Applying Multinomial Logit Model for Determining Socio- Economic Factors Affecting Major Choice of Consumers in Food Purchasing: The Case of Mashhad

Transcription

1 J. Agr. Sc. Tech. (2013) Vol. 15: Applyng Multnomal Logt Model for Determnng Soco- Economc Factors Affectng Maor Choce of Consumers n Food Purchasng: The Case of Mashhad M. R. Kohansal 1, and A. Froozzare 1 ABSTRACT The am of ths study was nvestgaton of the factors affectng the prmary choce of consumers n food purchasng n Mashhad cty by applyng cross secton data of 201 households n In ths study, 56, 30, and 14% of the consumers chose healthness of food, prce of food, and taste of food, respectvely, as the prmary preference n food purchase. Results of applyng multnomal logt model llustrated that older respondents and females were more careful for health than young respondents and males. Also, results ndcated that the households wth hgh ncome and hgh educatonal levels were more lkely to choose healthy foods. Moreover, respondents who had knowledge of food health were more lkely to select healthness of foods. In addton, comparson of the fndngs of ths study wth smlar studes ndcates that results are analogous. Based on the results of ths study, some recommendatons are provded for polcy makers and food producers. Keywords: Choce Process, Food Consumpton, Prmary preference, Multnomal logt model, Prmary choce. INTRODUCTION Unbalanced food consumpton patterns and poor eatng habts are consdered as effectve factors of many dseases. Hgh-fat dets and consumpton of large amounts of hgh-energy foods are some examples of these knds of dets. Today, n most countres, health polces encourage people to follow a healther det: makng a reducton n fatty, sugary and salty foods; eatng more fbre-rch, fresh fruts, and vegetables. However, t s dffcult to change ndvdual food manners snce t s based on habts that have been developed over a lfespan (Phu Tu et al., 2012). Also, consumers worry about the qualty and safety of ther food. Consumers concerns about food are based on worres not only about health, but also about agrculture, ecology, and food culture. Technologcal and envronmental changes assocated wth modern food producton, such as genetc engneerng and the use of pestcdes, are also of vtal weght for socety and for ncreasng nterest to consumers (Holm and Kldevang, 1996). There are many substances n the world that are detrmental to human health. Henson and Trall (1993) descrbe food safety as the nverse of food rsk-the probablty of not sufferng some hazard from consumng a specfc food. In recent years, many food companes have developed and marketed foods n response to ncreasng consumer concern about det and healthness. When makng purchase decsons, not only consumers are nterested n the partcular health benefts offered by the product, but also the taste and prce. Understandng how ndvduals perceve characterstcs of foods and the factors affectng consumer decson can 1 Department of Agrcultural Economcs, Ferdows Unversty of Mashhad, Mashhad, Islamc Republc of Iran. Correspondng author; emal: alfroozzarea@gmal.com 1307

