Understanding product differentiation failures in agri-food markets: The role of product knowledge and brand credence in olive oil markets

This paper tries to shed light on a key question for different foodstuffs: why are product differentiation strategies far from successful in some agri-food markets? Undoubtedly, understanding consumer behaviour in situations where product differentiation failures occur is essential to resolving this issue. To that end, we built a theoretical model to analyse the roles played by both consumer information and inferences made from informational stimuli, given their potential relevance to the differentiation process. We thus examined consumer knowledge structures and brand credence related to attitudes toward a particular foodstuff and a product alternative, as well as the actual consumption of the foodstuff. The theoretical model was tested by an empirical application, using variance-based structural equation modelling (SEM) with the partial least squares (PLS) algorithm. Results showed that attitudes to both products explained the relative consumption of the foodstuff under study. In addition, product knowledge influenced consumers’ attitude towards the foodstuff and its consumption, but not the attitude towards the product alternative. On the contrary, the higher the brand equity of the product alternative, the better the attitude towards it. In addition, this factor was shown to have an impact on the attitude towards and consumption of the foodstuff. Therefore, those variables are key to explaining consumer behaviour in such agri-food markets, where increasing consumers’ knowledge and creating consumer-based brand equity seem to be appropriate strategies to improve the differentiation process.