Received: 7 March 2017 Revised: 31 August 2017 Accepted: 29 September 2017

DOI: 10.1002/cb.1692

SPECIAL ISSUE ARTICLE

Determinants and outcomes of price premium and loyalty: A

food case study
Mar Gómez1,3 | David Martín‐Consuegra2,3 | Estrella Díaz2 | Arturo Molina1,3

1
Department of Marketing, University of
Castilla‐La Mancha, Toledo, Spain
2
Department of Marketing, University of
Castilla‐La Mancha, Ciudad Real, Spain
3
Universidad Autónoma de Chile, Santiago,
Chile
Correspondence
Arturo Molina, Department of Marketing,
University of Castilla‐La Mancha, Cobertizo
San Pedro Mártir, s/n, Toledo 45071, Spain.
Email: arturo.molina@uclm.es
Abstract
This paper examines determinants and outcomes of price premium and loyalty on a food product.
The study attempts to fill this gap by offering new insights into consumer's perspectives, as
concerns food marketing, and to empirically test a model that includes five determinants or
drivers: awareness, corporate social responsibility, origin, quality, and positioning. Furthermore,
the greater or weaker impact of price premium and loyalty on their outcomes have been also
studied, specifically, the influence that word‐of‐mouth has on people's opinions. This study uses
a survey research design, and the data were collected from 278 consumers of a specific food
product: olive oil. Structural equation modeling with partial least squares regression technique
was used to test the hypotheses. The results provide empirical support for the proposed
differences on the relationships of price premium and loyalty with their determinants and
outcomes. Positioning is the strongest and unique element of the determinants of price premium.
Awareness, corporate social responsibility, and quality are the drivers of loyalty. Both constructs
have a positive influence on word‐of‐mouth. The findings reveal important practical implications
for food managers, in terms of making a proper design of strategies from the analysis of
consumer's behavior. To stay competitive, practitioners should work in an ongoing process.
Specifically, they should pay attention to quality, sustainable olive oil, locally made products, or
food marketing.

1 | I N T RO D U CT I O N phenomenon at the management level in food marketing (Cronin,

Food markets are facing an intense competition in the retail context,
and managers are seeking for answers to take advantage of sales.
The new forms of communications have determined a new form of
competition and practicing marketing activities in the food sector
because of its effects on consumer's recommendations (Marchini,
Diotallevi, Paffarini, Stasi, & Baselice, 2015). On the one hand, price
competition has increased as a result of the development of store
brands striving against manufacturer brands (CalvoPorral
Levy‐Mangin, 2016; Diallo, Coutelle‐Brillet, Rivière, & Zielke, 2015;
Rondán, García, & Phau, 2006; Verhoef, Nijssen, & Sloot, 2002). On
the other hand, retail managers devote attention on loyalty programs
as a tool for the increase in sales (Sayman & Hoch, 2014). Thus,
ensuring whether the elements that influence consumers to pay more
for a food product influence in the same way that those that impact on
consumers' loyalty is such a great challenge (Anselmsson, Bondesson,
& Johansson, 2014). Understanding the determinants and outcomes
of price premium and loyalty has been considered an important
Brady, & Hult, 2000; Kim, Holland, & Han, 2013; Wang, 2010) because
of their interrelation (Sayman & Hoch, 2014) but their different nature.
However, despite the importance of price premium and loyalty in
governing the purchase decision and further recommendations of food
products among consumers—there exists a lack of research that focus
on further explicating the interplay between these aspects in the food
context (Ferreira & Coelho, 2015; Loose, Peschel, & Grebitus, 2013;
Rondán et al., 2006). Therefore, in this study, we focus on this linkage
& by considering the context of olive oil, which as a food product, holds a
vital importance in the Mediterranean countries (Kalogeras,
Valchovska, Baourakis, & Kalaitzis, 2009). In contrast, the existing
address to food products in various contexts has widely focused on
products such as food in general (Choe, Park, Chung, & Moon, 2009),
packaged food (Anselmsson et al., 2014), seafood (Loose et al.,
2013), and wine (Lockshin, Corsi, Cohen, Lee, & Williamson, 2017).
There are several determinants that can explain the price that
consumers are willing to pay for food products (price premium) or
willing to be loyal: awareness, corporate social responsibility (CSR),