2 Kohansal and Froozzare assst polcymakers and producers of food. Knowledge of the factors affectng consumers decson can supply advantages for producer. Surveys show that, n recent years, producers also pay attenton to the scope of food securty (Cobanoglu et al., 2013; Rahm et al., 2011) and, therefore, t s necessary for them to understand the factors affectng the maor choce of consumers n food purchasng. In addton, the polcymakers can develop new strateges accordng to ths study. Thus, when prorty s gven for populaton detary change, the need for a greater understandng of the factors that affect food choce and ther nteractons s greater than ever. Ths research attempted to dscover the features nfluencng consumer preferences for food products and analyss of the factors affectng choces of consumers n food purchasng. It s necessary to menton that, n ths artcle, the word food apples to all conventonal materals that consumers purchase n order to eat or drnk, except drugs. Purchasng decsons of consumer are nfluenced by demographc and socoeconomc factors. Lterature revew ndcates that consumers atttudes towards food safety, n general, dffer accordng to demographc and soco-economc factors such as sex, age, educatonal level, and economc status. Dfference between ndvduals n ther choce(s) of food(s) s apparent and the queston what and why we eat? has been addressed by many studes durng the last years (Azen, 1991; Azen and Fshben, 1980; Köster and Moet, 2007; Murcott, 1989; Shepherd, 1999; Stener, 1979). Food choce has been reported as a very complex human behavor that s determned by many factors, not exclusvely by physologcal and nutrtonal needs, and ther nteractons (Phu Tu et al., 2012). Also, a lot of researches have analyzed factors affectng consumer reacton to food safety. Dosman et al. (2001) found that women, older respondents, and households havng hgher ncome level tended to perceve food safety of hgher rsk than ndvduals n other categores. Shepherd (1999) beleve that ndvdual s food choce s determned by the ndvdual s characterstcs (ncludng psychologcal factors such as mood, stress, gult, etc.); by the nteractons between ths ndvdual and the food n queston (ncludng bologcal factors such as hunger and satety, appette, perceptve sensory characterstcs, etc.) and by the nteractons between ths ndvdual and hs/her economc condtons (such as cost, ncome, accessblty, educaton, sklls, tme, etc.) and socal envronment (such as culture, relgon, demography, etc.). These factors vary accordng to stage of lfe, and the relatve weght of one factor wll vary from one ndvdual or group of people to the next. Flynn et al. (1994) found that women perceve rsks to be hgher than do men. Krewsk et al. (1994) found that older ndvduals were more lkely to rate rsks hgher than younger ndvduals. Baker (2003) found that women, older respondents, households havng hgher educaton level and members of households wth young chldren were the most lkely to have an extreme rsk avodance response. The present study was conducted n Mashhad to determne the factors affectng consumers food preference such as ncome level, educatonal level, gender, age, household sze, and knowledge of food health. MATERIALS AND METHODS Methodologcally, the am of ths study was to show a useful applcaton of the multnomal regresson approaches to food consumers n marketng and food scences research. Dscrete choce analyss deals wth the modelng of choce from a lmted set of dscrete alternatves. Most frequently, these are bnary choce models usng ether a probt or logt specfcaton (Rddngton et al., 2000). Multnomal logt model s used for analyss of consumers prmary choces. The multnomal logt model represents an 1308

3 Factor Affectng Choce of Consumers approprate framework to explore and explan choce process where the choce set conssts of more than two alternatves (Greene, 1998; Ben-Akva and Lerman, 1985). For the sake of ths model to be approprately appled, those alternatves must not be ranked. Ths model descrbes the behavour of consumers when they are faced wth a varety of goods wth a common consumpton obectve. However, the goods and choces must be hghly dstngushed by ther ndvdual attrbutes. Multnomal logt estmaton has been used n many emprcal studes such as Goktolga et al., 2005; Schupp et al., 1998; Luzar et al., 1998; Ferto and Szabo, 2002; Da vla et al., 2002; Seddgh and Theocharous, 2002; Haartsen et al, 2003; Baker, 2003; Pundo and Fraser, 2003; Hatrl et al, The orgnal formulaton of the logt model stems from Luce (1959) and the theoretcal expresson of ts choce probabltes can be derved from the random utlty maxmzaton theory (Ben- Akva and Lerman, 1985). The utlty U derved by the th ndvdual from the th alternatve can be wrtten as: t U = V + ε = β X + ε (1) Where, V s the average utlty, s the random part, X s the matrx of the characterstcs of the ndvdual, and s the parameter vector for each alternatve. Followng the development of random utlty theory, the probablty, P that an ndvdual selects alternatve equals the probablty that U s larger than the utltes U k of all other alternatves n the ndvdual s choce set, C. P = P( U U k C k ) P = P( V + ε V k + ε k C k ) (2) It s assumed that the random components of the utlty,, are ndependent and dentcally dstrbuted wth a Gumbel dstrbuton, the expresson of the probablty of an ndvdual choosng an alternatve s gven by(pna and Dı az Delfa, 2005): e P = t β k e k t β X C X C (3) In the context of our study, the logt analyss determnes the lkelhoods of a consumer selectng one of the dfferent characterstcs of food (healthness, prce, and taste), gven hs/her soco-demographc characterstcs. In other words, multnomal logt models are generalzaton of logt models for bnary responses and fttng the generalzed logt model requres smultaneously satsfyng the J 1 equatons that specfy the model. Multnomal logt model s defned as follows: p log x for 1,..., J, p = β = 1 = 1,..., N (4) Where, s Prob(Y= x), whch s obtaned as follows: exp( xβ ) P = (5) J exp( x β ) = 1 Equaton (5) can be estmated by the method of maxmum lkelhood. In ths model, the probablty s obtaned as follows: 1 P ( Y = 1) = J 1 exp{ x β } P ( Y = ) = 1+ + = 1 exp{ x β } J = 1 exp{ x β } where = 1,2,... J 1, = 1,2,..., N exp{ xβ } P ( Y = J ) = (6) J 1 exp{ x β } + = 1 Multnomal logt models assume response counts at each level of covarate combnaton as multnomal and multnomal counts at dfferent covarate combnatons are ndependent. The beneft of usng multnomal logt model s that t models the odds of each category relatve to a baselne category as a functon of covarates, and t can test the equalty of coeffcents even f confounders are 1309

