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AgricultureandthefoodindustryintheinformationageARTICLEinEUROPEANREVIEWOFAGRICULTURALECONOMICSFEBRUARY2005ImpactFactor:1.47DOI:10.1093/eurrag/jbi017Source:RePEc

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WimVerbekeGhentUniversity313PUBLICATIONS6,264CITATIONS

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Agriculture and the food industryin the information age

Wim Verbeke

Ghent University, Ghent, Belgium

Abstract

Food consumers face uncertainty and demand high quality and safe food products,apparently with as much information as possible. Todays agriculture and foodindustry aims at reducing market failures from information asymmetry. Such infor-mation provision can be successful only if it meets the information needs of the tar-get audience. This paper focuses first on individual characteristics that shapeinformation needs, and then discusses information provision through mass mediaand labelling. It emerges that consumer needs for information cannot be taken forgranted. The provision of ever more and too detailed information entails a risk ofinformation overload, resulting in consumer indifference or loss of confidence.Instead, segmentation and targeted information provision are proposed as potentialsolutions to market failure from information asymmetry.

Keywords: information, consumer, uncertainty, involvement, labelling, traceability

JEL classification: D12, M39, Q13

1. Introduction

Increased market demand for quality food in general, and the occurrence ofcross-national food safety crises, have heightened consumer awareness offood quality and safety. Food quality and safety issues have received inten-sive mass media coverage in recent years, which has led consumers andagri-food chain stakeholders to change their beliefs, attitudes and behaviour.These changes have been reflected in recent developments in food supply,purchasing and consumption patterns. The subject of information related tofood products, which are often generic, credence type goods with a lowdegree of differentiation, has gained considerable attention. There has alsobeen growing interest, not only in the role and mechanisms of information,but also in the evaluation of the various techniques and vehicles for spread-ing information. Much effort has been devoted to evaluating the effects ofadvertising and media coverage of food quality and safety issues, investi-gating the role of trust and credibility of information sources, and analysingconsumer interest in and use of available information cues.

My reasoning in this paper starts from the premise that consumers faceuncertainty with respect to food quality and safety, which hinders attempts

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European Review of Agricultural Economics Vol 32 (3) (2005) pp. 347368doi:10.1093/eurrag/jbi017

to match food choices with preferences. The obvious solution to this marketfailure resulting from information asymmetry seems to be the provision ofmore information. However, I will argue that more information doesnot necessarily mean better informed consumers, as has alreadybeen understood with respect to non-food products (Dranove et al., 2003;de Garidel-Thoron, 2005). Information is likely to be effective only when itaddresses specific information needs, and can be processed and used by itstarget audience. The paper will argue that it cannot be taken for granted thata target audience will pay attention to information intended for it. First, itrequires identification and thorough understanding of the target audiencesneeds, and second, appropriate management of the information provision sothat it optimally addresses particular needs.

Despite the fact that food has never before been as safe and healthy as itis today, it seems that consumers are uncertain and increasingly criticalabout the quality and safety of their food. Consumers seem to want infor-mation to help them achieve a balanced diet, to avoid certain allergens oringredients that have proved not to agree with them, or to know the originand environmental, ethical and technological conditions under which thefood was produced. Among the motivations for demanding all this infor-mation, safety concerns occupy a particular place. Safety is one of the foodproduct attributes that can be used by consumers in their evaluation of pro-duct alternatives and their formation of quality expectations. Hence, safetyis to be considered as an integral part of quality, and it contributes to deter-mining purchase intentions and choice (Grunert, 2005). Under normalconditions, the majority of consumers are not anxious about food safety,although some uncertainty may always be present in a latent state. Experi-ence with recent cases such as GM foods, food irradiation, and even func-tional foods, demonstrates that perceived safety can drop dramatically whennew information is provided even without medical or scientific evidence.

Much of todays information about food quality and safety can be classi-fied as risk information that aims at reducing consumers uncertainty whenmaking purchasing decisions. Current failures of risk information to achieveits goals may stem from gaps in understanding the relationship betweenindividual perceptions, information processing and behaviour (Langfordet al., 1999). Research has shown that the public tends to misjudge rela-tive food risks, at least when compared with expert opinions (Lazo et al.,2000; Hansen et al., 2003). In some cases, little relation is seen between theperceived hazard of a food safety issue and its actual, scientifically proven,hazard. Food- and lifestyle-related heart and coronary diseases, obesity frompoor dietary habits and lack of physical activity, as well as lung cancerfrom smoking, for instance, are relatively large risks, which, however, arelargely underestimated by consumers. Simultaneously, food-borne illnessescaused by contaminants and residues that were recently subject to intensivemass media coverage are examples of the overestimation of a relativelysmall actual risk (Miles and Frewer, 2001, 2003; Miles et al., 2004).The often-seen gap between scientific reality and human perception is

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determined by a large number of factors, including individual characteristicsand food properties (Steenkamp, 1997; Drichoutis et al., 2005), togetherwith information and communication, which act as situational or environ-mental factors.