64 Copyright © 2017 John Wiley & Sons, Ltd. wileyonlinelibrary.com/journal/cb J Consumer Behav. 2018;17:64–74.
GÓMEZ ET AL.
origin, quality, and positioning (Jover, Montes, & Fuentes, 2004; Kalra
& Goodstein, 1998; Magnier, Schoormans, & Mugge, 2016; Suri &
Thakor, 2013). Price premium and loyalty are important tools for
companies' competitive advantages. Hence, much research has
focused on studying their relationships with their antecedents (Cronin
et al., 2000). Notwithstanding, the study of the direct influence of the
five above determinants on price premium and loyalty is a huge
challenge due to their interrelation and different nature. Thus, knowing
if there are differences in the creation of each concept and recognizing
how they are interrelated are interesting themes and useful for
management goals (Alnazer, 2013; Habel, Schons, Alavi, & Wieseke,
2016). Moreover, word‐of‐mouth (WOM) can be analyzed as a
relevant consequence of price premium and loyalty because of its
importance in consumer's buying decisions (Casidy & Wymer, 2015,
2016; Karjaluoto, Munnukka, & Kiuru, 2016).
For this purpose, the main objective of this research is to analyze
the direct influence of the determinants of price premium and loyalty
(awareness, CSR, origin, perceived quality, and positioning) in the
context of olive oil. Furthermore, this study will analyze the influence
of price premium and loyalty on WOM. The empirical analysis refers
to olive oil, which is a product of the agro‐food market, characterized
by a high level of differentiation related to quality, brand, origin, price,
or loyalty (Marchini et al., 2015). The conceptual model has been
empirically tested through structural equation modeling.
2 | LITERATURE REVIEW AND
HYPOTHESES DEVELOPMENT
2.1 | Price premium and loyalty
Price premium and loyalty are strategic concepts in management that
are interrelated despite their different nature. For Aaker (1996), price
premium is presented as a basic indicator of loyalty. Nevertheless,
despite this interconnection, both the concepts are identified as
independent (Mutonyi, Beukel, Gyau, & Nico, 2016). Price premiums
have a significant connection with loyalty programs; however, it is
not easy to evaluate the compensation between both subjects
(Sayman & Hoch, 2014). Price premium determines customer's loyalty
(González‐Benito & Martos‐Partal, 2012) motivating the repurchase in
the same company (Wang, 2010). Price is a strong concept highly
connected with loyalty (Mutonyi et al., 2016). As such, loyalty has an
influence on price premium by segmenting customers in different price
sensitivity levels and offering dissimilar products (Sayman & Hoch,
2014). Specifically, these authors suggest that consumer's willingness
to pay a price premium is the result of loyalty rewards offered by firms.
Despite its connection, both constructs present differences in
their definition and outcomes. Price is not the same in every in
consumer's mind, and consequently, it has a far more extensive
meaning than the monetary perspective (Bei & Chiao, 2001). Price is
a core element in explaining consumer behavior. There are different
concepts related to price, such as price fairness, price discount, price
satisfaction, or price premium, among others. This research focuses
on price premium because of its relevance as a monetary tool in the
product's purchase (Cronin et al., 2000). Price premium is defined as
65
the consumer's desire to pay more for one branded product than for
another (Sethuraman, 2003; Xu, Loke, & Leung, 2015). Price premium
is defined as the consumer's perceptions that are willing to pay a
premium price for specific products, mainly if they are customized
(Moon, Chadee, & Tikoo, 2008). For Sayman and Hoch (2014), price
premium symbolizes what a buyer is willing to pay at each level of
purchases per each product when they offer rewards in the loyalty
programs. In the food area, price is considered an important choice
driver (Loose et al., 2013).
Loyalty signifies a link between a customer and a brand,
determining the intention to buy a product again (Zeithaml, Berry, &
Parasuraman, 1996). A person is a loyal customer when a devotion
towards a brand is presented. It means that there are voluntary feelings
towards the product or firm. A customer is loyal if there is a regular
patronage behavior for a particular brand (Casidy & Wymer, 2015,
2016). Loyalty is defined as an intended behavior towards a product
or a service (Bei & Chiao, 2001; Molina, Fernández, Gómez, & Aranda,
2017) attempting to stay with the same organization (Zeithaml et al.,
1996). Thus, loyalty deals with the particular experience and allows a
company to increase the sales and, consequently, the market share
(Akhtar, Ahmed, Jafar, Rizwan, & Nawaz, 2016). Loyalty encourages
firms' sales and strengthens the link with the companies decreasing
the response to the actions of their competitors (Makanyeza, 2015). It
is an essential concept in management to obtain competitive
advantages (Erdogmus & Büdeyri‐Turan, 2012).
2.2 | Determinants of price premium and loyalty and
their interrelations
In this section, the determinants of price premium and loyalty
(awareness, CSR, origin, quality, and positioning) are defined. Each of
these determinants and its direct relationship with price premium
and loyalty will be developed. Due to the interrelation between price
premium and loyalty, this paper seeks to analyze the influence of the
five common determinants on these concepts. Furthermore, the
influence of price premium on loyalty will be detailed at the end of this
section.
First, awareness represents the presence of a brand in the
consumer's mind, and it symbolizes the capability to recognize a brand.
It means the consumer's ability to maintain a brand in his/her memory
under different conditions and remembering the past experience with
that brand (Aaker, 1996). Awareness plays a relevant role in the mar-
keting process (Makanyeza, 2015; Molina et al., 2017). Price premium
and loyalty are considered outcomes of awareness (Aaker, 1996).
There is a relationship between awareness and price premium depend-
ing on the level of recognition of the brand (Alnazer, 2013). Awareness
is a dimension responsible for the consumer's loyalty, and
consequently, it can provide competitive advantages to companies.
Awareness presents a positive relationship with this concept (Akhtar
et al., 2016). Therefore, awareness and knowledge of particular goods
can drive the loyalty towards those products affecting purchase
intentions or purchase recommendations (Makanyeza, 2015). Hence,
awareness impacts directly on consumer decision making by
influencing the loyalty (Netemeyer et al., 2004).These connections
have been highlighted because of their importance in food products
66
(Anselmsson et al., 2014). For example, although Alnazer (2013) has
contrasted the effect of different levels of awareness of several soft
drinks on price premium, the influence of consumer awareness on
consumer loyalty has been studied applied to meat (Makanyeza,
2015) or milk products (Khan, 2012). Based on these premises, the
following hypothesis is proposed:
H1: A direct and significant relationship exists between
awareness and (a) price premium; (b) loyalty.
Second, CSR is defined as the mixture of monetary, legal, moral,
and humanitarian duties towards people and is presented as a compet-
itive strategy. CSR refers to ethical and legal behaviors (Choi & La,
2013) or social and environmental activities made by sustainable firms
(Mohr & Webb, 2005). CSR is related to the willingness to pay and to
customer loyalty (Ferreira & Ribeiro, 2017; Habel et al., 2016). CSR
matters to consumers and their intentions to buy, even though they
have to pay a higher price. CSR presents a relationship with price pre-
mium. Some buyers are willing to pay more for products that have been
produced ethically (Mohr & Webb, 2005). CSR is related to loyalty, as it
is an emerging factor that influences loyal customers. Customers are
loyal to brands when they know about their firms (Khan, Ferguson, &
Pérez, 2015). The more customers take into consideration CSR when
going shopping, the more this element will affect loyalty, which is
defined as purchase intention (Mohr & Webb, 2005). Therefore, CSR
is relevant in the food sector (Aaker, 1996). Specifically, food products
with CSR are connected with consumer's willingness to pay (Magnier
et al., 2016).If customers feel that a food company cares about the
society, they will be willing to pay a higher price for their offerings
due to the inherent CSR commitment. There are socially responsible
consumers that consider CSR as a key element when making purchase
decisions and generating loyalty to food products, such as coffee
(Gupta, 2015).
Based on this theoretical development, the second hypothesis is
proposed:
H2: A direct and significant relationship exists between
CSR and (a) price premium; (b) loyalty.
Third, origin represents a key role for the consumer, related to
quality and image (Delgado, Gómez‐Rico, & Guinard, 2013). Origin
can be associated with a country, region, or a local area. In fact, Suri
and Thakor (2013) determine differences when product's manufactur-
ing origin refers to a country or to a county. Because the country's
image can change along the time, there are several countries that work
hard with advertising promotions and manufacture standards in order
to increase domestic sales (Becker, 2009). According to this researcher,
buyers even classify products depending on the nation of origin, and it
is an element that influences on the consumer decisions. Origin influ-
ences the price that consumers are willing to pay as the geographical
area determines the credence attributes of products (Loose et al.,
2013; Suri & Thakor, 2013). The same product, but produced in differ-
ent countries, definitely impacts on the price premium. Thus, the price
will be higher if the product is produced in a more industrialized country
(Hulland, Todiño, & Lecraw, 1996), or the country has a positive origin
image (Drozdenko & Jensen, 2009). There is a connection between
local products and price premium (Xu et al., 2015). Suri and
GÓMEZ ET AL.