4 Kohansal and Froozzare dfferent, unlke the case of par-wse logstcs, where testng equalty of coeffcents requres assumptons about confounder effects (Fumoto, 2005). The parameter estmates for the vectors that maxmze the log lkelhood functon can be obtaned usng the Newton method (Greene, 1995). Margnal probabltes of choce (margnal effects) can be calculated from Equaton (7) below: P J y = P Pk k 0 forj 1,2,..., J. x β β k= 1 (7) Usng Equaton (7), we can fnd changes n probabltes for prmary choce n food purchase due to a slght change n one of the consumers characterstcs, whle holdng all other explanatory varables fxed (Goktolga et al., 2005). In the case of qualtatve varables ncluded n the model lke sex and knowledge of food health, the dfference between the probablty of each alternatve when the varable s equal to one and when t s equal to zero s calculated. In ths study, Lmdep 8.0 was used to estmate the multnomal logt model. The Data Incorrect detary habts due to lack of awareness and also some socal and economc ssues s consdered as one of the most mportant problems all over the world. Some statstcs ndcate that ths stuaton s poorer n Iran (Table 1). From Table 1, t s clear that wrong detary habts s a maor problem n Iran. Mashhad, whch s consdered as one of the most mportant metropolses of Iran, has smlar stuaton. Ths cty s located n Khorasan Razav Provnce, n the northeastern corner of Iran. It s Iran s second largest cty, second n sze only to Tehran, Iran s captal. Also, these days we observe ncreasng rate of nauguraton of fast-food centers as a result of publc nterest n these knds of foods, so that, today, 1,400 fast-food centers work under the control of Del and Pzzera unon of Mashhad. All around the cty, these centers are too crowded and sometmes operators cannot provde the desred servce. Ths trend s worryng. Moreover, nvestgaton shows that average prce of fast foods are much less than tradtonal foods n ths cty. These factors besdes lack of dversty of tradtonal foods, delectablty of fast foods, attractveness of fast food centers, and other reasons lke lack of food knowledge n the populaton, tend to change the recommended consumpton patterns n ths cty. Usng a plot study, whch covered 30 cases, we calculated the varance of the ntended survey varables. Based on ths varance and employng Equaton (8), we determned sample sze; afterward, by applyng smple random samplng method, data of 201 households of Mashhad cty were gathered n March 2012 through fllng a questonnare va face to face method. 2 2 Z δ n = (8) 2 d The questonnare ncluded three parts. One part was dedcated to behavoral characterstcs of the consumers whle buyng food, the other part was desgned to evaluate the economc nformaton of the ctzens, and the last part amed at some socal features of the respondents. Table 1. Comparson of pattern of food consumpton n the world and Iran. The rato of Iranan Food consumpton to world consumpton Fsh 0.33 Vegetables 0.25 Soybean 0.05 Egg 0.33 Mlk 0.33 Sugar 6 Salt 2 Bread 6 Soda 4 Source: Forutan Entrepreneurshp Foundaton (2012). 1310

