New Market Opportunities and Consumer Heterogeneity in the U.S. Organic Food Market

Kim, G.; Seok, J.H.; Mark, T.B. New Market Opportunities and Consumer Heterogeneity in the U.S. Organic Food Market. Sustainability 2018, 10, 3166.

17 Pages Posted: 15 Feb 2017 Last revised: 15 Sep 2018

See all articles by GwanSeon Kim

GwanSeon Kim

University of Kentucky - Department of Agricultural Economics

Jun Ho Seok

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Tyler Mark

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: February 13, 2018

Abstract

This paper investigates what factors and characteristics of organic consumers affect annual organic food expenditure by using Nielsen’s consumer panel dataset from 2010 to 2014. To be specific, this paper explores new marketing opportunities by investigating organic consumer heterogeneity in different household income levels by utilizing the multilevel model. Findings in this study will contribute to the previous and existing literature in three-folds. First, we find that the organic consumers are more heterogeneous in the high-level of income groups (approximately above $60,000) as well as the low-income households between $35,000 and $45,000. This finding demonstrates that the income levels above $60,000 and around $40,000 have potential market segmentation. Second, we find that that annual organic expenditure is positively associated with consumers who consecutively repurchase organic food products compared to irregular organic consumers, supporting a different level of satisfaction. Third, we find that USDA organic labeling has a positive effect on annual organic expenditure compared to the organic labeling certified by private companies, implying the importance of credibility for organic labeling.

Keywords: Multilevel model, Nielsen data, organic food, repurchase, USDA labeling

JEL Classification: D12, Q13

Suggested Citation

Kim, GwanSeon and Seok, Jun Ho and Mark, Tyler, New Market Opportunities and Consumer Heterogeneity in the U.S. Organic Food Market (February 13, 2018). Kim, G.; Seok, J.H.; Mark, T.B. New Market Opportunities and Consumer Heterogeneity in the U.S. Organic Food Market. Sustainability 2018, 10, 3166., Available at SSRN: https://ssrn.com/abstract=2916250 or http://dx.doi.org/10.2139/ssrn.2916250

GwanSeon Kim (Contact Author)

University of Kentucky - Department of Agricultural Economics ( email )

Lexington, KY
United States

Jun Ho Seok

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Tyler Mark

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

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