Clearly, the current debate about information from agriculture and thefood industry needs the consumer behavioural perspective as one of thepoints of departure. This consumer perspective became fully recognisedrecently, as illustrated for instance in the Work Programme of the SixthFramework of European-funded research. The thematic priority on FoodQuality and Safety replaced the classical farm-to-fork approach with afork-to-farm setting, by giving priority to consumer needs and wellbeing.Within the agricultural economics profession also, emphasis has graduallyshifted from purely agricultural business problems towards problemsconfronting all links in the production chain, ultimately resulting in moreattention for consumer research (Zachariasse and Leon, 2003). It hasbecome commonly acknowledged that consumers, together with retailers astheir primary direct trading partner in the agri-food chain, acted more andmore as the driving force. Future success, either from an industry,public policy or research point of view, depends more than before on a bet-ter understanding of the motives, perceptions, attitudes and behaviour ofconsumers (e.g. Frewer et al., 2004). Finally, this consumer orientation isalso exemplified in the plenary programme of the XIth Congress of theEuropean Association of Agricultural Economists, published in this issue ofthe European Review of Agricultural Economics.

As well as understanding consumers information needs, the managementof information provision emerges as a particular challenge for at least tworeasons: first, because there are so many potential attributes to provideinformation about, and second, because consumers are not all alike (Golanet al., 2001). Information is most likely to be efficient and effective when itmanages to meet specific needs of the target audience (Wilson, 1981;Rubin, 1986), in this particular case individuals facing food choice underquality and safety uncertainty. Salaun and Flores (2001) claim that much oftodays information about food quality and safety is irrelevant to consumers,as it does not address particular needs or expectations. On the other hand,providing (e.g. Marette et al., 1999) or withholding (e.g. Mazzocchi et al.,2004b) food quality or safety information to consumers may result inconsiderable welfare effects.

Whereas the keyword at the level of consumers with information needsis uncertainty, the key issue for information providers is about reducinginformation asymmetry. In what follows, I will argue that information canbe effective in reducing uncertainty and allowing consumers to make opti-mal choices in line with their preferences only when it can be processedand used by its target audience. I will focus first on the role of variablesthat influence an individual consumers need for information. Variables ofinterest are in the psychological domain of uncertainty, involvement,personality and knowledge. Second, I will focus on two types of

Agriculture and the food industry in the information age 349

information that are commonly provided by agriculture and the foodindustry, namely information provided through the mass media and throughproduct labelling.

2. Food information and consumer informationprocessing

2.1. Information asymmetry and food consumer uncertainty

Neo-classical microeconomics assumes that economic agents aim to maxi-mise their utilities from purchasing and consuming goods within theconstraints imposed by their available means, hence by trying to makeoptimal choices. This theory assumes that individuals are always awareof the full range of options open to them, and that they are capable ofweighing up all the pros and cons (Salaun and Flores, 2001).

A first assumption pertains to access to information, which relates to theavailability of information. Caswell and Mojduszka (1996) reported thatrational decision-making, utility maximisation, systematic interpretation ofinformation and optimal choice are hampered because information in agri-food markets is often imperfect, incomplete, inaccessible, asymmetricallydistributed, non-standardised or costly to collect. Hence, potential marketfailures from information asymmetry arise because consumers face uncer-tainty regarding the true nature of product attributes, and as a result, makechoices that are not well aligned with their preferences (Teisl and Roe,1998). This risk of market failure holds particularly in situations whereproduct differentiation is low and mainly based on so-called credence attri-butes (Akerlof, 1970; Darby and Karni, 1973; Blandford and Fulponi, 1999;Grunert et al., 2000). It means that situations prevail in which individualscannot adequately assess product quality or safety, even after experiencingthe good, thus facing uncertainty and having to trust the information pro-vided. Market failures arise when sellers have more knowledge than buyersdo (e.g. concerning the production process, product origin, nutritionalcontent, or safety issues), which means that information is asymmetricallydistributed. In other cases, relevant information may be imperfect, i.e. itmay not exist or it may be contradictory, as in the early days of the BSEand dioxin crises where scientists and government held opposing views onthe potential health risks.