Thakor (2013) define that buyers will be willing to pay a higher price
for local products than country origins (Ferreira & Ribeiro, 2017).
Consumers will have a higher commitment to the price of a brand if
the country of origin's image is positive (Ha‐Brookshire & Yoon,
2012). Buyers are often willing to pay price premiums for imports from
certain countries if they have a good reputation (Hulland et al., 1996).
Moreover, the impact of origin or price premium depends on the
product category (Drozdenko & Jensen, 2009). The influence of origin
on the brand loyalty has been analyzed from different perspectives.
Esmaeilpour and Abdolvand (2016) study this relationship through the
role of brand attitude in the context of luxury fashion brands,
confirming this link mainly from the technology attributes of the
country of origin. There is a stereotype that suggests that buyers are
loyal to those products that are produced in their own nation
(Ha‐Brookshire & Yoon, 2012). Hulland et al. (1996) even suggest that
origin influences on consumers' products attitude and behavior. In the
food context, the study of the relationship between origin and price
premium has been applied in fresh products such as lettuce (Xu et al.,
2015) or seafood (Loose et al., 2013).Origin is defined as a signal of
different product taste characteristics and as an indicator of food safety
that has influence on consumer loyalty (Ferreira & Ribeiro, 2017).
Following this statement, the following hypothesis is presented:
H3: A direct and significant relationship exists between
origin and (a) price premium; (b) loyalty.
Fourth, quality is a concept defined as the consumer's judgment of
a product or service based on the excellence of the brand (Zeithaml
et al., 1996). It is an essential element in the branding process that is
formed founded on client's' subjective ideas (Aaker, 1996), although
it refers to the role of functional aspects (Erdogmus & Büdeyri‐Turan,
2012). Some researchers highlight the difference between product
and service quality, depending on the tangible or intangible attributes
evaluated (Bei & Chiao, 2001). Quality is different from an objective
or perceived quality (Jover et al., 2004) or according to intrinsic and
extrinsic characteristics (Erdogmus & Büdeyri‐Turan, 2012; Gómez,
Martín‐Consuegra, & Molina, 2015; Jover et al., 2004). Several studies
ratify empirically the positive link between perceived quality and price
premium (Anselmsson et al., 2014; Netemeyer et al., 2004;
Sethuraman, 2003). When products are perceived as high quality,
buyers will be willing to pay premium prices (Becker, 2009). Addition-
ally, the influence of quality on loyalty has been widely studied. From
the difference between product and service quality, Bei and Chiao
(2001) evidence the direct effect of product quality and indirect
influence of service quality, through satisfaction, on loyalty. Cronin
et al. (2000) confirmed also the direct effect of service quality on
loyalty, represented as behavioral intentions, and some researchers
focus on the relationship between quality and loyalty in services
(Jin, Line, & Merkebu, 2016; Kim et al., 2013; Wang, 2010) or products
(Erdogmus & Büdeyri‐Turan, 2012). These last authors highlight the
relevance of appearance and product quality perception in the
consumer's preferences. The influence of quality on price premium
has been tested in several types of research related to food. As such,
Kalogeras et al. (2009) confirmed this link in a research applied to olive
oil that is focused on the study of the determinants of price premium.
On the other hand, Jover et al. (2004) outline the link between
GÓMEZ ET AL.
perceived quality and loyalty in wine. Based on these premises, the
fourth hypothesis is presented:
H4: A direct and significant relationship exists between
quality and (a) price premium; (b) loyalty.
Fifth, positioning is a relevant component in marketing differenti-
ation, as it represents the distinctive attributes in relation to the
competitors (Netemeyer et al., 2004). Positioning can differentiate
products or services based on their image. Product positioning is a
strategic choice that determines the differences related to the com-
petitors and affects to firms' monetary results (Lauga & Ofek, 2011).
The link between positioning and price premium has been statistically
confirmed (Kalra & Goodstein, 1998; Netemeyer et al., 2004). Product
positioning determines marketing mix variables as the sale price.
Hence, pricing decisions are taken after deciding product positioning
(Lauga & Ofek, 2011). Positioning is mainly determined by the firm's
advertising policy, which traditionally produces effects on the price.
When the attributes are unique, consumers identify premium
perceptions (Aaker, 1996). The effect of positioning strategies can
be measured through price effects; and thus, differentiation is
connected with price. Differentiation through competitive positioning
allows companies to develop loyalty. It means how a brand positioned
in customer's minds will affect the development of loyalty towards its
brand (Esmaeilpour & Abdolvand, 2016). In the food context of
grocery markets, Gonzalez‐Benito and Martos‐Partal (2012) focus on
retailer's competitive uniqueness and their effects on price and store
loyalty. As such, in their research, this connection emerged relevant
due to the direct implications over store brand consumption and
retailer's sales. According to this statement, the following hypothesis
is presented:
H5: A direct and significant relationship exists between
positioning and (a) price premium; (b) loyalty.
Finally, the relationship between price premium and loyalty has
received a considerable attention. Despite the fact that loyalty can also
affect price premium (Sayman & Hoch, 2014), the influence of price
premium on loyalty has been investigated extensively by different
researchers (Akhtar et al., 2016). The price, represented as value, can
motivate consumers to be supplied again by the same company (Wang,
2010). Bei and Chiao (2001) analyze the relationship between the price
that a customer is willing to pay and loyalty, guaranteeing a direct
effect on this concept. According to these authors, when consumers
perceive that the price premium is reasonable for the goods they
obtain, they will have the intention to repeat the same purchase. The
firm's price policy determines the customer's loyalty, although it differs
across product categories, as it was tested in some retail stores by
González‐Benito and Martos‐Partal (2012). Sayman and Hoch (2014)
analyze the link between price premium in loyalty program rewards,
such as promotions that offer some benefits to customers based on
their purchase evolution. These authors highlight the difficulty of
measuring the connection between current prices and future reward.
In the food context, several authors also ratify that there is an effect
of price on buying intentions that heavily depends on the price policy
addressing discounts or premiums (Alnazer, 2013). As such, the
consumers' evaluation of prices influences customer loyalty
67
(Habel et al., 2016; Rondán et al., 2006). Based on this literature
review, the sixth hypothesis is proposed:
H6: A direct and significant relationship exists between
price premium and loyalty.
2.3 | WOM as an outcome of price premium and
loyalty
Commitment to a product can be shown as a positive WOM behavior.
WOM can be studied from a positive view or from a double perspec-
tive, considering positive and negative comments (Casidy & Wymer,
2015). WOM is a powerful tool that drives other consumers' buying
decisions and firms' sales (Diallo et al., 2015). This concept is relevant
in marketing decisions due to its effect on the formation of consumer's
attitudes (Lymperopoulos & Chaniotakis, 2008). WOM is a positive
declaration about a product, a service, or a company that is available
through online and offline channels (Karjaluoto et al., 2016). WOM is
one of the main consequences of price premium (Karjaluoto et al.,
2016) and loyalty (Casidy & Wymer, 2015).
Price is a strategic marketing concept that influences consumers'
purchase behavior, working on potential clients (Kim et al., 2013). If a
company wants to benefit from positive WOM, special attention to
price should be devoted (Lymperopoulos & Chaniotakis, 2008). Moon
et al. (2008) work on personalized products and the relationship
between price premium and purchase intention for those kinds of
products based on willingness to buy and recommend. Specifically,
they suggest that there is a maximum price premium willing to pay
for those products made by cocreation with the customers. The
relationship between price premium and WOM will be stronger in
countries with less risk and will be different depending on the product
category. Price also mediates between a brand, and WOM strengthens
this relationship mainly in the offline recommendations (Karjaluoto
et al., 2016). In the food context, a recent study by Hanaysha (2016)
outlines how the increment of prices can affect the recommendations
to others. This connection has also been studied in organic food
products, for example, Chakrabarti (2010). According to this, the
following hypothesis is proposed:
H7: A direct and significant relationship exists between
price premium and WOM.
The consequences of loyalty in customer behavior have been
studied in numerous studies. Loyalty can be associated with the
purchase behavior or spreading WOM to other customers (Jin et al.,
2016). Loyal customers are more likely to act as agents informing
friends, relatives, or colleagues encouraging the purchase of a specific
brand. WOM represents up to 60% of sales among new customers
(Kim et al., 2013). Attitudinal loyalty influences WOM behavior in a
positive way. Thus, loyalty is an antecedent of WOM because it
reduces consumer's cognitive dissonance and excuses their intentions
by recommending the product to other potential customers (Diallo
et al., 2015). Casidy and Wymer (2015, 2016) suggest a significant
relationship between loyalty and WOM in their study of antecedents
of WOM in the higher education system. Fetscherin, Boulanger,
Gonçalves, and Quiroga (2014) confirm, on the one hand, the influence
68 GÓMEZ ET AL.