5 Factor Affectng Choce of Consumers RESULTS Investgaton of the consumers n ths study sample shows that 56 percent of them choose healthness of food as the prmary preference n food purchase. Moreover, based on these results, about 30 percent of consumers select taste of food as the prmary preference n food purchase and the rest choose prce as ther maor preference. Computng Ch-Square test statstc (53.920) depcts that these results s not random, but at the sgnfcance level of 1 percent, can be extended to all resdents of Mashhad (Fgure1). The defntons of varables are represented n Table 2. In ths study, the varables consdered affectng choces of consumers among prmary preference alternatves (PP) were: sex (SE), age (AG), ncome (INC), educaton (EDU), household sze (HS) and knowledge of food health (KFH). It s hypotheszed that sex, age, ncome level, educaton level and household sze are the key factors affectng choce of households for consumng food. It s hypotheszed that household ncome level s an mportant varable that nfluences household consumng behavor. Consequently, households who have hghncome level are more lkely to choose healthness of food than households havng low-ncome level, due to food prce beng one of the maor factors for households wth low-ncome. It s also assumed that consumers who have hgh educatonal level are more lkely to gve preference to healthness of food than those who have lower level of educaton. Moreover, Table 2. Defnton of the varables of the multnomal logt model. Fgure 1. Frequency dstrbuton of consumers prortes of food characterstcs, 2012 (n= 201). household sze varable nfluences respondents purchase behavor. It s assumed that large-sze households are less lkely to choose healthness of food as prmary preference because crowded households are more nterested n prce of foods than other households. In addton, we assume that consumers who have knowledge of food health are more lkely to gve preference to healthness of food than to other alternatves (prce and taste of foods), From Table 3, t s obvous that 41 percent of the respondents were male and 59 percent female. Also, t s clear that the range of respondents age was years and the average of age was about 30 yr. Based on ths table, the average educatonal level of the respondents was about 15 years. It ranged from 6 to 22 years. The average number of household members was 4.76 persons, wth the mnmum of 2 and the maxmum of 9 persons. Ths table also ndcates that 46 percent of respondents had partal knowledge about food health. Based on ths table, the respondents monthly ncome ranged from 1,000 to 16,000 thousand Rals and the average ncome was Varables (X) Unt of account: modaltes of varables PP (prmary preference) 0= Healthness of food; 1= Prce of food, 2= Taste of food SE (Sex) 1= Male, 0= Female AG (Age) Number of lvng years (contnuous) INC (Income) 10,000 Ral (contnuous) EDU (Educaton) Number of educaton years (contnuous) HS (Household sze) number of household members (contnuous) KFH (Knowledge of food health) Yes= 1, No=

6 Kohansal and Froozzare Table 3. Descrptve statstcs of ndependent varables of the multnomal logt model. Varable Mnmum Maxmum Mean SE (Sex) AG (Age) INC (Monthly ncome) EDU (Educaton) HS (Household sze) KFH (Knowledge of food Health) Source: Research Fndngs. 6,301 thousand Rals. The estmated results from the multnomal logt model are represented n 2 Table 4. Based on R pseudo statstcs, t can be clearly seen that estmated multnomal logt model s a sutable regresson and, therefore, ndependent varables of the model explan varaton of dependent varable n three groups (.e. ncludng household n dfferent groups) well Moreover, the model s statstcally sgnfcant at 0.01% level. It also s statstcally sgnfcant based on the Ch- Square test. It s clear from Table 4 that sex, age, ncome level, and educatonal level varables affected households prmary choce of prce of food over the food s healthness n the frst equaton. In other words, age, ncome level, educatonal level, and beng female ncrease the probablty of embeddng a Table 4. Estmaton of multnomal logt model for consumers preferences: Three categores. Varable Coeffcent Standard Error b/st. Er. P[ Z >z] Odds rato Characterstcs n numerator of Prob[Y= 1] (Prce of food vs. Healthness of food) Constant *** SE ** AG *** INC *** EDU * HS KFH Characterstcs n numerator of Prob[Y= 2] (Taste of food vs. Healthness of food) Constant *** SE ** AG *** INC *** EDU HS KFH *** Pseudo R-square Cox and Snell Nagelkerke McFadden Model fttng nformaton Lkelhood rato tests Ch-square= DF= 12 Sg< Notes: ***, ** and * ndcate the sgnfcance level of 1, 5 and 10%, respectvely. Source: Multnomal logt model output. 1312

