Economic Journal of Emerging Markets, 11.
2019, 123-134 Economic Journal of Emerging Markets Econ.
Emerg.
Mark.
Available at http://journal.
id/index.
php/jep Willingness to pay and actual purchase decision for organic agriculture products in Vietnam Dung Tien Luu Lac Hong University.
Bien Hoa.
Vietnam Corresponding author: dunglt@lhu.
Article Info Abstract This article aims to investigate the determinants of willingness to pay and the actual purchase decision of organic agriculture products among consumers in Vietnam, one of the emerging markets.
The study uses primary survey data of 210 consumers based on the logit and ordered logit regression models.
Findings/Originality: The results confirmed Keywords:
that consumers' perceptions of external factors and product attributions.
Organic agricultural product, external factors .
rocessing, packaging, and labelling, certification, ordered logit, logit, purchasing supply of produc.
, perceived health and nutrition of products, decision, willingness to pay socioeconomic characteristics significantly influence on consumerAos willingness to pay and actual purchase decision for organic foods in the JEL Classification:
context of Vietnam market.
These results of the study provided insights D1.
D9.
M3.
Q1 for marketers on the key variables that could be used for promoting more DOI: 10.
20885/ejem.
art1 widespread consumption of organic foods in the country.
Article history:
Received : 27 April 2019 Accepted : 9 August 2019 Published : 1 October 2019 Introduction Consumer demand for organic agriculture products is rising rapidly in recent years due to the increase in consumer awareness concerning climate change, product safety, and hygiene.
The increasing consumer demand for higher quality produce and food safety makes organic food an interesting option.
Willer and Lernoud .
estimated the value of the organic agricultural products market would grow by 15-20%/year in the Asia-Pacific region.
In Vietnam market, rapid socio-economic development has been accompanied by modernization, industrialization, and international integration of agricultural food production, the young population structure, the rapid increase in per capita income, and the improving consumer awareness for health and environmental issues will increase demand for organic products, but the actual demand for organic agricultural products has not yet reached its potential.
Sustainable agricultural development is the trend and the proper policy.
The high incidence of lifestyle diseases, such as diabetes and heart disorders, raised an alarm which made consumers realize the importance of food quality and safety.
while investment in organic agriculture will become a long-term and sustainable strategy of agricultural businesses as well as of farmers.
However, the output of organic products has met hard barriers that have to be consumption of organic food was symbolic of the ethical value system (Grosglik, 2.
Consumer behavior regarding organic agriculture products have received great attention in the economics literature with numerous results clarifying many aspects of consumer behavior, such as clarification who are the customers as well as their characteristics, their attitudes, and preferences, willingness to buy, purchasing decisions, and the level of consumption of organic agricultural products in many countries (Anisimova, 2016.
Asif.
Xuhui.
Nasiri, & Ayyub, 2018.
Cheung.
Lau, & Lam, 2015.
Hansen.
Syrensen, & Eriksen, 2018.
Joshi & Rahman, 2015.
Khan & Mohsin, 2017.
Rana & Paul, 2.
Previous studies used a microeconomic theory approach, behavioral economics theory to explain consumers' organic products purchasing behavior and test for multiple product groups.
P ISSN 2086-3128 | E ISSN 2502-180X
Copyright @ 2019 Authors.
This is an open-access ar ticle distributed under the terms of the Creative Commons Attribution License .
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Economic Journal of Emerging Markets, 11.
2019, 123-134 However, there is no full research model in all cases, and many studies, rather than the use of dependent variables, are the real purchase decisions of consumers make using other variables such as a willingness to buy or intention to purchase.
Thus, the predictability power of these research models is not significant.
This study aims to analyze factors that influence the willingness to pay and the actual purchase decision of organic agriculture products among Vietnamese consumers.
The definitions of organically produced products mostly emphasize the technology or production practices and principles used, such as biological or natural production systems and green or environmental friendliness, while others emphasize the limited use of artificial chemicals in organic production (Yiridoe.
Bonti-Ankomah, & Martin, 2.
The term Auorganic productAy remains loosely defined along with related terms, such as Aubiological,Ay Aunaturally produced,Ay Augreen,Ay Auenvironmentally friendly,Ay AusustainableAy and Aulimited use of artificial chemicalsAy (Harper & Makatouni, 2002.
