The effects of organic labels on global, local, and private brands: More hype than substance?
Introduction
Over the last decade, the global organic food sector has grown substantially within a fairly static total food market (Baker, Thompson, Engelken, & Huntley, 2004). Many countries show annual growth rates of the organic food industry of up to 30% (Krystallis & Chryssochoidis, 2005). From being a niche market, the organic food sector has entered the mainstream, having rapidly gained more and more market share. Many companies are therefore trying to jump on the bandwagon, as they recognize the potential of standing out from the crowd by offering organic food. Organic food products are usually symbolized by an organic certification issued by an independent accredited institution for organic product testing (in the following, also termed as an organic label).
In spite of the growing relevance of distinguishing brands by organic labels, research efforts have yet to focus on this differentiation approach. Prior studies in the context of organic food mainly deal with identifying the ‘organic consumer’, analyzing the reasons why consumers fail to purchase organic food, or they investigate purchase motives (Hughner, McDonagh, Prothero, Shultz, & Stanton, 2007). These studies deal with organic products in general and do not focus on products certified by an independent accredited institution for organic product testing.
Moreover, Ngobo (2011) highlights the relevance of comparing and contrasting the use of the organic label across different brand types (p. 92): “If the consumer decides to buy an organic product, then s/he must decide which organic brand to choose.” The author finds that consumers are more likely to buy organically produced private brands compared to organically produced local brands. Nevertheless, his study is only a first step in investigating the research topic of organic food and branding, as it (1) does not distinguish between food that is organically produced and organic food that is actually certified by an independent accredited institute for organic product testing; (2) only investigates the actual purchase, and therefore neglects the issue of price premium acceptance, and does not investigate whether brand perception changes when the brand is certified as organic; and (3) does not include further brand types such as global brands. To extend his findings, he calls for more research that focuses particularly on organic labeling in combination with branding.
Another literature stream investigates the relationship between other labels in addition to organic ones – such as fair-trade labels – and branding. As few studies deal with this topic, more research is also needed here. De Pelsmacker, Driesen, and Rayp (2005) investigate manufacturers' and private brands and show that, from the consumers' perspective, the brand is the most important attribute of the coffee, followed by the coffee's flavor and the fair-trade label. Thus, while both the brand and the fair-trade label are important when buying coffee, the brand is most important. In contrast to this result, De Pelsmacker, Janssens, Sterckx, and Mielants (2005), in their comparative research on manufacturers' and private brand coffees, show that the type of brand is of relatively minor importance. More precisely, their results highlight that ethical labels are more effective when used for manufacturers' brands than for private brands. These study results confirm the need to investigate organic labels at the level of brand-type and call for further research in this domain (De Pelsmacker, Janssens, Sterckx, & Mielants, 2005).
In sum, no studies yet exist that assess the impact of organic certification issued by an independent accredited institution of organic product testing on different brand types. The current study contributes to this nascent research gap and responds to the stated calls for more research by looking at organic labels as a brand differentiation strategy. The study discerns whether an organic labeled product generates positive consumer brand perceptions and thus influences consumers' food buying intentions. In addition, it is necessary to assess whether various types of brands benefit differently from organic labeling in the retail market. In order to achieve this, the following research objectives are outlined:
- (1)
Verify the main purchasing motives for organic food in Germany.
- (2)
Investigate consumers' perceptions of global, local, and private brands bearing an organic label.
- (3)
Analyze whether an organic label influences the predictors of brand purchase intention regarding global, local, and private brands.
Therefore, our study fundamentally differs from the prior studies by (1) explicitly focusing on an organic label issued by an accredited institution; (2) combining branding and organic labeling and investigating whether an organic label is a successful differentiation strategy for different brand types, namely global, local, and private brands; and (3) taking the complete set of main purchasing motives of organic food in Germany as well as relevant variables of intended behavior into account.
Three studies are carried out. In order to assess consumers' perceptions of brands bearing an organic label, it is necessary to examine the relevant perception variables that reflect the key drivers of organic food consumption in Germany, where our study is conducted. This leads to the research objective of study 1, in which in-depth interviews are used to identify the main drivers for organic food purchasing decisions in a German market environment. Based on these results, an experimental study (study 2) is carried out to test how the use of an organic label affects the perceptions of global, local, and private brands concerning the key motivational drivers of organic food purchasing behavior. More precisely, we investigate whether an organic label affects the perceptions of healthiness, hedonism, environmental friendliness, and food safety for global, local, and private brands. Finally, the effect of organic labels on brand-related outcome variables (study 3), namely consumers' purchase intentions and their willingness to pay a price premium, is examined. The results yield implications for marketing practitioners and suggestions for future academic research.
Section snippets
Study 1: Verifying the main purchasing motives for organic food in Germany
Prior research regarding the main drivers of why consumers purchase organic food may not be applied without verification. This is due to the fact, firstly, that many different purchasing motives have been identified in prior research; and, secondly, that Germany – where we conducted our study – is one of the countries in which research dealing with organic food purchasing behavior is of utmost importance but still in its beginnings.
More precisely, prior research suggests that the perceived
Study 2: The impact of organic labels on brand perception
The second study tests the effects of organic labels on global, local, and private brand perceptions concerning the identified main drivers for organic food purchasing decisions. Thus, the integrated variables constitute crucial indirect sources of brand strength in the context of organic food (Aaker, 1996). Because of the hot debate on the globalization of branding (e.g., Schuiling & Kapferer, 2004), global brands are chosen for this study. Global brands are important; however, the
Study 3: The impact of organic labels on variables of behavioral intention
The objective of study 3 is to emphasize the relevance of organic labels in brand differentiation to marketers. For this purpose, we investigate the impact of differentiating a global, local, and private brand by means of an organic label on two marketing-related outcome variables, namely purchase intention and willingness to pay a price premium.
Discussion
This paper contributes to the literature by providing empirical support for the effectiveness of organic labels issued by an independent accredited institute as a source of brand differentiation. It is the first study to explicitly link branding to organic labeling as a relevant strategy in marketing practice. Our first study verifies the four key motivational drivers of organic food purchasing behavior in Germany. A qualitative study reveals the main purchasing motives: healthiness, hedonism,
Acknowledgments
The authors would like to thank Managing Editor Michel Laroche and two anonymous reviewers for their valuable feedback. We also thank Colin L. Campbell for his assistance throughout the review process.
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