. For example, studies by Fernqvist and Ekelund (2014) demonstrated the effect of organic labeling on consumer’s estimation of calorie consumption. The same studies have shown that the presence of organic labeling has a positive effect on nutritional evaluations (Fernqvist & Ekelund, 2014).

Studies that have investigated the influence of organic labeling in the beverage industry have also shown similar findings because they demonstrate that organic labeling helps customers to develop a positive liking for beer (Aertsens et al., 2009).

Nonetheless, independent studies have shown that only 55% of consumers could develop a liking for beer this way (Aertsens et al., 2009). Relative to these findings, Janssen and Hamm (2012) say that different customers have different sensitivities for the presence of organic labeling in a product. This analysis alone reveals that organic labeling could influence only 50% of consumers. These findings informed the first hypothesis, which proposed that most consumers would give a high WTP for products labeled as “organic.”

The justification for the formulation of the second hypothesis emerges from research studies, which have investigated the influence of knowledge on consumer purchasing behavior (Fernqvist & Ekelund, 2014). Such studies have also shown that some consumers understand the concept of organic foods, while others do not (Fernqvist & Ekelund, 2014).

Studies by Ajzen et al. (2011) reveal that more than half of consumers do not understand the concept of organic foods and their influence on human health. Studies by Kollmuss and Agyeman (2002) reveal that this problem stems from the insufficiency of information regarding such foods. Studies by Young et al. (2010) reveal that student consumers have the most positive perceptions of organic foods because they understand the concept.

In fact, this demographic believes that organic foods are necessary and beneficial (Young et al., 2010). Studies that support this narrative reveal that the higher a customer’s knowledge about organic foods, the higher their tendency to develop a positive attitude towards them (Fernqvist & Ekelund, 2014). The justification for the development of the third hypothesis stems from these research studies, which have shown that taste is an important factor in the development of customer purchasing decisions (Gámbaro & Ellis, 2012).

Justification for Study

Kollmuss and Agyeman (2002) emphasize the importance of understanding product attributes as those intrinsic and extrinsic factors that could affect consumer-purchasing decisions. According to Young et al. (2010), tangible and intangible factors have the same effect on consumer purchasing decisions.

For example, there is little (or no) compelling evidence to suggest intrinsic and extrinsic factors have a strong impact on customer loyalty. Based on this understanding, Young et al. (2010) suggest that most companies should be more preoccupied with explaining how many attributes are associated with their products and their consumer purchasing decisions, as opposed to merely identifying the attributes that characterize their products.

References

Aertsens, J., Verbeke, W., Mondelaers, K., & Van Huylenbroeck, G. (2009). Personal determinants of organic food consumption: a review. British Food Journal, 111(10), 1140-1167.

Ajzen, I., Joyce, N., Sheikh, S., & Cote, N. G. (2011). Knowledge and the prediction of behavior: The role of information accuracy in the theory of planned behavior. Basic and Applied Social Psychology, 33(2), 101-117.

Fernqvist, F., & Ekelund, L. (2014). Credence and the effect on consumer liking of food–A review. Food Quality and Preference, 32, 340-353.

Gámbaro, A., & Ellis, C. A. (2012). Exploring consumer perception about the different types of chocolate. Brazilian Journal of Food technology, 15(4), 317-324.

Janssen, M., & Hamm, U. (2012). Product labeling in the market for organic food: Consumer preferences and willingness-to-pay for different organic certification logos. Food Quality and Preference, 25(1), 9-22.

Kollmuss, A., & Agyeman, J. (2002). Mind the gap: why do people act environmentally and what are the barriers to pro-environmental behavior? Environmental education research, 8(3), 239-260.

Mittal, P., & Ravinder, D. (2012).Consumer Buying Behavior & Perception towards Chocolates Brands and Its Consumption. International Journal of Business and Management Tomorrow, 2(9), 1-10.

Young, W., Hwang, K., McDonald, S., & Oates, C. J. (2010). Sustainable consumption: green consumer behavior when purchasing products. Sustainable development, 18(1), 20-31.

Zander, K., & Hamm, U. (2010). Consumer preferences for additional ethical attributes of organic food. Food quality and preference, 21(5), 495-503.

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