7 Factor Affectng Choce of Consumers household n a group wth more relatve preference for food s healthness compared to prce of food. Household sze and knowledge of food health were found statstcally not sgnfcant n explanng households choce between prce of food and healthness of food alternatves. Concernng the household s choce of taste of food over the healthness of food alternatve, sex, age, ncome level and knowledge of food health varables were statstcally sgnfcant. From Table 4, t s obvous that the sgn of sex varable s postve and statstcally sgnfcant n both equatons. These show that female respondents are more lkely to choose healthness of food over prce and taste of food. In other words, t depcted that female respondents were more senstve about ther health than male respondents. Based on results of ths study, there would be a postve relatonshp between age and purchasng behavor of healthness of foods. The sgn of age varable s negatve and statstcally sgnfcant n both equatons. The results suggest that older respondents are less lkely to choose prce and taste of food over health of food. As a result, t s concluded that older respondents are more senstve about ther health than young respondents. We see a smlar stuaton for ncome level varable. It s hypotheszed that there would be a postve relatonshp between ncome level and purchasng behavor toward healthness of foods. On the bass of these results, wealther respondents were more lkely to prefer healthness of food over taste and prce of food, because naturally they don t worry about cost of lvng and try to consume foods sutable for ther health. As shown n Table 4, t s obvous that the sgn of educaton level varable s negatve n both equatons, and statstcally sgnfcant n the frst one. The results support the hypothess and ndcate that households wth hgher educatonal level are less lkely to choose prce of food over ts healthness. In addton, these households are less lkely to choose taste of food over ts healthness. Therefore, households who have hgh ncome and hgh educatonal level are more conscous about ther health than households wth low ncome and low educatonal level. Thus, the hypothess s confrmed that households havng hgh ncome and educatonal levels are more lkely to choose healthness of food over ts prce, compared to other ncome groups. Moreover, based on these results, knowledge of food health varable s sgnfcant n equaton two and ts sgn s negatve. Therefore, respondents havng more knowledge of food health are more senstve about ther health and less lkely to choose taste of food over healthness of food. As Greene (2002) notced, the meanng of coeffcents s not straghtforward; therefore, t s necessary to compute margnal effects to provde a better understandng of the model. In ths model, margnal effect measures the change n the probablty of the household s prmary preference outcome wth respect to a change n each explanatory varable (Goktolga et al., 2005). Results of calculatng varables margnal effects are presented n Table 5. Margnal effect of sex varable ndcates that female respondents chose healthness of food alternatve as the prmary preference n food purchase more than male respondents. Consequently, margnal coeffcent of healthness of food alternatve s However, male respondents chose taste of food and prce of food as the prmary preference n food purchase more than female respondents, wth ther margnal coeffcents beng and 0.106, respectvely. Ths fndng ndcates that male respondents are concerned wth features such as taste and prce, whle female respondents worry about healthness. 1313

