Will the Consistent Organic Food Consumer Step Forward? An Empirical Analysis

Abstract

The organic food market has reached a significant value in developed countries, but market shares vary substantively between product categories. This article investigates general patterns in the sequence of adoption of organic products based on a major Danish retailer’s panel scanner data. All registered transactions over 20 months from 8,704 randomly selected customers with a loyalty card are analyzed using a hidden Markov model, capturing the dynamics in consumers’ purchases. The model identifies latent states representing identifiable, accessible, and actionable dynamic customer segments, and captures the movements between states or segments. A pattern emerges that is consistent with the theory of behavioral spillover and inconsistent with the theory of moral licensing, including a tendency to buy organic products in an increasing number of product categories over time. The order in which organic products are adopted is inversely related to the behavioral costs of adopting them. The employed approach provides a firm basis for personalized communication aiming to increase cross-selling of organic products, increase the sale of less popular organic products, and accelerate movements from segments buying few organic products to segments buying organic more consistently.

acquisition patterns, hidden Markov, dynamics, organic foods, segmentation