Hill & Lynchehaun, 2.
Organic products are generally regarded as healthier, safer, better tasting, and more nutritious than conventionally produced products (Krystallis & Chryssohoidis, 2005.
Perrini.
Castaldo.
Misani, & Tencati, 2010.
Voon.
Ngui, & Agrawal, 2.
Organic agriculture products are perceived as healthier and safer and organic practices are perceived to be more environmentally sound in this study.
The theory of planned behavior by Ajzen .
is a generally applied model that predicts consumer behavior based on "intention to perform the behavior" and "perceived behavioral The intention is inCuenced by three constructs: "attitude towards the behavior", "subjective norm", and "perceived behavioral control".
The theory of planned behaviour has often been applied in the area of product choice and also more recently to model organic product choice (Aertsens.
Verbeke.
Mondelaers, & Van Huylenbroeck, 2009.
Al-Swidi.
Huque.
Hafeez, & mohd shariff, 2014.
Chen, 2007.
Dean.
Raats, & Shepherd, 2008.
Dowd & Burke, 2013.
Gracia Royo & De-Magistris, 2007.
Paul.
Modi, & Patel, 2016.
Saba & Messina, 2003.
Scalco.
Noventa.
Sartori, & Ceschi, 2017.
Shin.
Im.
Jung, & Severt, 2018.
Tarkiainen & Sundqvist, 2005.
Voon et al.
, 2.
Value theory has also been applied to get a better insight into the consumption of organic products, including perceived value effects on personal moral norms, beliefs, and attitudes (Schwartz, 2.
Basic of the theory of planned behavior, several attempts have been made to examine consumersAo perceptions of organic products, factors that have facilitated the organic product choice, willingness to pay, and reasons for purchase/non-purchase.
Consumers purchase organic products among consumer mainly for the following factors:
social and demographic factors, environmental concern, health concern and lifestyle, product quality, knowledge or awareness, external factors .
rocessing, packaging and labelling, certification, supply of product, store imag.
, perceived behaviour control, subjective norms, product-related factors .
erceived attributes, product attribute.
, are the most important factors that explain consumersAo decision-making processes for organic food products (Aertsens et al.
, 2009.
Anisimova.
Aryal.
Chaudhary.
Pandit, & Sharma, 2009.
Asif et al.
, 2018.
Cheung et al.
, 2015.
Gil & Soler.
Hamzaoui Essoussi & Zahaf, 2008.
Hansen et al.
, 2018.
Hughner.
McDonagh.
Prothero.
Shultz, & Stanton, 2007.
Joshi & Rahman, 2015.
Khan & Mohsin, 2017.
Konuk, 2018.
Onyango.
Hallman, & Bellows, 2007.
Paul & Rana, 2012.
Rana & Paul, 2017.
Salleh & Noor, 2018.
Singh & Verma, 2017.
Tsakiridou.
Boutsouki.
Zotos, & Mattas, 2008.
Van Doorn & Verhoef, 2015.
Voon et al.
, 2011.
Yadav & Pathak, 2.
Family structure, marriage status, the presence of children in the household has been regarded as a significant factor, which positively influences consumersAo organic food attitudes as well as buying behavior (Hamzaoui Essoussi & Zahaf, 2.
Education has also been reported as a significant factor affecting consumer attitudes towards organic food products.
People with higher education are more likely to express positive attitudes towards organic products (Gracia Royo & De-Magistris, 2.
Higher-income households are also more likely to form positive attitudes and to purchase more organic food (Aryal et al.
, 2009.
Haghiri.
Hobbs, & McNamara, 2.
Willingness to pay and actual purchase decision.
(Lu.
The research framework was defined based on a review of the literature on organic product The dependent variables in the research model are the willingness to pay (WTP) and the actual purchase decision of agriculture organic products among consumers.
Variable definitions and measurements were presented in Table 1.
Methods Greene .
and Maddala .
revealed that, given the ordinal ranking of the WTP variable, the multinomial logit model would fail to account for the ordinal nature of the dependent variable.
therefore, the ordered version of logit estimation was applied.
Overall probabilities were calculated for the variables' mean values using estimated intercepts and coefAcients.
