A good crowd was on hand in October for the annual OSU Rural Economic Outlook Conference in Stillwater

A good crowd was on hand in October for the annual OSU Rural Economic Outlook Conference in Stillwater.

State brand ag products may earn a premium

State brands attract consumers Price may be a factor

Brands make a difference.

Folks who drive Fords will eschew paying for a Chevy, and those Chevy owners would not forsake their favorite pickup to put a dodge in the garage—unless bad experience or a sudden change on price offered a different incentive.

Same holds for farmers who prefer red farm machinery over green. Personal preference makes a difference as does longtime experience and satisfaction.

It works for consumers buying food items, too. A recent survey through the Oklahoma State University Food and Agricultural Products Center shows that Oklahoma consumers are willing to pay a bit more for products gown in the state. Rodney Holcombe, who holds the Browning Endowed Chair in the Food Science program, discussed the survey during the annual OSU rural Economic Outlook Conference on the Stillwater Campus in October.

Holcombe says the survey looked across state lines to test how consumers value state branding programs, such as Made In Oklahoma (MIO). He says this and similar programs were initiated following the Farmer-to-Consumer Direct Marketing Act of 1976, and subsequent block grant funding in the 1980s. The goal, he says, was to “increase in-state demand and generate a spill-over effect in other states.

 

SURVEY GOALS

The recent survey goal included: estimate demand differences using choice-based, conjoint survey analyses; a generic commodity—milk in a gallon container; consideration of eight state labels and commercial brands; approximately 6,900 respondents from eight states.

The survey collected information on consumer location (state and county), level of state pride, demographic variables (household size, children under 18, gender, primary shopper, age, education, and household income).

The survey considered whether one state label was marked; one state label plus regional and national brands; and all state labels plus regional and national brands.

“Consumers will pay for a state label,” Holcombe says. In Oklahoma, consumers were willing to pay significantly more for the gallon of milk if it was marked MOI--$4.93 per gallon compared to the base price of $2.75. Consumers in nearby states were not as interested in paying a premium for MOI milk, although Kansas, Arkansas, and Missouri consumers would pay a little more than base value, up to $3.33 in Kansas.

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“But, if more options are available, consumers will pay less for a state label,” he adds. “Still, the survey shows some will be willing to pay a premium for products made in Oklahoma.”

Holcombe says markets have limits. “We like our own state,” he says, “but we also have preferences for other state products. And firms must beware of over-pricing. Consider target levels and pricing points.” If prices get too high, the state label will not compete.

Holcombe says the study will continue and try to determine how far away from the state the brand attraction will hold. Also, honing in on state pride will be a factor as will identifying where firms should sell their products.

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