A second assumption pertains to consumers ability and willingness toprocess information. Rational consumers would not knowingly consumeunsafe food, though in the absence of credible food quality and safetysignals, consumers face uncertainty and incur specific information searchcosts (Hobbs, 2004). Insights from cognitive psychology and behaviouraleconomics have shown that the idea of the rational consumer who has allnecessary inputs, capabilities and willingness to engage in active reasoningis far more complex. For instance, Kahneman and Tversky (1973) suggestedthat, when confronted with decision-making under uncertainty, people do

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not behave as if they were maximising expected utility. Later, Simon(1979a,b) introduced the concept of bounded, limited or procedural ration-ality to explain the behaviour of economic agents facing limitations withrespect to necessary inputs, cognitive capabilities and willpower to engagein active reasoning (see also Camerer and Loewenstein, 2004). Mostrecently, McCluskey and Swinnen (2004) introduced the rationally ignorantconsumer hypothesis, indicating that it may be rational for consumers to beimperfectly informed in the specific case of food safety issues. The reasonis that the price of information and/or the opportunity cost of processinginformation is too high compared with the marginal benefits from infor-mation, hence constraining information processing willpower.

In general, the dissemination of information (e.g. through educationalprogrammes or labelling) aims at reducing the problems resulting frominformation asymmetry (Rabinowicz, 1999; Lusk et al., 2004; Hobbs,2004). Logically, if asymmetric information is at the core of market failures,it can reasonably be assumed that better information and more transparencywill be at the core of any solution (McCluskey and Swinnen, 2004). But wecan legitimately ask: to what extent does this logic hold when dealing withfood consumers facing uncertainty? To shed some light on this question, Iwill first briefly review current insights in consumer information needs andinformation processing.

2.2. Information need and information processing

It has long been acknowledged that understanding consumers information-seeking behaviour and information processing are crucial to making bettermarketing decisions (Bettman, 1970). Consumer psychology and behaviourmodels hold that information moves people through a sequence of stages,often referred to as a hierarchy of effects. This concept indicates the differ-ent mental stages that consumers go through when making buying decisionsand responding to information. Although it is generally accepted that astructure including a cognitive (learning, knowing), affective (thinking, feel-ing) and conative (intending, doing) component holds, no clear-cut evidenceabout the sequence and inter-distance of these hierarchical steps appears tobe available (Vakratsas and Ambler, 1999).

Different approaches to information processing have been presented.The two most relevant ones with respect to food quality and safety are theheuristicsystematic model by Chaiken (1980, 1987) and the ElaborationLikelihood Model (ELM) of persuasion by Petty and Cacioppo (1986). Theheuristicsystematic model proposes two modes that people use to processinformation. The systematic mode is based on analytic orientation in whichindividuals assess, investigate and integrate all useful information to reachtheir judgement. Systematic processing takes place when an individualencounters information of significant personal importance or relevance.Conversely, the heuristic mode involves the use of simple decision rules orrules of thumb to reach judgements. Heuristics allow consumers to make


fast decisions in complex situations, in situations of uncertainty or whentheir motivation to process information and think of potential consequencesis low (Tversky and Kahneman, 1974; Chen and Chaiken, 1999). This typeof processing is more likely to occur with low issue involvement (see alsolater). It allows individuals to find satisfactory solutions after search of onlya tiny part of the total space, which fits with the aforementioned bounded orlimited rationality. Limited cognitive capacity, willpower or self-interestexplain also why consumers prefer routine purchasing or the use of heuris-tics over extended problem solving. These limits also explain why extendedproblem solving is performed mainly upon trial or first purchase, whereassatisfaction quickly leads to routine purchasing using some key informationsuch as brands, quality labels or information source characteristics to derivequality expectations. The link with transaction costs is obvious; the notionof the individuals limited cognitive capacities results in the conclusion ofincomplete agreements, which together with information asymmetryencourages behaviour of a satisficing or opportunistic type. Opportunisticbehaviour yields a need for doing better, thus involving higher transactioncosts, among other from ex ante information search (Williamson, 1991;Salaun and Flores, 2001; Hobbs, 2004).

The Elaboration Likelihood Model (ELM) holds that individuals processpersuasive messages in one of two ways: the central or peripheral route.The central route is the active information processing or high elaboration,and involves in-depth processing of information. The peripheral routerelates to low involvement, and utilises external cues surrounding the infor-mation (e.g. a trustworthy information source) to permit simple inferencesabout the merits of the content without recourse to complex cognitive pro-cessing. The ELM conceptualisation has many parallels with the heuristicsystematic model, with systemic processing fitting with the central route,and the use of heuristics corroborating with peripheral informationprocessing.