Model signiAcance was veriAed by calculating the N2 statistics resulting from the restricted and unrestricted log-likelihood The model, selected to analyze the dependence of WTP on the main factors, was speciAed as equation 1:
ycOycNycE = yu1 yu2 yayaycAyayaycI yu3 yayaycO yu4 yayaya yu5 yayayayaya yu6 yayaycAycIyaycs yu7 yaycAyaycCycAya11 yu8 yaycAyaycCycAya20 yu9 yaycAycCycOyayayayaya yu10 ycIycOycEycEyaycU Oe ycIya yu11 ycIycOycEycEyaycU Oe ycOya yu12 ycEycEya Oe ycIya yu13 ycEycEya Oe ycOya yu14 yayayayaycNyaycU Oe ycIya yu15 yayayayaycNyaycU Oe ycOya yu16 ycAycOycNycIya Oe ycIya yu17 ycAycOycNycIya Oe ycOya AA in which WTP is the willingness to pay, 1 to 17 are regression coefficients of the independent variables .
ender, education, age, the family with children, family size, income, knowledge of organic foods, supply availability, external factors related to organic products, consumersAo perceptions of health, nutrition concerns of organic products, respectivel.
, and AA is the residual.
The logit model was estimated to explain and predict consumer purchase of organic agriculture products.
The logit model was chosen for this study because of its mathematical simplicity and because of its asymptotic characteristics that constrain the predicted probabilities to a range between zero and one (Maddala, 1.
The maximum likelihood (ML) estimation procedure was used to obtain the model parameters.
The model, selected to analyze the dependence of purchasing decision (Y) on the main factors, was speciAed as equation 2:
ycU = yu1 yu1 yu2yayaycAyayaycI yu3 yayaycO yu4 yayaya yu5 yayayayaya yu6 yayaycAycIyaycsya yu7 yaycAyaycCycAya11 yu8 yaycAyaycCycAya20 yu9 yaycAycCycOyayayayaya yu10 ycIycOycEycEyaycU Oe ycIya yu11 ycIycOycEycEyaycU Oe ycOya yu12 ycEycEya Oe ycIya yu13 ycEycEya Oe ycOya yu14 yayayayaycNyaycU Oe ycIya yu15 yayayayaycNyaycU Oe ycOya yu16 ycAycOycNycIya Oe ycIya yu17 ycAycOycNycIya Oe ycOya AA in which Y is the purchasing decision, 1 to 17 are regression coefficients of the independent variables .
ender, education, age, the family with children, family size, income, knowledge of organic foods, supply availability, external factors related to organic products, consumersAo perceptions of health, nutrition concerns of organic products, respectivel.
, and AAis residual.
Green .
suggesting that in the regression model, the minimum sample size was determined by the empirical formula 50 8*independent variables in the model.
This study has 08 independent variables so the sample size is at least 50 8*16 = 178 observations.
The sample for the study was drawn conveniently from 210 consumers in Ho Chi Minh city which represent different geographic, cultural, and commercial backgrounds of Vietnam.
The stratified sampling plan was followed based on the population distribution in the districts of the city to ensure the representation of the research sample.
Personal interviews were conducted at the supermarkets and organic food chains by the author in Ho Chi Minh city.
The survey collected information about consumer awareness, knowledge of willingness to pay, purchasing decision toward organic products and views Economic Journal of Emerging Markets, 11.
2019, 123-134 on their characteristics considered important in the purchase decision.
Data were also collected on knowledge of organic products, attitudes towards personal health, and nutrition concerns relating to these products among consumers.
Additional information concerning the respondents' socioeconomic characteristics and economic conditions was also collected.
Table 1.
Variable definitions and demographic descriptions VARIABLES Variable Definition Mean S.
D Max Min WTP Willingness to pay for organic products 0 = none 1 = no more than 5% 2 = 6-10% 3 = 11-15% 4 = 16-20% 5 = more than 20% Purchasing Purchasing decision (Y) 1 = regular buyers .
uying organics sometimes, frequently or alway.
0 = irregular buyers .
ever or rarely buy organic.
Gender Sex of respondent 1 = male.
0 = female Education Education level of respondent 1 = high school or higher 0 = otherwise Age Age of respondent .
14 56 19 Child Household with children (<.
