Food Labeling And Market Segmentation Of Consumers
Many studies and surveys ask consumers to self-report behavior, and many researchers have asked consumers to self-report the influence of environmental and health concerns on their purchasing decisions. However, it’s well known that self-reported behavior may be exaggerated. This exaggeration could be minor or major, but either way, it skews results. This study published in the Journal of Cleaner Production wanted to circumvent self-reporting exaggeration by analyzing actual (rather than self-reported) purchasing behavior. The study tracked the purchases of 130 Italian consumers over a period of 30 months.
The study distinguished between product labels that offered public benefits (e.g. animal welfare or sustainability) and labels that offer private benefits (e.g. health). The labeled products in this study fell into 5 categories: socially equitable (such as fair trade; public benefit), environmentally-friendly (public benefit), healthy (private benefit), organic (private and public benefit), and vegan (private and public benefit). Such labels make promises backed up by their certifying organizations, which may be government-affiliated or otherwise, although it is difficult for consumers to directly verify whether the claims made are factual.
A Cluster analysis of the 132-person sample was performed to determine how to best categorize consumers based on the way their purchases related to product labels. The analysis determined that consumers typically fall into one of three clusters: collectivists (7% of the sample), individualists (22% of the sample), and indifferents (71% of the sample).
The three groups purchasing decisions differed a fair amount. Based on the results of the trial period the researchers found that, overall, products with sustainability and/or health labels accounted for 27.54% of collectivists’ total purchases, compared to 10.44% of individualists’ purchases and 3.60% of indifferents’ purchases. Products with ecological labels accounted for 2.15% of collectivists’ purchases, 1.62% of individualists’ purchases, and .97% of indifferents’ purchases. Products with social equity labels accounted for 1.80% of collectivists’ purchases, .31% of individualists’ purchases, and .22% of indifferents’ purchases. Products with health labels accounted for 4.15% of collectivists’ purchases, 3.03% of individualists’ purchases, and 1.05% of indifferents’ purchases. Products with organic labels accounted for 17.66% of collectivists’ purchases, 4.47% of individualists’ purchases, and 1.25% of indifferents’ purchases. Finally, products with vegan labels accounted for 1.78% of collectivists’ purchases, 1.01% of individualists’ purchases, and 0.11% of indifferents’ purchases.
The authors did not find a significant correlation between the cluster a consumer fell into and their age, gender, or job status. However, there was a correlation between a consumer’s education level and their cluster (higher education levels were associated most with collectivists, then with individualists, and least with indifferents).
The authors suggest that collectivists represent a niche emerging market of consumers who allocate a significant portion of their purchases (27.54%) towards products whose labels promise greater sustainability and health benefits. Individualists, which form a greater proportion of the consumer segment, appear to be motivated more by private benefits than by public ones. Though collectivists care more about public benefits than do individualists, they still also care about private benefits: no evidence was found of a group that is motivated solely by public benefits. Though consumers who are largely unaffected by these labels represent the majority of the sample (71%), even these indifferents were found to purchase some products with sustainability and health labels (3.6% of their total purchases).
The relatively low effectiveness of labels to reach indifferents may be due to label ambiguity, the difficulty of knowing whether the label’s promise is truly fulfilled, etc. To increase effectiveness, marketers may need to work on increasing public awareness and confidence in labels. Nevertheless, labels clearly are already impactful – when combined, collectivists and individualists account for 29% of the total market and thus have significant purchasing power.
In the future, researchers may want to use a larger sample size and try to identify additional nuances such as latent subgroups within these clusters. Future researchers may also try to see how perceptions of labels match up to reality, how purchasing behavior changes over time and is affected by factors like brand loyalty and media influence, and how to attract indifferent consumers to be more like individualists and collectivists. The effect of variations in labels and their sponsoring bodies may also be interesting to look at.
Animal advocates can use the information from this study to help raise public awareness of plant-based products that offer sustainability and health. They can also encourage more companies to adopt socially responsible practices through their own purchasing behavior, and to clearly label products to allow consumers to potentially make more informed decisions.