of loyalty on purchase intentions; and, on the other hand, the TABLE 1 Consumers' profile
relationship between loyalty and WOM, theoretically proposed by Variable Categories Population (%) Sample (%)
Dick and Basu (1994). This relationship has been also studied in the
Gender Men 49.1 46.0
food context. For instance, Hanaysha (2016) and Meyer and Petzer Women 50.9 54.0
(2014) focus their analysis on fast foods. Age 20s 15.6 16.2
Based on this statement, the last hypothesis is presented 30s 22.1 26.2
40s 24.9 23.5
(Figure 1): 50s 21.4 19.1
60s 16.1 15.0
H8: A direct and significant relationship exists between
Marital status Single 33.2 28.5
loyalty and WOM. Living as a couple/ 52.8 57.3
married
Separated/divorced 6.3 8.5
Widower 7.8 5.7
3 | METHOD Education Basic 15.6 12.4
level Middle 53.9 51.4
Higher 30.5 36.2
3.1 | Sampling process and measurement scales
To attain the objective of this study, the population was defined as The questionnaire used in this study contains information of the
Spanish consumers who buy olive oil. Two different stages were measurement scales regarding awareness, CSR, origin, quality,
planned: a pretest and an online survey. First, a pretest was performed positioning, price premium, loyalty, and WOM. The survey instrument
in January 2016 using academics and olive oil expert consumers to was obtained using existing dimensions adapted to an olive oil study.
verify the adequacy of the questionnaire. To verify the applicability Price premium is a measure that needs to be compared to other
and appropriateness of the questionnaire for the set of objectives, a competitors. Two items based on the higher price willing to pay were
pretest was subsequently conducted as an integral part of the develop- adapted from Anselmsson et al. (2014), Habel et al. (2016),
ment of the questionnaire (Reynolds & Diamantopoulos, 1998). Netemeyer et al. (2004), and Zeithaml et al. (1996). Loyalty is a com-
Second, to find a number of consumers who usually buy olive oil, a plex concept that can include a multifaceted conceptualization. It can
sample of consumers was drawn from a national consumer panel from be considered as attitudinal (predisposition towards a brand) and
March to June 2016. The usable sample comprised 278 consumers. behavioral (repeat patronage), as it was proposed by Dick and Basu
This sample size supposes a ±5.9% error for a 95% confidence interval. (1994). When measuring loyalty, the options presented by researchers
Table 1 presents the main sociodemographic characteristics of the are diverse. Some studies present solely one factor (Makanyeza,
sample and population. With regard to consumption, 85.6% confirmed 2015); whereas others consider two factors (Casidy & Wymer,
that they consumed olive oil every day. Regarding the purchase 2015) or even three concepts (Fetscherin et al., 2014). For this study,
frequency, 46.4% buy it once or more times a month, and 33.8% buy following the proposal of CalvoPorral and Levy‐Mangin (2016) and
it once every 2 or 3 months. In relation to the place of purchase, Diallo et al. (2015), two of the most common items were chosen,
53.9% buy it in supermarkets, and 37.4% buy directly from the based on loyalty and the first option. All of the indicators were mea-
producers. sured using a Likert scale with five positions (1 = totally disagree;