8 Kohansal and Froozzare Table 5. Margnal effects averaged over ndvduals. Varables Consumers prmary preference Taste of food Prce of food Health of food SE (Sex) AG (Age) INC (Monthly ncome) EDU (Educaton) HS (Household sze) KFH (Knowledge of food health) Source: Results from the multnomal logt regresson. Also, margnal effect of age varable ndcates that older respondents chose healthness of food alternatve as the prmary preference n food purchase, more than younger respondents. Based on the results of ths study, as the respondent s age ncreases by one year, the probablty of selectng the prce and taste of food as the prmary preference n food purchase decrease by and 0.034, respectvely. However, the probablty of choosng healthness of food ncreases by Furthermore, margnal effect of ncome level varable depcts that each 10,000 Rals ncrease n household ncome decreases the probablty of selectng prce and taste of food as the prmary preference n food purchase by and , respectvely. Smultaneously, the probablty of choosng healthness of food ncreases by In Table 5, t s obvous that educated respondents chose healthness of food alternatve as the prmary preference n food purchase more than the uneducated ones. On ths bass, one year ncrease n the number of educaton years decreases the probablty of selectng prce and taste of food as the prmary preference n food purchase by and , respectvely. However, the probablty of choosng healthness of food ncreases by The varable of household sze shows that addng one famly member to the household wll ncrease the probablty of selectng taste and prce of food as the preference n food purchase by and 0.019, respectvely. On the other hand, the probablty of choosng healthness of food as the prmary preference n food purchase decreases by At last, respondents who had knowledge of food health chose healthness of food alternatve as the prmary preference n food purchase more than respondents who dd not have ths knowledge. Consequently, margnal coeffcent of healthness of food alternatve s Smultaneously, respondents who dd not have ths knowledge chose taste and prce of food as the prmary preference n food purchase more than female respondents, wth ther margnal coeffcents beng and 0.004, respectvely. Also, nstead of calculaton of margnal effect for each varable, we can calculate and nterpret odds ratos. The nterpretaton of the results of margnal effects and odds rato leads to the same drecton. As an example, the rato of probablty of choosng food prce to choosng food health for the male s equal to It means that male respondents pay more attenton to prce rather than health of food. Also, based on results of Table 4, t s obvous that the rato of probablty of choosng taste of food to choosng health of food s equal to In other words, taste and prce have the domnant roles as the prmary preference n food purchase for the male. As another example, results n the same table ndcate that one year older respondents had the rato of probablty of choosng prce of food to choosng health of food equal to Ths means that older respondents pad more 1314

9 Factor Affectng Choce of Consumers attenton to health of food rather than ts prce. In order to nvestgate the predctve power of the multnomal logt model (out of sample) we flled ths questonnare for about 25% of the frst sample sze. It means that we asked the same questons from 50 resdents of Mashhad and, based on ther answers and results of the estmated model, we calculated the predctve power of the model (Table 6). Accordng to Table 6, t s clear that the overall predctve power of the estmated multnomal logt model s 68 percent. It means that ths model and ts coeffcents could approprately predct the consumers behavor n choosng these crtera whle purchasng food wth reasonable relablty. Results of predctve power are represented n Table 6 ndvdually for each group. Based on ths table, statstcs of predcton power for consumers who chose healthness of food was more than those who chose prce or taste of food. DISCUSSION Results of ths study, whch was conducted n Mashhad and amed at determnng the factors affectng consumer preference (.e. ncome level, educaton level, gender, age, household sze, and knowledge of food health), are compatble wth fndngs of Goktolga et al. (2005), Baker (2003), Dosman et al. (2001), Flynn et al. (1994), and Krewsk et al. (1994) studes. They also found that women, older respondents, households havng hgher ncome level, households havng hgher educatonal level, and members of households wth young chldren tended to perceve health of food as havng greater prorty than other crtera. These results can offer mportant nformaton for frms to produce healthy foods and for polcy makers who care about ctzens health. Food producers should produce for households who have hgh ncome and hgh educaton. Target groups of frms producng food should be older consumers and women. They should ncrease knowledge of the socety through ther advertsements n order to attract more customers. If frms have some data about factors that affect food preference of consumers, they can mprove some marketng strateges. Polcy makers should develop some cost orented regulatons n order to decrease prce effect for low ncome households. These regulatons nclude subsdzng healthy foods, provdng fnancal credt at low nterest rate, reducng tax, and encouragng nvestment n frms producng healthy food. By reducng cost of healthy foods, probablty of preferrng healthness of food over prce of food n households wth low ncome wll ncrease. Regardng the results of ths study, government can organze some educatonal programs about food health for all ctzens n order to ncrease knowledge of food health. In addton, meda has a very sgnfcant responsblty n enhancng ths knowledge n the socety. Table 6. Classfcaton of customers for testng data based on estmated multnomal logt model. crteron Number of Predctve power of MNL model cases Health of food Taste of food Prce of food Health of food % 14.3% 11.4% Taste of food % 57.1% 0.0% Prce of food % 0.0% 50.0% Percentage of rght predcton 68.0% Source: Results from the multnomal logt (MNL) regresson. 1315

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