Impact of the information provided to consumers on their willingness to pay for Champagne: comparison with hedonic scores

Abstract

This study was carried out in order to compare two mechanisms designed to reveal consumers' preferences: a Vickrey auction which measures willingness to pay, and a common hedonic test. Via these two methods, the objective was to assess the respective effects of sensory characteristics and external information on the overall evaluation of five brut non-vintage Champagnes. One hundred and twenty three consumers were randomly assigned to two groups and took part in one of the methods. Whichever the method, they evaluated the Champagnes in a blind condition, then on the basis of bottle presentation and, finally, after observing the bottle while tasting. Results revealed that the two methods performed equally in revealing the effect of external information on the overall evaluation of Champagnes. Participants are unable to discriminate Champagnes after blind tasting, while significant differences in preferences for the products appeared when labels were made known, and the preferences observed respected the hierarchy of the market. Nevertheless, some differences between the two methods were observed suggesting that these methods could be used differently according to the specific objectives of the study.

Introduction

The value consumers put on a food product depends on the degree of product-information that is available to them. This information can be external, such as label, claims, and packaging, which are used as quality cues to infer a hedonic expectation. When a product is experienced, the sensory characteristics perceived by the consumers and expectation are combined into an overall product quality evaluation. Hedonic measurements (expected and liking evaluation) are usually performed in order to study how intrinsic and extrinsic characteristics interact in the global perception (Deliza, 1996, Lange et al., 1999, Schifferstein et al., 1999, Siret and Issanchou, 2000). More and more, researchers use not only a hedonic test but also purchase intent measurements, using methods incorporating tasting into a conjoint analysis (Moskowitz et al., 1997, Solheim and Lawless, 1996, Vickers, 1993). However, there is a limit of such hedonic or purchase intent declarative measurement which is due to the distance from real behaviour. Consumers may declare strong preferences and purchase intent for products with high perceived quality, without actually buying them once they are placed under economic constraints. Assessing consumers' willingness to pay for a product according to the information provided seems to be a promising way to overcome this limit.

In economic literature, recent studies have shown that auctions make it possible to place subjects in front of real choices where they reveal their true preferences and the values they put on different goods. A specific type of auction, the Vickrey second price auction, is commonly applied to elicit consumers' willingness to pay for real goods (Melton et al., 1996, Menkhaus et al., 1992) and in particular to assess the value consumers assign to food safety (Buhr et al., 1993, Haves et al., 1995, Noussair et al., 2001, Roosen et al., 1998). The principle of this auction consists in asking individuals to submit a sealed bid which corresponds to the maximum price they would agree to pay for a particular product. The winner of such an auction is the highest bidder who actually has to pay for the product at the second highest price (Vickrey, 1961). Using this procedure gives the participants an opportunity to buy a product at a price lower than, or at the most equal to, the value they put on it, and their best strategy is to bid this value. Lecocq, Magnac, Pichery, and Visser (1999) used a Vickrey auction to assess the influence of the level of information on the value people put on wines. The authors observed that if individuals who have only tasted the wines blindly are informed about the external characteristics of the wines and opinions of experts, their willingness to pay increases substantially.

The purpose of this paper is to report results of a Vickrey auction designed to reveal the willingness to pay for Champagnes presented in different information conditions and to compare them with results obtained with a current hedonic measurement performed under the same conditions. We assumed that a procedure including a potential purchase would provide more incentive, be more involving, and would lead to better discrimination between Champagnes and between information conditions.