AWA H1a

H1b

PRP
H2a
CSR
H2b H7

H3a
ORI H6 WOM
H3b

H8
QUA H4a

H4b LOY

H5a

POS
H5b

Note: AWA: awareness; CSR: corporate social responsibility; ORI: origin; QUA: quality; POS: positioning; FIGURE 1 Theoretical model of price
PRP: price premium; LOY: loyalty; WOM: word-of-mouth.
premium and loyalty to olive oil
GÓMEZ ET AL.
5 = totally agree). The complete measurement scales for all the factors
are included in Table 2.
3.2 | Data analysis and model evaluation
This research presents a conceptual model where awareness, CSR,
origin, quality, and positioning, influence on price premium and loyalty.
Moreover, price premium influences loyalty and WOM; and loyalty,
directly on WOM. The decision to use a reflective approach to develop
the scales of all the concepts is consistent with Jarvis, MacKenzie, and
Podsakoff's (2003) recommendations: Direction of causality runs from
the construct to its items; all the indicators have high correlations;
items are interchangeable; the error is associated with the indicators;
and just the analysis of common variance is used. Partial least squares
(PLS) were used to test the conceptual model through the software
SmartPLS 3 to measure the inner and outer models. PLS is a favorite
technique for both exploratory and confirmatory studies (Lowry &
Gaskin, 2014) and presents several advantages because of its predic-
tive capacity. Bootstrapping was used for significance (Efron, 1979).
The evaluation of reliability and validity was developed. The
measures used to analyze the reliability of the reflective dimensions
present satisfactory levels: (a) a Cronbach's alpha above or approxi-
mately 0.7 (Nunnally & Bernstein, 1994); (b) a composite reliability
above 0.7 (Fornell & Larcker, 1981); and (c) the average variance
extracted above 0.5 (Fornell & Larcker, 1981). Once the reliability
was confirmed, convergent validity of the scale was verified. The
results exhibit factorial loads of the measurement variables above 0.6
(Bagozzi & Yi, 1988) and significantly different from zero. The analysis
conducted demonstrates the need to eliminate one reflective indicator
because it presented a load lower than 0.6 (Table 3; ORI3—Spanish
olives). Once this item was removed, the results revealed a satisfactory
TABLE 2 Measurement scales
Dimensions Items
Brand I know this brand.
awareness I have a positive opinion of this brand.
I can recognize this brand among others.
CSR Olive oils of this brand are ecological.
Olive oils of this brand are healthy.
Olive oils of this brand are produced under right working conditions.
Loyalty I am loyal to this brand.
I consider this olive oil brand among my first options.
Origin I confirm that this olive oil brand is from Spain.
The factory of this olive oil brand is located in Spain.
Olive oils of this brand are made with Spanish olives.
Perceived Olive oils of this brand are well made.
quality Olive oils of this brand have a high standard of quality.
Olive oils of this brand always guarantee the same quality.
Price I am willing to pay a higher price for the olive oil of this brand.
premium I am willing to pay a lot more for this brand than other brands in this
category.
Uniqueness This brand is different from other olive oil brands.
This brand stands out from other olive oil brands.
Olive oil of this brand is unique.
WOM I would recommend this olive oil brand to someone who would ask Casidy and Wymer (2015); Karjaluoto et al. (2016); Bei & Chiao,
me for advice.
I would say positive comments about this olive oil brand to other
people.
Note. CSR = corporate social responsibility; WOM = word‐of‐mouth.
69
specification. Data from the extracted variance test show that average
variances extracted are higher than the squares of correlations,
guaranteeing that there are no discriminant validity problems
(Table 4). Moreover, the lack of collinearity was confirmed using the
variance inflation factor with values lower than 3 (Petter, Straub, &
Rai, 2007).
4 | RESULTS
After evaluating the measuring instrument, the structural model was
estimated. In other terms, relationships between the constructs
through path coefficients and their significance under the hypotheses
are proposed in the conceptual model (Table 5).
Differences in the determinants and outcomes of loyalty and price
premium can be observed. Awareness influences positively and signif-
icantly on loyalty (β = 0.199; p < .01), but this relationship is negative
and not significant on price premium (β = −0.037; p > .10). With
respect to CSR, there is a positive and significant relationship on
loyalty (β = 0.159; p < .05); nevertheless, the influence is not significant
with price premium (β = 0.092; p > .10). In the case of origin, the
influence is not significant in any case, and in case of price premium
is even negative (price premium: β = −0.020; p > .10; loyalty:
β = 0.064; p > .10). In the influence of quality, there are also
differences. There is a positive and significant relationship on loyalty
(β = 0.189; p < .10) but not in price premium (β = 0.021; p > .10). In
relation to positioning, the influence is positive and significant on price
premium (β = 0.407; p < .01); however, this influence is not significant
on loyalty (β = 0.058; p > .10).
Additionally, it was confirmed the positive and significant
influence of price premium on loyalty (β = 0.257; p < .01) and on
Literature review
Anselmsson et al. (2014); Yoo and Donthu (2001)
Anselmsson et al. (2014); Magnier et al. (2016); Mohr and Webb
(2005)
CalvoPorral and Levy‐Mangin (2016); Diallo et al. (2015)
Anselmsson et al. (2014); Jover et al. (2004)
Diallo et al., 2015; Bei & Chiao, 2001; Magnier et al., 2016;
Netemeyer et al., 2004; Kim et al., 2013
Anselmsson et al. (2014); Habel et al. (2016); Netemeyer et al.
(2004); Zeithaml et al. (1996)
Anselmsson et al. (2014); Netemeyer et al. (2004)
2001
70 GÓMEZ ET AL.

