Determinants of Consumer’s Willingness to Pay towards Organic Products: A Structural Equation Modelling Approach

Abstract

Background: India’s food industries are hotly debated as there are numerous scandals involved in tainted food products, which deliberately lowers the public’s confidence. These incidents made the organic food market growth in developing countries, especially in India. Objective: This study examines the underlying factors that influence consumer’s willingness to pay for organic products. Methods: Coimbatore district of Tamil Nadu in India was purposively selected for the study using a structural equation model (SEM) with 250 respondents. The study was conducted in twelve organic shops distributed across the district. The model is bifurcated into the willingness to pay construct and attitude construct, which helps understand the factors influencing the consumer’s willingness to pay towards organic products. Findings: The results from the attribute construct showed that health concerns, environmental concerns and subjective norms were found to positively affect the consumer’s attitude towards purchasing the organic product. In the case of willingness to pay construct, the factors like attitude, knowledge, awareness and income of the consumers positively influence willingness to pay towards the organic product. In contrast, the factor perceived expensiveness was contrary in nature. Novelty: This empirical study provides a good understanding of purchase intention towards organic products, which will aid the producers, middlemen, and stakeholders develop the product and expand the market