Choosing Brands: Fresh Produce versus other Products

This study presents a framework to analyze how uncertainty about product attributes affects consumers' WTP for brand name products over generic ones, incorporating key elements of a random utility model and product attribute models. We found that in comparison to electronics, clothing, and processed food, consumers buy brand name vegetables and fruits mainly because of quality uncertainty, and they can easily reduce uncertainty of product quality of fresh vegetables and fruits by seeing, touching, smelling, and tasting. Hence, consumers are less willing to pay for brands of fresh vegetables and fruits. However, simulation results show that brands of fresh fruits and vegetables may have a similar price premium as other products, but they lack the market share. Thus, the main challenge in building brands of fresh produce is to establish a critical mass. We also find that demographic information such as education and gender does affect consumers' WTP for brands.