TABLE 3 Reliability and convergent validity of reflective constructs

Constructs Indicators Mean (STD) Loadings (t) α CR AVE
Awareness AWA1. I know it 3.49 (1.517) 0.880*** (39.912) 0.844 0.903 0.757
AWA2. Positive opinion 3.48 (0.914) 0.892*** (46.272)
AWA3. Recognition among others 3.27 (1.221) 0.837*** (28.521)
CSR CSR1. Ecological 3.23 (0.791) 0.749*** (12.917) 0.733 0.848 0.651
CSR2. Healthy 3.65 (0.773) 0.825*** (18.526)
CSR3. Right working conditions 3.52 (0.734) 0.843*** (21.472)
Origin ORI1. Brand from Spain 4.16 (0.891) 0.999*** (3.692) 0.821 0.831 0.719
ORI2. Factory in Spain 3.94 (0.989) 0.664*** (2.472)
Quality QUA1. Well made 3.42 (0.705) 0.870*** (32.477) 0.776 0.871 0.693
QUA2. High standard of quality 3.33 (0.745) 0.866*** (36.539)
QUA3. Guarantee same quality 3.28 (0.789) 0.756*** (14.725)
Positioning POS1. Different from others 3.27 (0.843) 0.886*** (63.233) 0.796 0.879 0.708
POS2. It stands out form others 3.10 (0.938) 0.771*** (16.117)
POS3. Unique 2.65 (0.906) 0.863*** (42.944)
Price premium PRP1. Willing to pay a higher price 2.33 (0.956) 0.945*** (113.643) 0.838 0.924 0.859
PRP2. Willing to pay a lot more 2.00 (0.879) 0.909*** (63.605)
Loyalty LOY1. Loyal to this brand 3.27 (1.113) 0.918*** (85.032) 0.831 0.922 0.855
LOY2. My first options 2.95 (1.100) 0.931*** (103.433)
WOM WOM1. Recommend to someone 3.08 (0.920) 0.918*** (100.898) 0.744 0.885 0.794
WOM2. Positive comments to others 3.15 (0.967) 0.863*** (34.105)

Note. CR = composite reliability; AVE = average variance extracted; STD = standard deviation; CSR = corporate social responsibility; WOM = word‐of‐mouth;
ORI = origin; QUA = quality; POS = positioning; PRP = price premium; LOY = loyalty.
***p < .01 (value t bootstrap).

TABLE 4 Discriminant validity of reflective constructs 5 | DISCUSSION

Variables AWA CSR ORI QUA POS PRP LOY WOM
This research tested the differences of the determinants on price
AWA 0.757
premium and loyalty because of its different nature and their influence
CSR 0.199 0.651
on WOM. It is based on a relevant food product: olive oil. The develop-
ORI 0.139 0.085 0.719
ment of a model that allows analyzing the relationship between
QUA 0.517 0.374 0.148 0.693
awareness, CSR, origin, quality and positioning, and price premium
POS 0.192 0.320 0.056 0.327 0.708
and loyalty, contributes to the knowledge of food products and,
PRP 0.067 0.221 0.009 0.166 0.435 0.859
specifically, providing new insights to the olive oil sector. This research
LOY 0.365 0.350 0.138 0.422 0.324 0.363 0.855
fills an existing gap in the field of loyalty and the contributions of price
WOM 0.412 0.443 0.106 0.483 0.321 0.355 0.693 0.794
premium elements in food products. Because price premium and
Note. Diagonal: average variance extracted (AVE); below diagonal: squared loyalty can have different determinants, this distinction has a relevant
inter‐construct correlation; AWA = awareness; CSR = corporate social
responsibility; ORI = origin; QUA = quality; POS = positioning; PRP = price power for directors (Anselmsson et al., 2014) in food marketing. This
premium; LOY = loyalty; WOM = word‐of‐mouth. study contributes to the existing literature by analyzing the influence
of price premium on loyalty as two independent but interrelated
factors (Habel et al., 2016). Furthermore, a study has been conducted
WOM (β = 0.119; p < .05). And the relationship between loyalty and where loyalty is presented as an independent factor of WOM but
WOM was also positive and of prime importance (β = 0.650; related (Fetscherin et al., 2014). Additionally, the influence of price
p < .01). Thus, price premium influences directly on WOM and premium on WOM is also contrasted (Karjaluoto et al., 2016). The
indirectly through loyalty. results of this study are based on PLS‐based structural equation
In order to guarantee better evidence on the validity of the modeling (Diallo et al., 2015; Karjaluoto et al., 2016; Khan et al.,
measuring instrument, relationships between the constructs, in a man- 2015), and the use of reflective measures improves the specification
ner that was consistent and coherent with the theory, were presented. of the five drivers or determinants (Jarvis et al., 2003).
The results showed that the variables maintained positive correlations, From an empirical perspective, the results, verified through
and as a result, nomological validity can be confirmed. Furthermore, it structural equation modeling, confirm that the formation of price
was confirmed that all of the values of the coefficients of determina- premium and loyalty presents dissimilarities. Although positioning is
tion R2 exceed the minimum recommended value. The Stone–Geisser the strongest and unique determinant of price premium, awareness,
2
test Q presents values higher than zero (Chin, 1998), confirming the CSR, and quality are the principal drivers of loyalty. Origin is the
predictive relevance of the model. The goodness of fit index exhibits weakest predictor of both constructs, and its influence is not signifi-
a high value (goodness of fit > 0.36; Table 5). cant. Additionally, there is an influence of price premium on loyalty.
GÓMEZ ET AL. 71