1 = Family with children.
0 = otherwise Farm size Family Size (Number of peopl.
Income-10 1 = less than 10 million.
0 = otherwise Income-11 1 = 11-20 million.
0 = otherwise Income-20 1 = more than 20.
0 = otherwise Knowledge Knowledge/awareness of respondent about organic products 1 = some or more information.
0 = no information Supply_NIa 1 = Product availability is not important.
0 = otherwise Supply_SI 1 = Product availability is somewhat important to important.
0 = 0.
Supply_VI 1 = Product availability is very important to extremely important.
0 = otherwise PPL_NIa 1 = Processing, packaging, labelling, certification of organic products is not important.
0 = otherwise PPL_SI 1 = Processing, packaging, labelling, certification of organic products is somewhat important to important.
0 = otherwise PPL_VI 1 = Processing, packaging, labelling, certification of organic products is very important to extremely important.
0 = otherwise Healthy_NIa 1 = Healthy concerning organic product is not important.
0 = otherwise Healthy_SI 1 = Healthy concerning organic product is somewhat important to important.
0 = otherwise Healthy_VI 1 = Healthy concerning organic product is very important to extremely important.
0 = otherwise Nutri_NIa 1 = Nutritious, tasty in organic product is not important.
0 = otherwise Nutri_SI 1 = Nutritious, tasty in organic product is somewhat important to important.
0 = otherwise Nutri_VI 1 = Nutritious, tasty in organic product is very important to extremely important.
0 = otherwise Note: a Implies that the variable was dropped during model estimation to avoid the dummy variable trap.
Willingness to pay and actual purchase decision.
(Lu.
The survey data shows the organic product types and distribution channels selected by Vietnamese consumers.
Vegetables, fruits, meats, rice, fishes and tea were the top organic foods among consumers, while distribution channels include organic food stores, direct sales, and supermarkets in this study basic of a survey the data.
Variable definitions and demographic characteristics were described in Table 1.
Results and Discussion Factors Affecting ConsumersAo WTP for Organic Agriculture Products Table 2 presented the estimation results from the ordered logit model.
The log-likelihood ratio test indicates that the estimated model has satisfactory explanatory power - N2 was signiAcant at the 001 probability level.
R2 was at 0.
The positive sign on Income and Knowledge was common to all similar previous studies while other demographic factor effects were not significant.
This means that the probability of a higher WTP increases with higher income and knowledge/awareness of organic products.
Among factors related to consumersAo perceptions of external factors and product attributions, the coefAcients related to processing, packaging and labeling, certification, the supply of the product, and perceived health and nutrition of products have positive impacts on WTP and are signiAcant at the 5% and 1% levels.
Regarding the weight of the different explanatory variables on WTP, probability derivatives were calculated from the estimated model.
The sum of marginal probabilities was zero, and a higher probability attached to one WTP category means a lower probability for another.
Income and perceived product attributes were the variables with the strongest impacts on the consumer's decision to change his or her behavior from no WTP to a positive WTP.
Looking at the different WTP classes, the most positive changes in probabilities were in the "6 to 10%", "11-15" classes and the "above 20%".
Consumers with an income belonging to the class from 11 million or higher and who viewed products attribute to be important were more likely to buy organic products regularly compared to those who did not consider this aspect.
Table 2: Regression results of WTP for organic agriculture products .
rdered logit analysi.
VARIABLES P>.
supply_si supply_vi ppl_si ppl_vi healthy_si healthy_vi nutri_si nutri_vi Number of observations: 210.
LR A .
: 252.
Prob > A : 0.
Pseudo R square:
Log likelihood: -224.
Economic Journal of Emerging Markets, 11.
2019, 123-134 Factors Affecting Consumer Purchasing Decisions (Y) for Organic Agriculture Products The maximum likelihood (ML) estimates of the model coefAcients, the marginal effects on consumersAo purchase decision, and t-ratios were reported in Tables 3 and Table 4.
The maximum likelihood (ML) estimates of the model coefAcients, the marginal effects on the dependent variable, and the associated t-ratios were reported in Table 3 and Table 4.
Among the 210 respondents included in this study, 131 .
%) respondents were categorized as regular buyers .
uying organics sometimes, frequently or alway.
while 79 .