Particularly in todays agri-food environment with consumers facing foodquality and safety uncertainty, it is acknowledged that food-relateddecisions and risk perceptions are often based on heuristics or followperipheral routes of information processing (Frewer et al., 1997, 2005).However, consumers do not react systematically, all alike, equally orpredictably to information. Information seeking and processing is largelyconditional on whether consumers perceive a real need for information.Uncertainty, risk, stress or threats to well-being, for instance related to foodquality or safety, are potential catalysts for information need arousal andactive information search (e.g. Aaker et al., 1992). Following Cukierman(1980), uncertainty makes it profitable to spend more time and resources onacquiring information before making a decision. The stronger the perceivedneed for information, the higher the likelihood of active information searchand extensive information processing (e.g. Rubin, 1986). Hence, the notionof information need is at the very core of the present debate. Numerousindividual characteristics such as uncertainty level, but also involvement,

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knowledge, or personality, as well as attitudes, lifestyles and socio-demographics account for differences in information needs and reaction toinformation (e.g. van der Lans et al., 2001; Hu et al., 2004; Drichoutis et al.,2005). In what follows, I will illustrate the impact of several of thosevariables, mainly stemming from my own research findings.

3. Impact of individual difference variables

3.1. Uncertainty arousing active information search?

Under the assumption that consumers facing uncertainty will be moreprepared to engage in active information search, it could be tempting forgovernment or the food industry just to make information available at lowor no cost for those who feel a strong need for it. This is what happened inSeptember 2000 with a campaign to inform Belgian consumers about thefeatures and guarantees offered by the European beef traceability and label-ling system. Together with the introduction of the mandatory beef labellingregulation, consumer information campaigns were initiated. A quarter-pagecoloured advertisement was inserted in 20 national newspapers and in fourwomens magazines. The advertisement included a free telephone numberto call for an information leaflet about the traceability and labelling system.The impact of the campaign on consumer interest in information cues wasmeasured by a pre- and post-campaign survey in Belgium (Verbeke et al.,2002; Verbeke and Ward, 2006). Whereas the advertisement succeeded interms of attracting consumers attention to specific information cues (seealso later), the direct response component largely failed, with only 304 callsfor the free information leaflet received (as opposed to a target of 15,000).

Failure of the direct response component was explained by consumerinvolvement being too low and by reduced uncertainty between the periodof campaign planning, shortly after the occurrence of the dioxin crisis inBelgium, and the execution of the campaign more than a year later. Quali-tative depth interviews with a sample of those who had reacted effectivelyrevealed strong involvement, clear motivations for searching information, orheightened levels of uncertainty, even though the crises had been out of themedia for a while. Clearly, involvement correlates positively with infor-mation seeking, including the likelihood of response to a direct responsemessage, but apparently uncertainty was not high enough to move manyconsumers to even limited action. This case illustrates that it may be uto-pian to expect high direct response rates, even in cases where consumersare supposed to be uncertain. Instead of engaging in active informationsearch, an alternative and much easier solution was to cut beef consumptionand replace it by another protein source. This idea fits with the rationallyignorant consumer hypothesis (McCluskey and Swinnen, 2004), in that,even when information is free, consumers refrain from acquiring moreinformation because the opportunity costs (related to time and allocation ofcognitive capacity) of information processing are larger than the expected


marginal benefit. Apparently, the rationally ignorant consumer is a low-involvement consumer. This case also shows that the conclusion, relating tohigh-involvement goods such as investment or durable consumer goods,that uncertainty deters decision-making and makes it more profitable to waituntil more information becomes available (Cukierman, 1980), does not holdfor food that is highly substitutable, low-priced, purchased repeatedly andprimarily satisfying basic physiological needs.

3.2. Involvement-based information needs

Involvement implies relevance to the individual and it refers to the level ofperceived personal importance of a stimulus. The relevance of investigatingconsumer involvement results from its function as a motivational force,which has been proved to explain numerous steps in the consumer decision-making process, including information search and processing (Mittal andLee, 1989; Juhl and Poulsen, 2000; Sansgiry et al., 2001). Under normalconditions, and in comparison with durable goods, food is believed to be atypical low-involvement good (Beharrell and Denison, 1995), hence beinghighly susceptible to the use of heuristics, peripheral information proces-sing, routine problem solving and limited use of information (see also pre-vious section).

Using the involvement profile as described by Laurent and Kapferer(1985), individual differences in information needs were identified fordifferent consumer segments based on their involvement in fresh meat as aproduct category (Verbeke and Vackier, 2004). We argued that the prob-ability of making a wrong choice, and the potential health implications thismay have, are likely to increase involvement and information need, atleast for some consumers. Higher levels of involvement are expected toresult in a greater depth of information processing and more extendeddecision-making.