TABLE 5 Hypothesis testing results

Hypothesized paths Estimate t‐value Contrast R2 Q2
H1a: AWA → PRP −0.037 0.464 Reject PRP: 19.8% PRP: 0.141
H1b: AWA → LOY 0.199*** 2.666 Do not reject LOY: 32.9% LOY: 0.253
H2a: CSR → PRP 0.092 1.151 Reject WOM: 49.3% WOM: 0.364
H2b: CSR → LOY 0.159** 2.428 Do not reject
H3a: ORI → PRP −0.020 0.324 Reject
H3b: ORI → LOY 0.064 0.749 Reject
H4a: QUA → PRP 0.021 0.192 Reject
H4b: QUA → LOY 0.189* 1.874 Do not reject
H5a: POS → PRP 0.407*** 7.732 Do not reject
H5b: POS → LOY 0.058 0.953 Reject
H6: PRP → LOY 0.257*** 3.957 Do not reject
H7: PRP → WOM 0.119** 2.070 Do not reject
H8: LOY → WOM 0.650*** 13.172 Do not reject
Goodness of fit (GoF) 0.455

Note. AWA = awareness; CSR = corporate social responsibility; ORI = origin; QUA = quality; POS = positioning; PRP = price premium; LOY = loyalty;
WOM = word‐of‐mouth.
***p < .01;
**p < .05;
*p < .10.