%) were irregular buyers .
ever or rarely buying The reported value of the Pseudo R2, a measure of goodness of model At, was 0.
indicating that the model has signiAcant explanatory power.
The estimated model successfully 48% of the responses relating to organic product purchase decision among Vietnamese consumers.
Among the socioeconomic variables, the coefAcients related to big family size, with having a high school education or above, and income have positive impacts on organic purchases and were signiAcant at the 5% level.
The results suggest that bigger family size, income .
Ae 20 million VND) and those with a high school education or more were more likely to purchase organic products that were the respective reference categories.
The coefAcients for knowledge or awareness by consumers of organic products was signiAcant and positively related to organic product The result indicates that consumers who have good information about organic products were more likely to purchase them than were others.
Among the external factors, perceived attributes, and product-related factors, the coefficients related to processing, packaging and labeling, certification, the supply of the product, and perceived health and nutrition of products have positive impacts on Vietnamese consumer purchase decision of organic products and were signiAcant at the 10% and 5% levels.
Table 3.
Maximum likelihood estimates of model coefAcients VARIABLES P>.
supply_si supply_vi ppl_si ppl_vi healthy_si healthy_vi nutri_si nutri_vi Number of observations: 210.
LR A .
: 214.
Prob > A : 0.
Pseudo R square:
Log-likelihood: -31.
The estimated marginal effects of the demographic, knowledge, and product attribute .
resented in Table .
showed the degree to which respondents were more or less likely to regularly purchase organic products.
Respondents with bigger family size and with a high school education or higher were likely to buy organic products regularly.
Probabilistically, those with a big family size were Willingness to pay and actual purchase decision.
(Lu.
20% more likely to buy organic products regularly than were those with smaller family size.
Those with a high school education or higher were 35.
60% more likely to buy organic products regularly than were those with less than high school education.
Similarly, those who identiAed themselves as knowledgeable .
ave information about organic product.
as compared to non-knowledgeable respondents were 59.
10% more likely to buy organic agricultural products.
Table 4.
Maximum likelihood estimates of model marginal effects VARIABLES supply_si supply_vi ppl_si ppl_vi healthy_si healthy_vi nutri_si nutri_vi Correct prediction: 0.
P>.
In terms of external factors and perceived product attributes, respondents who view supply availability to be somewhat important to important in deciding what products to eat and were 30.
more likely to buy organic products regularly compared to those who do not consider this aspect Respondents who view processing, packaging and labeling and certification to be very important to extremely important were 21.
20% more likely to buy organic products.
Respondents who view health concerns to be either important or extremely important in purchasing decisions 90% and 35.
60%, more likely, respectively, to buy organic products regularly compared to those who do not consider this aspect important.
And finally, those who view the nutrition of organic products to be very important to extremely important were 54.
70% more likely to buy organic products regularly than those respondents who do not consider this aspect.
The results of this study suggested that the regularity of organic product purchase decision was inCuenced by socioeconomic factors and the presence or absence of external factors, knowledge of consumers, and product attributes deemed important in consumption decisions.
This article is one the few studies that integrated multiple factors in one research framework to empirically evaluate the role of demographic factors, healthism, and trust among suppliers in explaining consumerAos WTP and actual purchase decision of organic foods.
These findings were strongly supported by several previous studies.
It helps to understand that there is a strong relation in purchase behavior for organic food among consumers between developing and developed countries.
For developed economies: Teng and Wang .
revealed that trust, serving as the antecedent of attitudes, significantly mediates the relationships between revealing information, perceived knowledge, and organic purchase intentions.
Additionally, both attitudes towards organic foods and subjective norm significantly influence consumer organic food choices.
Anisimova .
provides support for the research hypotheses by revealing positive and statistically significant effects of healthism, hedonism, and trust on consumer purchase intentions in Australia.
Economic Journal of Emerging Markets, 11.
2019, 123-134 The findings of Konuk .
in Turkey reported that store image has a positive impact on perceived quality and trust in the private organic label.
It was also revealed that perceived quality, trust in private organic label contributes to perceived value.
Also, both perceived value, trust in private organic label and the perceived value were found to have a positive influence on consumersAo purchase intentions.
In developing economies: Thygersen, de Barcellos.
