Consumer Sophistication in Food Industry

Abstract

This study investigates the effect of consumer sophistication, a qualitative component of demand, on individual shopping behaviors and industry competitiveness. To do so, the study develops a measurement system to explicate consumer sophistication. To develop and validate an appropriate measurement of consumer sophistication, the study modifies the process first devised by Churchill Jr. (1979). A 12-item measurement system with three first-order constructs about consumer sophistication—opinion formulation, sensitivity, and exposure to variety—is suggested. Using the developed measurement tool, the effect of consumer sophistication on individual shopping behaviors is investigated. The results indicate that this new measurement of consumer sophistication explains not only general grocery purchasing behaviors (e.g., purchase amount) but also variety-seeking or new product-buying behaviors. The amount of product variety within a given product category is used as a proxy variable of consumer sophistication to examine product variety effect on the competitiveness of that product categorys industry in a given country. The results show that product categories with more variety exhibit significantly higher competitiveness than other product categories in the same country. This expands understandings about the role of product variety to explain the competitive advantage of a specific industry within a given country.