Projects Funded for Kristin Kiesel
Consumer Demand and Marketing Strategies for Locally Produced Foods
- Kristin Kiesel
Specific Objectives of the Project
California produces over 400 agricultural commodities, including high-value dairy products and meats, a third of all vegetables, and two-thirds of fruits and nuts consumed nationwide (CDFA, 2017). Situated in close proximity to this agricultural abundance are affluent metropolitan areas, uniquely positioning California to capitalize on the rapidly expanding demand for locally grown and produced foods. This project contributes to a better understanding of consumer preferences for local foods, and interdependencies with other premium attributes (such as organic). It will explore which marketing strategies are needed to establish and promote local supply-chain relationships. More specifically, conducting an in-store experiment in a specialized retailer in Sacramento will allow us to estimate how purchasing probabilities for local, value-added products are influenced by food labels and information displays at the retail level.
Project Report/Summary of Results
In collaboration with the Davis and Sacramento Natural Food Co-ops, we completed both consumer surveys and the proposed in-store labeling experiment. While the analysis of our data collected in the in-store labeling experiment in ongoing, we presented the results of our survey analysis this summer at the AEA Annual Meeting and summarized key findings in a recent ARE Update article.
The 2008 Farm Act defines local foods as those sold fewer than 400 miles from the product’s origin or within the state in which the product is produced. However, consumer perceptions of distances that define local foods range from the belief that baked goods, eggs, and produce are local only if they originate in the same city/town as where they are sold, to the beliefs that milk and dairy are local if they are produced in state, and frozen and shelf-stable goods are local as long as they are made in the U.S. Consumers paid more attention to local production than any other attributes, including avoidance of genetically modified ingredients in a recent Nielsen study comparing awareness of 16 different food-related causes, but transport miles might not be their only or even primary concern. To many consumers, local foods are defined by direct-to-consumer sales or direct distribution to local retailers in regional markets. Some associate “localness” primarily with adherence to organic and/or sustainable production practices or with small family farms. Others are motivated by a desire to ensure the livelihood and economic stability of all members of their community. Finally, consumers might simply perceive local foods to be of higher quality than other products.
Our survey analysis of consumer perceptions confirms that a local label can evoke all of these beliefs. Despite stores’ precise definitions based on mileage and a generally high consumer awareness of these definitions, we detected biases in consumer perception regarding the meaning of a local label. When consumers were asked to pick the statement most likely to be associated with a local label displayed by the store, the stores’ definitions did not dominate, and responses varied widely. In one of the two stores, 204 consumers stated that a local label most likely implied that a food item was of a higher quality and produced by a small farm or business using only organic ingredients. Across both stores, far more consumers reported stronger associations with one or more of these characteristics than the actual definition used by the stores. We also find that consumer perceptions of local labels do not compete with other value-added attributes such as organic production. Instead, consumers view these as complements and increase their stated willingness to pay.
These results in combination with our completed feasibility studies for proposed business models aimed at improving access to local markets for small food businesses and farmers supported by separate USDA Local Food Promotion Planning Grants allow us to conclude that the promotion of local foods is first and foremost relationship marketing. Local labels relying on specific, proximity-based definitions will likely not be able to communicate authentically and credibly what consumers are looking for in local foods. Rather, they restrict the geographic areas in which farmers can market their goods. In contrast, regional umbrella brands would allow farmers and small businesses operating in urban and more rural communities to preserve their unique product offerings while creating economies of scale when marketing and distributing their local foods. Our continued research in this area will be able to provide specific recommendations regarding marketing strategies for local retail stores.
Food for Thought: Can Education Affect Student Attitudes and Behavior Towards Healthier and Sustainable Food Choices?
- Kristin Kiesel