Perin, and Zhou .
indicated that the reasons why Brazilian and Chinese consumers buy organic food are strikingly similar to what is found in Europe and North America.
Consumers' attitude toward buying organic food is strongly linked to beliefs about its healthiness, taste, and environmental friendliness.
Also, consumer attitudes toward buying organic food are positively related to Schwartz's "Universalism" values in all studied cultures.
The findings from Kapuge .
demonstrated that awareness and health consciousness were the two key determinants and demonstrated a significant positive impact with purchase intention of organic food Sri Lankan customers.
Nandi.
Bokelmann.
Gowdru, and Dias .
, based on a consumer survey in India, indicated that about 90% of the consumers were willing to pay a premium price ranging between 5% to more than 100% to acquire better-quality fruits and vegetables.
They also suggested that factors such as family income, size of the family, gender, and other opinion variables such as chemical residue in conventional foods, trust on retailers, taste, and environmental concerns significantly influence consumersAo WTP.
More than 87% of the consumers indicated that high price, lack of availability, narrow range, and irregular supply are the major barriers for them to buy these products.
Singh and Verma .
confirmed six factors included health consciousness, knowledge, subjective norms, price, additional factor .
, availabilit.
, and socio-demographic factors .
ge, education, and incom.
influence the actual buying behavior among organic food products.
Asif et al.
is comparative in nature and focuses on understanding the factors that affect the purchase intention for organic food in three countries: Pakistan.
Turkey, and Iran.
The results of the study vary from country to country, but attitude and health consciousness are found to be better predictor organic food purchase intention.
The awareness of consumers moderates positively in the intention to purchase of organic food.
The relationship of the subjective norms, perceived behavior control and environment concern to purchase vary across different contexts.
This study has some limitations.
First, the results of this study cannot be generalized, since the sample was collected in Vietnam, one of the emerging economies.
Thus, more studies need to be carried out in different economies, geographical settings, and cultures to provide overall consumerAos decision process among organic products.
Second, the research model contains the relationship of many independent variables, mediating effects, and dependent variable.
These relationships are independently tested through the logit and ordered logit regression models in this study.
Meanwhile, the model can also be tested simultaneously through the SEM model.
Subsequent studies can be approached in this direction.
Thirdly, based on Kotler consumerAos purchase decision process passes five stages includes: aware, appeal, ask .
, action .
urchase/non-purchas.
, and advocate .
but this study did not cover consumerAos postpurchase behavior.
Thus, further studies could consider a consumer's loyalty/satisfaction as the independent variables in the research model.
Also, this study has not considered the decision to purchase and the willingness to pay for each type of organic products, but only consider consumer purchase decision in a general case.
Further studies may test consumer purchase decision toward each type of products to provide insights for the marketer of each segmentation.
Conclusions A growing interest in organic agriculture production has prompted numerous studies comparing aspects of organic and conventional agriculture products.
This article uses primary data based on the logit and ordered logit regression models.
Its Andings provide interesting new insights for Willingness to pay and actual purchase decision.
(Lu.
marketing and business strategies under customer-driven demand in the Vietnamese organic food In summary, consumers' perceptions of external factors and product attributions, coefAcients related to processing, packaging and labelling, certification, supply of product, perceived health and nutrition of products, along with socioeconomic characteristics related to big family size, high school education or above, and income influence consumer WTP and purchase decisions for organic foods.
The price premium for organic food over conventional alternatives can be viewed among consumers as the cost of investment in human health.
Product prices also provide signals about the inherent quality characteristics of a product, as well as reflecting the value of inputs used to produce the product.
The promotion of organic products among agriculture businesses needs to be invested affordably concerning product attributes and health concerns.
these then would be translated into a positive WTP and purchasing decisions by consumers in the long-term.
Marketers also need to include information of production methods, environmental benefits, and positive contributions to local economies.
Besides, the distribution channels and other factors belonging to cost management must be controlled to increase positive WTP and purchase decisions among consumers because the cost will be a crucial factor for the success of organic Consumer trust in the food sector has been destroyed significantly in Vietnam context over the past years.
therefore, external factors such as processing, packaging and labelling, certification, and identification of place of origin for organic products will be needed to increase WTP and convince consumers to change purchase decisions.
References