Original Research

Willingness to pay and preference for imported rice brands in Nigeria: Do price–quality differentials explain consumers’ inertia?

Uchenna Obih, Lloyd S. Baiyegunhi
South African Journal of Economic and Management Sciences | Vol 20, No 1 | a1710 | DOI: https://doi.org/10.4102/sajems.v20i1.1710 | © 2017 Uchenna Obih, Lloyd S. Baiyegunhi | This work is licensed under CC Attribution 4.0
Submitted: 26 November 2016 | Published: 06 December 2017

About the author(s)

Uchenna Obih, Discipline of Agricultural Economics, School of Agricultural, Earth and Environmental Sciences, University of KwaZulu-Natal, South Africa
Lloyd S. Baiyegunhi, Discipline of Agricultural Economics, School of Agricultural, Earth and Environmental Sciences, University of KwaZulu-Natal, South Africa


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Abstract

Background: Rice (Oryza sativa) is the most consumed staple food in Nigeria. Consumers have persistently preferred and are willing to pay higher prices for imported rice despite improvements in the quality attributes of local rice brands in the last 5 years. Nigeria’s import bill of over $6million daily on rice is not only a drain on the country’s Forex reserves, but a threat to the development of the domestic rice industry. Previous studies on rice consumers’ behaviours have not explained the underlying reason of how consumers with imported brands preference mind-set make purchasing decisions when faced with both local and imported rice brands with almost similar quality attributes but different market prices.

Aim: When making purchase decisions, consumers consider product quality in comparison to its price. This study attempts to explain how the differences in prices and quality attributes of local and imported rice brands determine consumer’s inertia against preference for imported rice brands in Nigeria.

Setting: This study was conducted in the Federal Capital Territory of Nigeria using data sets collected from a survey of 460 rice consumer households.

Methods: Data were collected using a structured questionnaire administered to the household heads during the face-to-face interview. Two separate binary logit regression models were estimated for households’ preference and WTP for imported rice.

Results: The results show that price, household head’s age, household’s income and general perception are statistically significant variables explaining household’s preference and WTP for imported rice brands. Consumers’ inertia against preference and WTP for imported rice persists because of the negative price–quality differential gaps between local and imported rice brands.

Conclusion: Rice consumers in Nigeria compare price and quality differentials before making a choice between local and imported rice brands. There is need for implementation of flexible and synergic import restriction and strategic marketing policies that sustain wide price differentials between local and imported rice brands, while improving the quality image of the local brands to narrow consumer’s perception of the quality differential between these two sets of brands.


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