Premium price for smaller size? : Testing the relationship between small firm cues and consumers’ willingness to pay for organic wine

Abstract: Consumer demand for organic products has increased due to growing awareness of climate change and sustainability. However, the higher price of organic products is a barrier for some consumers. Previous research has examined various factors that influence consumers’ perceptions of organic products, but little attention has been paid to the influence of small firm cues. Understanding how small firm cues affect consumer behaviour could fill this gap and help small wineries overcome resistance to the price premium.  This study aims to investigate how the perception of small firm cues influences consumers’ willingness to pay for organic products, using organic wine as an example. Understanding this relationship can help small wineries market their products effectively and encourage them to switch to organic farming.  To fulfil the purpose of this thesis, a quantitative study was conducted. An online survey was developed with an experimental design to answer the research question empirically. Respondents were randomly assigned to either the control group or the experimental group. The experimental group was shown an organic wine label with a small firm cue and the control group with no cue.  The analyses showed that signalling a company’s small size did not affect consumers’ willingness to pay. Factors such as trustworthiness, perceived quality, and made with love did not affect the relationship between small firm cues and consumers’ willingness to pay. However, presenting a small firm cue resulted in increased consumer perceptions that the product is made with love. Nevertheless, this perception did not correspond to a higher willingness to pay.