Consequences of price premium and loyalty propose the positive and
significant relationship with WOM.
It is worth noting that the outcomes of this research are consistent
in some ways with other studies. Awareness is a better predictor of
loyalty than price premium (Anselmsson et al., 2014). Awareness
appears not to influence price premium despite its relevance (Alnazer,
2013). However, this researcher suggests that price discounts are
more effective than price premium when the awareness of a brand is
low or even high. Awareness influences positively on consumer loyalty
in line with others studies applied to the food sector (Makanyeza,
2015) or in other fields (Akhtar et al., 2016).
As others authors have proposed, CSR is a component based on
ecological aspects (Mohr & Webb, 2005). Despite the fact that there
is a link between customer CSR perceptions and price premium for
food products (Kalogeras et al., 2009; Magnier et al., 2016), it was
not confirmed in this study. Some authors suggest that there must
be a positive attitude towards the environment to be more eager to
pay a price premium for organic products (Chakrabarti, 2010; Choe
et al., 2009). The influence of CSR on loyalty was confirmed, following
the proposal of other studies that recommend that managers must be
aware of this element as a key contributor in improving loyalty (Choi &
La, 2013). Thus, the findings of the current research are in line with
Mohr and Webb (2005), because environmental CSR affects loyalty
more strongly than the way price did.
Origin is a key element that influences consumer choice (Loose
et al., 2013), and it is important for the willingness to pay a price
premium (Ha‐Brookshire & Yoon, 2012; Hulland et al., 1996).
However, these relationships were not confirmed in this study. On
the one hand, some authors suggest that there is no direct association
between origin and loyalty. This link must be studied through brand
attitude (Esmaeilpour & Abdolvand, 2016). They even highlight that
the only component of origin that has an effect on brand attitude is
the technologic, which is not relevant in a product such as olive oil.
On the other hand, the effect of origin on price premium depends
mainly on two factors that generate positive or negative bias: product
category; and development of the country, primarily for technologic
goods (Becker, 2009; Drozdenko & Jensen, 2009). Specifically,
Xu et al. (2015) also discovered that fresh national packaged food, orig-
inal from Hawaii, did not impact on the consumer's willingness to pay.
The effect of quality on loyalty was supported in line with several
authors that test the direct relationship on products (Bei & Chiao,
2001; Erdogmus & Büdeyri‐Turan, 2012) or services (Jin et al., 2016;
Kim et al., 2013). However, adding quality to the equation does not
represent a strategic component of price premium in the model pro-
posed in agreement with others authors, despite its relevance consid-
ered by several authors (Kalogeras et al., 2009). Again, the product
category is a conditioner for this relationship (Drozdenko & Jensen,
2009).
The influence of positioning on loyalty was confirmed in this
study, as other researchers propose (Esmaeilpour & Abdolvand,
2016; González‐Benito & Martos‐Partal, 2012). However, the influ-
ence on price premium was statistically verified in consonance with
authors, such as Kalra and Goodstein (1998), Lauga and Ofek (2011),
or Netemeyer et al. (2004), who consider that those firms that work
on brand uniqueness and positioning tactics will be able to ask for a
higher price because customers will be willing to pay.
The relationship between price premium and loyalty was validated
following the proposal of other authors (Akhtar et al., 2016; Bei &
Chiao, 2001). Sayman and Hoch (2014) study the positive role of prices
on loyalty program rewards and their effect on consumer choice. Or
Bei and Chiao (2001) even suggest an additional indirect influence
through satisfaction. Despite the fact that there are some exceptions,
such as the proposal of specific personalized items that present a
maximum premium price to be recommended (Moon et al., 2008), it
is generally accepted the influence of price premium on WOM as it
was confirmed in this study. This relationship will be different depend-
ing on the product category or country's risk (Karjaluoto et al., 2016).
Finally, the effect of loyalty on WOM was validated in line with other
authors that propose this relationship from a theoretical perspective
(Dick & Basu, 1994); quantify this effect in sales (Kim et al., 2013); or
even prove a direct and indirect influence through satisfaction (Casidy
& Wymer, 2015, 2016). Additionally, this study is in conformity with
72
Rondán et al.'s (2006) paper that suggests a greater influence of loyalty
on WOM compared to price.
5.1 | Practical implications
This study opens relevant considerations in terms of strategic manage-
ment in production and cooperation with retailers. First, practitioners
in the food sector should devote special attention to quality‐based
not only on the product quality but also on service quality or even
appearance quality. For instance, firms should offer services such as
“better use of the product” or work on packaging presentation (Gómez
et al., 2015; McLeay & Oglethorpe, 2013). For managers of high‐
quality olive oil, the results of this research are also interesting. They
should work on projecting organic food as more natural and with a
better quality than the rest of the products (Chakrabarti, 2010). Origin
should also be emphasized in the food marketing actions in order to
create a positive attitude towards the brand, mainly focused on
advanced technology used in the production of this kind of product.
In some circumstances, locally made products are more favorable
evaluated than national products. Hence, this is another interesting
advice that marketing practitioners should take into consideration as
well as the origin of raw materials. All this information connected with
origin should be specified on the labels.
Companies should work on the connection between CSR and
origin for a better influence on price premium because of the positive
link that sustainability and “made in” represent in many cases. Taking
into account the importance of positioning for price premium, firms
should work in identifying unique features that allow projecting an
exclusive image of the olive oil product. Another important action
refers to the role WOM through opinion leaderships and social groups.
Due to the fact that social media is used to learn about any topic, viral
marketing through gastronomic bloggers or lifestyle programs on social
media must be used as a strategic tool to emphasize largely the brand,
or to improve its awareness among the consumers, or to inform
consumers about the ecologic nature, origin, quality, or differential
positioning of olive oil.
5.2 | Limitations and further studies
The findings presented in this research are constrained by some
limitations that offer opportunities for future research. First, the five
determinants or drivers of price premium and loyalty are widely used
in literature (Anselmsson et al., 2014; Jover et al., 2004; Kalra &
Goodstein, 1998; Magnier et al., 2016; Suri & Thakor, 2013); however,
other determinants could be considered. Second, this study focuses on
the analysis of the direct influence of the five determinants of price
premium and loyalty, despite the fact that there could be additional
factors, such as brand image between the five drivers and both
outcomes (Anselmsson et al., 2014). Third, quality has been measured
from a unidimensional perspective regardless of the complexity in food
products (Jover et al., 2004), and perhaps, it could have a multidimen-
sional character. Fourth, despite existing numerous price definitions
(Diallo et al., 2015), this research focuses on price premium.
In relation to future research, other constructs could be included
as moderator variables. For instance, social value consideration was
GÓMEZ ET AL.
rejected after the expert's evaluation. Future research could include
it because of its interrelation with CSR (Choe et al., 2009; Habel
et al., 2016). However, it should be contemplated as a moderator
variable, attempting to know the attitude towards the environment
of the participants. Additionally, Wang (2010) suggested that quality
has a stronger or weaker effect on buyer loyalty depending on
switching costs. Even though this concept can be more connected with
services or industrial products, it could be an interesting topic to
analyze its effect on food products.
Another relationship could be proposed after the literature review
for further study including new factors: (a) Satisfaction could be added
between quality and loyalty, price premium and loyalty, or loyalty and
WOM; (b) brand attitude could be added in the relationship between
quality and loyalty; (c) trust as a factor located between CSR and loyalty
and between price and loyalty (Mutonyi et al., 2016); (d) the influence
of satisfaction on loyalty through brand attitude; or (e) ethnocentrism
as a factor that intermediate between awareness and loyalty. Other
new relationships among the concepts analyzed in this study: (a) the
influence of CSR on perceived quality as a mediator towards loyalty;
(b) the effects of origin on perceived quality; or (c) the influence of
loyalty on price premium (Sayman & Hoch, 2014).
Finally, the role of packaging could be considered for further types
of research through a multigroup analysis, because of its positive influ-
ence on perceived quality of food products (Magnier et al., 2016).
Another proposal of multigroup analysis could be the study of different
perceptions from the distinction between manufacturer and retailer
brands, on account of the increasing competition of the last one
(Rondán et al., 2006; Verhoef et al., 2002).
ORCID
Mar Gómez http://orcid.org/0000-0002-7681-4794
David Martín‐Consuegra http://orcid.org/0000-0003-4927-6289
Estrella Díaz http://orcid.org/0000-0002-3380-5847
Arturo Molina http://orcid.org/0000-0002-6537-2468
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GÓMEZ ET AL.
Mar Gómez PhD is Associate Professor of Marketing at the Uni-
versity of Castilla‐La Mancha (Spain). Mar Gómez is responsible
for business placements for her faculty. Her research interests
are focused on services, retailing, relationship marketing, wine
tourism, and branding. She has presented several researches at
international conferences such as EMAC and AMS. She has pub-
lished in journals including the Business Research Quarterly, Interna-
tional Journal of Consumer Studies, International Journal of Tourism
Research, International Journal of Hospitality Management, Journal
of Destination Marketing & Management, Quality & Quantity, Studies
in Higher Education, and Tourism Management. She has won the
Extraordinary Doctorate Prize at the University of Castilla‐La
Mancha (2011).
David Martín‐Consuegra PhD is an Associate Professor of Mar-
keting at the University of Castilla‐La Mancha. His teaching and
research interests span market orientation, customer relationship,
business management, and services issues. His research has been
published in the European Journal of Marketing, Journal of Air Trans-
port Management, Journal of Travel & Tourism Marketing, Tourism
Management, Computers in Human Behavior, Journal of Business
Research, and the Internet Research. He is also the author and co‐
author of several books on marketing. He has won several awards
for his research.
Estrella Díaz PhD is an Associate Professor of Marketing at the
University of Castilla‐La Mancha (Spain). Her areas of research
include e‐business management, services sector, and channel dis-
tribution. Her research has been published in Computers in Human
Behavior, Tourism Management, Journal of the Operational Research
Society, and European Journal of Operational Research. She is also
co‐author of several books on marketing and has won several
awards.
Arturo Molina PhD is Associate Professor of Marketing at the Uni-
versity of Castilla‐La Mancha (Spain). His research interests are
focused on branding, market research, retailing, relationship mar-
keting, and tourism. He has published in journals including Annals
of Tourism Research, Current Issues in Tourism, European Journal of
Marketing, International Journal of Bank Marketing, International
Journal of Consumer Studies, International Journal of Tourism
Research, Journal of Destination Marketing & Management, Qualita-
tive Market Research, Quality & Quantity, and Tourism Management.
He has spent several periods of research at European, North
American, and Canadian Universities. He has won several awards
for his research.
How to cite this article: Gómez M, Martín‐Consuegra D, Díaz
E, Molina A. Determinants and outcomes of price premium and
loyalty: A food case study. J Consumer Behav. 2018;17:64–74.
https://doi.org/10.1002/cb.1692