Our involvement-based meat market segmentation yielded four consumersegments. The first segment, typified as straightforward meat lovers,included significantly more men and daily fresh meat consumers, who strivefor enjoyment when eating meat, relying on their personal experience, notbeing hampered by eventual concerns related to meat safety, and neitherinterested in nor influenced by external information. The primary focus ofthis segment is on taste and hedonic benefits. Hence, providing informationabout better quality or safer meat will only convince these consumers whentangible benefits are present as well, with better or differentiated taste beingof utmost importance.

Another segment was identified as indifferent meat consumers. They donot really derive pleasure from eating meat, but at the same time, they showrather low concern and perceive the risks related to meat quality and safetyto be low. From all segments, the indifferent meat consumers show thelowest involvement in fresh meat, which translates into the least extensivedecision-making process. They are also the least expected to engage

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actively in information search and processing. Low price and price-relatedinformation is of utmost importance during their decision-making process.

The segment of cautious meat lovers is involved in fresh meat bothbecause of its pleasure value and high perceived risk. It includes mainlyfamilies with children, who still appreciate the taste of meat, but make moreconscious decisions following the meat safety crises. Efforts aiming at con-sumer reassurance about meat quality and safety (e.g. traceability and label-ling efforts) will be most effective among consumers belonging to thissegment.

The fourth segment was typified as concerned meat consumers. Thissegment mainly includes consumers who have strongly reduced their meatconsumption frequency since the meat safety crises. They report extremelyhigh levels of uncertainty related to meat safety and have the strongestintention to decrease meat consumption further. Negative information frommass media sources is particularly powerful among this segment, whereasreassurance is mainly sought through interpersonal information, which isreflected in their preference for butchers as meat suppliers.

The findings from this involvement-based segmentation corroborate thoseof McEachern and Schroder (2002), who concluded that all consumers irre-spective of their involvement are interested in tangible quality attributessuch as taste, whereas only the more-involved or highly involved consumersmay additionally demand intangible quality attributes, such as informationrelated to credence quality. With this case of involvement-based segmen-tation, I want to stress the role and importance of involvement as a motiva-tional force that stimulates information needs and information-seekingbehaviour. The fact that involvement-based segments with clear differencesin information needs could be identified argues in favour of adequatesegmentation and targeting in information provision.

3.3. Information needs depending on personality

Personality is another frequently mentioned individual variable interveningin information processing. Personality is defined as a particular pattern oforganisation that makes one individual unique and different from all others,and hence, it provides a consistency of responses based on enduring, innerpsychological characteristics (Engel et al., 1995). Following Bagozzis(1994) call for including personality in information-processing research, itcan be assumed that the need, search and processing of information areamong those consistent responses associated with personality. This wasexemplified in our study following the Coca-Cola crisis in Belgium in 1999(Verbeke and Van Kenhove, 2002). Personality traits were measured usingthe self-administered and validated Dutch version (Mervielde, 1992) of the25-item scale covering the big-five personality traits initially presented byNorman (1963). The Coca-Cola case was finally diagnosed as a case ofmass sociogenic illness or epidemic hysteria (Nemery et al., 1999), whichjustified our focus on the role of the personality trait emotional stability.


After classifying respondents into two categories of emotional stability (lowand high) using median split, associations with interest in information wereinvestigated.

The perception score of information completeness, clearness and genu-ineness was higher for respondents with high emotional stability comparedwith the less emotionally stable, but the differences were not statisticallysignificant. However, respondents with low emotional stability perceivedthe amount of information provided (perceived sufficiency) to be signifi-cantly lower than respondents with higher emotional stability. Furthermore,consumers who reported a lower emotional stability attached significantlymore importance to information about Coca-Cola during the crisis. Thesefindings indicate that respondents with lower emotional stability desired orneeded more information, and that the provision of information was alsoextremely important to them.

Like the previous study that focused on involvement, this one alsodemonstrates that specific consumer segments, namely consumers withlower emotional stability in this particular crisis, require more attention incommunication and information provision. Contrary to the previous casewith involvement-based segmentation, however, the target audience ofconsumers with low emotional stability could not easily be identifiedthrough behavioural or socio-demographic variables. As a result, this targetgroup with a heightened information need in a crisis situation is neitherreadily identifiable nor easily accessible, hence it poses particular challengesfor rapid targeted information provision.

3.4. Knowledge base: subjective, sufficient and reliable

The individuals knowledge base has frequently been shown to be associ-ated with information needs and information processing; for instance, labeluse (Bettman and Park, 1980; MacInnis and Jaworski, 1991; Lusk et al.,2004; Drichoutis et al., 2005). Although findings about the impact ofknowledge in this area are often contradictory, for instance whether or notperceived (subjective) knowledge is a better predictor of behaviour thanactual (objective) knowledge (Radecki and Jaccard, 1995), there is consen-sus that knowledge is a key construct in information processing.

