Understanding Factors Affecting

Consumer Purchase Decisions for

Functional Foods
By
Ratapol Teratanavat
Dr. Neal H. Hooker
Presented at the IFT Meeting, Las Vegas, July 12-16, 2004

Department of Agricultural, Environmental,

and Development Economics

Background

Increasing concerns/interest in diet-disease

relationship

Little evidence of improvements in eating

behavior or food choice selection

Investment decision for food manufacturers

high cost of R&D

Consumer demand and key factors affecting

purchase decisions for functional food???

Objectives

Examine consumer valuation of key

attributes of functional food
Health benefits

Identify market segmentation based on

consumer characteristics
Motivation, health knowledge, concern
and awareness
Demographics

Model - Choice Experiment

Similar to conjoint analysis

Hypothetical situation

Consumers evaluate different product

attribute combinations and select one they
prefer

Choice decision explained by product

attributes and consumer characteristics

Specific Functional Food

Product

Tomato juice containing soy protein - synergistic

effects of two functional benefits

Multidisciplinary project funded by USDA

Key attributes
Health benefits from lycopene and/or
isoflavones
Organic Ingredients
Source of nutrients: Natural vs. Fortification
Price

Example of Choice Scenario

Check the box above the product you most prefer

Tomato Juice
Tomato Juice Plus
Convention
Plus
With Soy
al Tomato
Rich in nutrients Rich in nutrients that
Juice
that may
may reduce the risk
reduce the risk
of prostate cancer
of prostate
and heart disease
cancer
I prefer
Conventional
Conventional
Organic ingredients none of
these
ingredients
ingredients
product
Fortified
Natural
Fortified nutrients
s
nutrients
$3.00

$3.50

$4.00

Data

454 Households Ohio Survey Data

51% - Female
94% - Caucasian
Age: Mean = 54 years old
Annual Income: Average range = $5075K

Each respondent received 4 choice scenarios

Importance Scale of Various

Food Attributes

Effects of Product Attributes on

Choice Decision

Estimated Willingness to Pay

Base product: Conventional Tomato Juice at $3.00 for 6 cans (8oz.)

Effects of Consumer Characteristics

on Choice Decision (Household
Data)

Note: Family history of cancer and heart disease and current consumption
of health and organic foods do not have significant effect.

Conclusion

Taste and price are still key attributes

Consumers value and are willing to pay more

for health attributes

Demographics and health concerns influence

choice decisions

Future analyses - Complete set of Ohio

household data
For more information, please contact
Ratapol Teratanavat at
teratanavat.1@osu.edu