2010, Volume 18, Paper 1
ISSN: 1883-5675

Is willingness to pay (WTP) for beef quality grades affected by consumer demographics and meat consumption preferences?

Conrad Lyford
John Thompson
Rod Polkinghorne
Mark Miller
Takanori Nishimura
Kate Neath
Paul Allen
Eric Belasco

Abstract

One of the ongoing problems in beef marketing has been to market a product that is consistent and enjoyable. The Australian solution is to use a beef grading scheme called Meat Standards Australia (MSA) to define beef eating quality. Quality is defined on the basis of the consumers’ eating experiences by assigning muscle or muscle portions to 4 grades comprising “unsatisfactory” (2 star), “good every day” (3 star), “better than everyday” (4 star) and “premium” (5 star) quality. One issue for marketers is how to price these newly defined quality grades. This paper evaluates the willingness to pay (WTP) by consumers for the defined levels of eating quality and interactions with consumer demographic factors and meat consumption preferences. The data comprised exit surveys from 6718 consumers who participated in taste panel sessions in Australia, the United States, Japan and Ireland conducted between 2005 and 2008. Consumers from each country scored WTP for the different grades in units of their relevant currency. These estimates were then expressed as a ratio of the price for ‘good everyday quality’ to allow comparison between the different currencies. The results clearly showed that consumers in all countries were willing to pay more for 4 and 5 star qualities (P<0.0001), and less for 2 star quality, relative to 3 star. Japanese consumers showed the greatest increase in WTP estimates for quality, with 4 and 5 star samples being valued at 1.7 and 2.9 times the WTP value assigned to 3 star product. United States consumers were next with Australian and Irish consumers showing the smallest increase in WTP with increased quality. In all countries consumer age interacted with quality grade (P<0.0001) with consumers in the age range 25-35 years willing to pay more for quality, compared with older consumers. Other demographic factors and meat consumption preferences had little impact on consumers relative WTP for eating quality. This information can be used in setting prices, marketing and selecting quality for the different markets. 

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