Functional foodsthe alleged number-one top trend facing the foodindustryillustrate the role of subjective knowledge well. Based on consu-mer research in Belgium, we found that consumers strongest concern withrespect to functional foods pertained to the perception that functional foodsmay be no more than a marketing effort from the food industry, with insuf-ficiently investigated health claims (Verbeke, 2005). Also, the risk of poss-ible nutrient deficiencies and fears about a false sense of security emergedas issues of concern. Hence, despite the healthy image of functional foods,consumers expressed considerable uncertainty about functionality, healthimpact and safety. As well as health benefit belief, knowledge of the con-cept of functional foods emerged as a significant determinant of functional

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food acceptance. Most importantly, and in contrast with expectations, highly(subjective) knowledgeable consumers had a significantly lower probabilityof adopting functional foods. Further analysis revealed that consumersknowledge base about functional foods mainly resulted from mass mediacoverage in the form of advertising, which was also their least trusted infor-mation source. This case study of functional foods illustrates the potentialadverse impact of subjective consumer knowledge when resulting from aless trustworthy or less reliable information source.

Yet another study (see also next section; Verbeke and Ward, 2006)showed that information campaigns can favourably change consumer atten-tion to some information cues on meat labels, such as quality marks or indi-cations of origin, whereas the campaigns failed to have an impact onattention to traceability information. The less familiar cues such as thetraceability codes were of little interest both before and after the campaign,irrespective of the consumers campaign awareness level. Nevertheless, thecampaign focused equally on raising consumer interest in quality marks,origin and traceability. The differential impact of the campaign on attentionto these different information cues, may be explained by the fact that qual-ity marks and origin indications, as compared with traceability codes,are easier heuristics for which consumers have a sufficient referenceknowledge base.

The meat label cue case suggests that a sufficient knowledge base isneeded for additional information to be noticed and used in purchasingdecisions. The aforementioned functional foods case suggested that thisknowledge base should be based on reliable information, i.e. informationfrom a trustworthy information source, to have a positive impact on consu-mer choice. This finding is in line with recent conclusions that informationprovided by sources that are mainly associated with food safetycommunication increases risk perception and negatively influences attitudes(Mazzocchi et al., 2004a).

4. Information from agriculture and the food industry

4.1. Mass media

Perhaps the most important source of information about food quality andsafety is the mass media, with advertising being the most widely used tool.Whereas the food industry is very active through brand advertising, theagricultural sectors communication efforts focus on co-operative genericadvertising. Generic advertising is primarily concerned with increasing thedemand, or slowing down an adverse trend in demand, for the product classas a whole, whereas brand advertising envisages market share expansion foran individual brand. Brand advertising efforts envisage product differen-tiation, whereby a products identity is partly shaped by the information thatgoes with the product along with other marketing variables. Almost by defi-nition, generic advertising is not only generic in its product scope, but also


in its target audience, i.e. addressing the general public rather than veryspecific consumer segments. Recently, evidence has been presented thatgeneric advertising effectiveness can be enhanced through better market tar-geting (Schmit and Kaiser, 2004).

At present, the potential benefits of generic advertising continue to bescrutinised and questioned (Ward, 1999; Crespi, 2003). It is not clearwhether generic advertising efforts reach the minimum threshold levelrequired to be apprehended. There is also discussion about the potentialinteractions between generic and brand advertising. For instance, it hasrecently been suggested that generic advertising, contrary to its primaryobjectives, has a differential effect on perceived qualities of branded pro-ducts (Crespi and Marette, 2002), and also can alter brand preferences(Chakravarti and Janiszewski, 2004).

Although advertising clearly has information value for guiding consumerpreference and choice, much of todays generic advertising, at least inEurope, aims to counter negative publicity from food quality and safety pro-blems. The potential negative impact of media coverage of health issues isbest documented in the case of meat consumption (e.g. Kinnucan et al.,1997; Verbeke et al., 2000; Verbeke and Ward, 2001). Findings unani-mously pointed towards decreasing meat intake following negative presscoverage. Also with respect to other real or perceived hazards from food,several studies confirmed the strong impact of releasing adverse informationin relation to food safety (e.g. Herrmann et al., 1997; Rozan et al., 2004).Empirical results from the aforementioned studies confirmed the existingbody of literature demonstrating that a similar quantity of unfavourablenews weighs more heavily in consumer decision-making than favourablenews (e.g. Mizerski, 1982; Smith et al., 1988; Fox et al., 2002; Hayes et al.,2002; Kinnucan et al., 2003). Recently, Swinnen et al. (2005) providedevidence for the so-called bad news hypothesis with respect to the supplyof food safety information. This hypothesis confirms the impression that themass media prefer publishing negative aspects of news items. This prefer-ence, however, is driven primarily by the demand of the audience.Consumers expected value of additional information is higher when itconcerns an issue with potential negative welfare effects than with positivewelfare effects. This links with prospect theory (Kahneman and Tversky,1979), and more specifically the endowment effect (Kahneman et al. 1990,1991), which explains why economic agents attach a higher value to lossesthan gains. Consumers evaluate the consequences of food quality and safetyinformation about potential health risks at higher prices than what could beexpected from risk neutral or health benefit information. This demand-sidefact helps to explain why negative news coverage is likely to dominatepositive news stories in the information supply market (Swinnen et al.,2005).

