Health vs. Price Sensitivity: Analyzing Willingness to Pay a Premium for Organic Food among Low- and Middle-Income Consumers in Indonesia

Andika Andika, Budi Setyanta

© 2024 Andika Andika, published by UIKTEN. This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International. (CC BY-NC 4.0).

Citation Information: SAR Journal. Volume 7, Issue 3, Pages 257-267, ISSN 2619-9955, https://doi.org/10.18421/SAR73-12, September 2024.

Received: 02 July 2024.
Revised:   30 August 2024.
Accepted: 04 September 2024.
Published: 27 September 2024.

Abstract:

Organic foods are known to be safer, healthier, and environmentally beneficial. However, the organic food market in developing countries like Indonesia remains small compared to developed nations. This study analyzes the role of health beliefs (HB) in shaping consumer attitudes (CA) and willingness to pay a premium (WTPP) for organic food, with price sensitivity (PS) as a moderating variable within the context of low and middle-income consumers in Indonesia. This analysis is conducted using the integration of the Health Belief Model (HBM) and Customer Value Theory (CVT). A quantitative approach was employed, distributing questionnaires across various regions of Indonesia. 270 responses were examined using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that HB significantly influences CA toward organic food. CA also substantially affects the WTPP. However, HB does not directly impact the WTPP, except through CA as a mediator. PS moderates the effect, strengthening the relationship between CA and WTPP. This study provides essential insights for producers and policymakers to develop more effective marketing strategies by considering health awareness, HB, and consumers’ economic limitations.

Keywords – health belief, low- and middle-income consumers, organic food, price sensitivity, willingness to pay.

                   

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