The Selection of Attributes and Levels in the Choice Experiment

The choice experiment explores how consumers value and make trade-offs among the selected attributes. The selected attributes need to properly reflect the competitive environment of the available alternatives and/or be closely relevant to consumers‘ decision making (Blamey, Louviere, and Bennett, 2001). For example, as mentioned in Chapter 1, the research questions of this study focus on examining consumers‘ response to full labelling, partial labelling and the verification of health claims, when making functional food choices. Therefore, full labelling (function claims, risk reduction claims and disease prevention claims), partial labelling (symbol) and verification organizations (government and third party verification) were selected as the main attributes for inclusion in the choice experiment.

When selecting attributes, the following aspects need to be considered by analysts. First, although many products might have the potential to become examined product(s), only the most representative product or service should be selected. The selected product or service will be used as the alternatives in the choice sets. For example, this study focuses on the effects of labelling on consumers‘ functional food choices, so the examined product should be a representative functional food which can credibly carry the labelling attributes. Second, not all attributes and levels that are relevant to consumers‘ choice decisions for the examined product are included in the choice experiment design. For example, taste might be a significant attribute in consumers‘ food choices. However, if taste itself is not relevant to the research question it should not be included as an attribute in the experiment.

In some studies, the utility brought by the levels of a single attribute is referred to as part-worth utility or marginal utility. The more levels are brought in by analysts, the more complexity of choice tasks or tradeoffs that are added. It is important to thoroughly understand

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the research topic and simplify the selected attributes and levels. The information on the relevant attributes and levels could be obtained through the use of focus groups (Lindlof and Taylor, 2002), discussion with relevant industry stakeholders, and review of relevant literature. For this study, the process of selecting attributes included interviewing individual consumers and scientific experts, informal market research on dairy products and a review of relevant literature.

Omega-3 milk has been selected as the product examined in this study. Why is Omega-3 milk chosen? First, the dairy sector is the earliest and a dominant functional food sector, and milk is widely consumed among Canadians. Second, Omega-3 fatty acid is one of the most popular functional ingredients as it is found in several functional food products. According to the World Health Report of the World Health Organization (2002), the potential health benefits of Omega-3 include cardiovascular disease prevention and control, cancer prevention, improved immune function and brain health. Cancer and cardiovascular/heart disease are also two out of the four leading causes of death in Canada. Third, health claims are not currently permitted on food products enriched with Omega-3 in Canada. Fourth, as Health Canada continues to review health claims in recent years, there may be changes in the near future regarding the regulation of health claims. For example, explicit health claims for products enhanced with Omega-3 ingredients may be allowed in the future.

Table 3.1 summarizes the selected attributes and levels in this choice experiment. Health claims, verification organization, heart symbol, Omega-3 functional ingredient and price are the selected attributes. The labelling effects include partial labelling and full labelling, which are included as two separate attributes in this design. Three types of full labelling health claims are defined as function claims, risk reduction claims and disease prevention claims. Function claims

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and risk reduction claims have already been applied on functional foods in the U.S. and Canadian markets. Function claims, such as ―calcium could build strong bones‖, usually do not need to be pre-approved in the United States, but certain conditions need to be met to be applied on food labels in Canada. Risk reduction claims (which link a nutrient to a particular disease) need to be supported by scientific evidence and need to be pre-approved in both Canada and the United States. Disease prevention claims are regulated as drug claims and are not yet permitted on any food products in either Canada or the United States.

Table 3.1: Attributes and Levels in Choice Experiment

ATTRIBUTES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4

1. Omega-3 Contains Omega-3 (included as a alternative specific constant) None - - 2. Health Claims (full labelling) Function Claim: ―Good for your

heart.‖

Risk Reduction Claim:

―Reduces the risks of heart disease and cancer‖

Disease Prevention Claim: ―Helps to prevent Coronary Heart Disease and Cancer― None 3. Symbol (partial labelling)

Heart Symbol None - -

4. Verification Organization

Government:

Health Canada

Third Party:

Heart and Stroke Foundation of Canada None - 5. Price (per two-litre) $1.99 (conventional) $2.69 (conventional or Omega-3) $3.59 (conventional or Omega-3) $4.49 (Omega-3)

In this study, the full labelling health claims attribute has four levels: Function Claim (FC), Risk Reduction Claim (RRC), Disease Prevention Claim (DPC) and no claim. The partial

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labelling attribute is represented by the ‗heart symbol‘ defined as two levels: with a heart symbol and without. The research design also explored the role of verification organizations in lending credibility to a health claim, with ‗Verification Organization‘ also included as an attribute. Three levels are specified for the verification organization attribute: Government (Health Canada), Thirty Party (Heart and Stroke Foundation) and none.

The Omega-3 attribute enters the choice experiment as an alternative specific constant variable, which has two levels: containing Omega-3 and none. In other words, each choice set contains two Omega-3 milk options as the first two alternatives and one conventional milk option as the third alternative. Although Omega-3 could have been used as a separate attribute in the experiment, initial tests of experimental designs showed that its inclusion required too many restrictions with respect to the relationship with other attributes and significantly reduced the efficiency of the design. For example, in the case of the absence of any Omega-3 in the choice set, all the other attributes (except price) would have to be restricted to the ―none‖ levels (e.g. no health claim, no symbol and no verification).

The price attribute is directly related to the measurement of consumers‘ WTP for other attributes in the experiment. The selected price levels should reflect but not be limited to the retail price in the market, with the price range covering the likely lowest price and the highest price for milk products as much as possible. According to observations for milk prices from food markets in Saskatoon, Edmonton, Calgary, Toronto, Vancouver and from information gathered from the internet, the four selected levels of the price attribute are: $1.99, $2.69, $3.59 and $4.49 for a two-litre carton of milk. Note that the highest price ($4.49) is applied only to Omega-3 milk and the lowest price ($1.99) is only applied to conventional milk to maintain the realism of the choice task.

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There are four alternatives in each choice set: the first two are Omega-3 milk, the third is conventional milk and the fourth is the no-purchase alternative (discussed in section 3.3). There are some restrictions for the attribute combination appearing in choice alternatives. Health claims and the heart symbol can only appear in the functional milk alternatives since conventional milk cannot contain a health claim or heart symbol. Verification organizations can only appear with health claims, otherwise there is nothing to be verified by those organizations. The Omega-3 attribute cannot appear in the conventional milk and the no-purchase alternatives, but it must appear in the first two alternatives in each choice set to indicate that they are the functional food alternatives.

Although Omega-3 milk products already exist in the Canadian functional food market, health claims for Omega-3 are not currently permitted, therefore a choice experiment allowed the potential health claims, and verification of those claims by different organizations, to be examined. The design of the choice experiment is discussed in the next section.