In our own study (Verbeke and Ward, 2001), it was shown that beef TVadvertising expenditures would need to be increased to about five timestheir mean level in order to maintain consumers beef expenditure share in

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the presence of a mean level of negative press. The relative impotence ofadvertising in an information era dominated by negative press may be notso surprising. Following Forker and Ward (1993), some advertising expen-diture threshold has to be exceeded before any significant results arenoticed. In line with the theoretical insights presented in the previous para-graph, this threshold appears particularly high in periods dominated byextensive negative media coverage that largely outweighs similar amountsof positive coverage aimed at consumer reassurance.

4.2. Labelling and traceability

Food labelling is an increasingly important route for delivering messagesabout food quality and safety to consumers. It has long been understood,however, that the presupposition that consumers want, will acquire and,having acquired, will adequately understand and use the informationsupplied on labels is invalid (Jacoby et al., 1977). Furthermore, labellinginformation is often inaccessible or useless to consumers (Salaun andFlores, 2001; Hobbs et al., 2005).

Labelling as a policy device is generally considered to be the least costlyand least restrictive method in cases where typical credence attributes suchas food safety and healthiness are involved (Caswell, 1998; Henson andCaswell, 1999). Nevertheless, Blandford and Fulponi (1999) indicated thatlabelling can be costly, in particular when independent certification andtraceability are required in order to guarantee product content and perform-ance as expected by the market. Furthermore, as compared with many otherpolicy measures, labelling initiatives are quite specific because of theirpotential direct impact on consumer decision-making. Indications on labelsperform a function as an attribute or cue, which can be incorporated by con-sumers in their evaluation of alternative products. From this perspective,labels are seen primarily as an item of direct consumer information thatmay help reduce information asymmetry (e.g. Rabinowicz, 1999). Thisexplains why labelling debates are largely about information and the proces-sing and use of this information by consumers (Teisl and Roe, 1998). In thisrespect, a distinction needs to be made between mandatory and voluntarylabelling systems. Whereas the first type typically aims at correcting formarket inefficiencies from asymmetric or imperfect information, oftenrelated to negative product attributes, the latter aims mainly at differenti-ating products and calling consumers attention to desirable productattributes (Golan et al., 2001).

One of the most recent issues of food labelling deals with traceabilityand origin labelling of meat and meat products. Whereas this has been anissue in Europe since the BSE crisis of 1996, the issue also reached theforefront in the USA with the 2002 Farm Bill. The previously mentionedsuccess factors for labelling as a policy instrument definitely hold in thespecific case of beef where market failures arose because of itsincreased credence character, heightened consumer concerns and inadequate


information about beef safety and healthiness. As a result, governments andthe beef chain reacted and worked at reducing consumer information asym-metry (Hobbs et al., 2005) and restoring consumer confidence throughenacting mandatory traceability and origin labelling of beef.

The question of which indications consumers are interested in is highlyrelevant for several reasons. The first reason relates to the limited humancognitive capacity, i.e. consumers have limited ability and willingness toprocess numerous chunks of information (see bounded rationality). Thesecond reason for focusing on what consumers really need or expect interms of information pertains to the risk of information overload and poten-tial adverse effects resulting from consumer indifference when confrontedwith too much information (see rationally ignorant consumers). Increasingthe amount of information on the label may overload the label or package,and make a given and desired amount of information harder to extract, orsimply cause individuals without time or ability to process information toignore it, hence yielding excess costs (Salaun and Flores, 2001). It may alsoyield boredom and impatience, as well as loss of confidence from non-understanding. Taking the aforementioned caveats to the role of labelling inameliorating market deficiencies into account, Teisl and Roe (1998) convin-cingly demonstrate that overall social and economic welfare issues of label-ling programmes are unresolved and deserve more attention in futureresearch. A particular challenge pertains to determining the optimum levelof simplicity versus detail, which is likely to differ depending on the indi-vidual and the product at hand.

