New market opportunities and consumer heterogeneity in the U.S. organic food market

This paper investigates what factors and characteristics of organic consumers affect annual organic food expenditure by using Nielsen's consumer panel dataset from 2010 to 2014. To be specific, this paper explores new marketing opportunities by investigating organic consumer heterogeneity in different household income levels by utilizing the multilevel model. Findings in this study will contribute to the previous and existing literature in three-folds. First, we find that the organic consumers are more heterogeneous in the high-level of income groups (approximately above $60,000), as well as the low-income households between $35,000 and $45,000. This finding demonstrates that the income levels above $60,000 and around $40,000 have potential market segmentation. Second, we find that that annual organic expenditure is positively associated with consumers who consecutively repurchase organic food products compared to irregular organic consumers, supporting a different level of satisfaction. Third, we find that USDA organic labeling has a positive effect on annual organic expenditure compared to the organic labeling certified by private companies, implying the importance of credibility for the organic labeling.