Abstract
We consider how a marketer of a GM food product should price it in response to the requirement of GMO food label in the near future and its effect on consumers’ heterogenous attitude. We examine how the GM food pricing is affected by different consumer attitudes toward GM-food (Like, Uninformed, and Dislike), the GMO food labelling to be enforced, and price competition. On the one hand, the GM food seller should expect to raise price after the GMO food labelling to cover the additional cost incurred on labelling. On the other hand, the seller may need to reduce price after labelling as the Uninformed consumers’ attitude may change and become negative once the labelling is available. The tradeoff of these two effects yields interesting results. For example, we find that a monopolist GM food seller may choose to charge a high price, i.e., charge a premium for the GM-traits, and maintain at this price even after the labelling is enforced. Managerial implications and future research directions are discussed.
Similar content being viewed by others
References
Alba, J. W., & Hutchinson, J. W. (1987). Dimensions of consumer expertise. Journal of Consumer Research, 13(4), 411–454.
Basu, A., & Vitharana, P. (2009). Impact of customer knowledge heterogeneity on bundling strategy. Marketing Science, 28(4), 792–801.
Boccia, F. (2016). Consumer perception: An analysis on second generation genetically modified foods. Nutrition & Food Science, 46(5), 637–646.
Sujan, M. (1985). Consumer knowledge: Effects on evaluation strategies mediating consumer judgments. Journal of Consumer Research, 12(1), 31–46.
Vecchione, M., Feldman, C., & Wunderlich, S. (2015). Consume knowledge and attitudes about genetically modified food products and labelling policy. International Journal of Food Sciences and Nutrition, 66(3), 329–335.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Electronic supplementary material
Below is the link to the electronic supplementary material.
Rights and permissions
About this article
Cite this article
Li, R., Basu, A.K. Pricing Strategy for GM Food: Impact of Consumer Attitude Heterogeneity and GMO Food Labelling. Ann Oper Res 291, 463–474 (2020). https://doi.org/10.1007/s10479-019-03154-w
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10479-019-03154-w