Related research of my own revealed that consumers classified the newcompulsory beef label indications referring to traceability as the leastimportant and least attended to, compared with other indicators on labelssuch as a quality mark or expiry date (Verbeke et al., 2002). Nevertheless,several studies had previously demonstrated that meat quality labels can beeffective in terms of improving consumers meat quality perception(Verbeke and Viaene, 1999; Herrmann et al., 2002; Roosen et al., 2003).From our study (Verbeke and Ward, 2006), we concluded that consumerinterest in beef traceability as such cannot be taken for granted. Whereasinterest levels differed depending on socio-demographics, interest in generalwas low for cues directly related to traceability and product identificationbut much higher for others such as readily interpretable indications of qual-ity (e.g. certified quality marks or seals of guarantee). Similar findings wererecently presented by Hobbs et al. (2005) based on an experimental consu-mer study in Canada. Traceability, in the absence of quality verification,was found to be of little value to consumers, whereas quality assuranceswere much more valuable. The conclusion was that traceability alone doeslittle to reduce information asymmetry, hence it has in itself a limited exante or proactive information function. If a particular label cue has littleperceived interest or value to the consumer, then the mandatory inclusion ofthat particular label cue must be based on something other than helpingconsumers make informed decisions, e.g. the cues value for eventual

360 Wim Verbeke

contingency legal purposes or product recall. Our study, together withrecent supporting evidence from other studies, indicates that quality labelsaccompanied by a single cue referring to traceability (rather than a massiveamount of cues and codes) stand the best chance of being valued by (atleast some) consumers.

5. Conclusions

Starting from the premise that todays consumers are uncertain about foodquality and safety, which together with information asymmetry should yieldspecific information needs, I have tried first to shed some light on individualdifferences that shape those information needs. Next, the provision of infor-mation through mass media and labelling was reviewed with respect to itspotential effectiveness. Most of these practices aim at reducing informationasymmetry. Despite presumed uncertainty about food quality and safety,general consumer interest in information and willingness to engage in activeinformation search cannot be taken for granted. The evidence I presentedshows that solving market inefficiencies due to information asymmetry canbe effective only if consumers are willing to pay attention to the infor-mation and process it for subsequent use in their decision making. The latterdepends largely on individual characteristics, which are often situated in thepsychological domain.

From the case studies discussed, it appears that strategies for reducinginformation asymmetry through the provision of vast amounts of infor-mation to consumers have a limited chance of success, simply because a lotof this information does not target a particular need. Hence, it risks notbeing attended to and processed by consumers. The particular challenge liesin identifying and effectively reaching market segments. In many cases thisis feasible, though it may be problematic when variables such as involve-ment, personality, motivation or attitudes come into play. A genericapproach, involving the provision of massive amounts of information to thegeneral public, stands a real risk of information overload, leading toconfusion and lack of interest among the majority of consumers. Hence,over-provision of information in an attempt to solve market inefficienciescaused by imperfect or asymmetrically distributed information may notyield the intended solution to market failures. The implications for infor-mation provision, e.g. through generic advertising or labelling, are that therecipient population needs to be well understood, segmented, identified andtargeted.

I acknowledge that the picture presented above is far from complete.Specifically, it covers only a selection of potential antecedents ofconsumers information needs, while omitting others such as attitudinal orsocio-demographic factors. Furthermore, individual characteristics, such asuncertainty level and involvement, are often inter-correlated and their levelis likely to be task-related, i.e. depend on the situation and the productpurchase or consumption decision at hand. Also, consumer attitudes are


very likely to play a key role as mediating variables between informationprocessing and choice. Likewise, the scope in terms of information pro-vision from agriculture and the food industry was limited to mass mediaand labelling, while ignoring interpersonal information exchange, forinstance from direct contact between producer and consumer, and emergingelectronic information vehicles. From the diversity of cases discussed, andequally from the diversity of potential cases ignored, it should be clear thatinteresting though very complex dynamics between information needs,information provision and information processing exist with respect to foodquality and safety. The assumption that market deficiencies as a result ofinformation asymmetries can be solved simply through providing more andbetter information seems not to hold when dealing with food consumersfacing quality and safety uncertainty. Instead, the management of infor-mation from agriculture and the food industry requires that the target popu-lation be identified and their specificities be well understood and taken intoaccount so as to make information meaningful, useful and effective. I hopethat this overview can stimulate the current debate and future researchagenda within the agricultural economics profession.

Acknowledgements

I am grateful to Klaus Grunert, Mario Mazzocchi, Donato Romano, Jutta Roosen, Johan

Swinnen, Ronald Ward, the journal editor Alison Burrell, and two anonymous reviewers who

provided very detailed and insightful comments on earlier drafts of this paper. Any remaining

errors are solely the authors responsibility.

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