Third party labeling and the consumer decision process: the case of the PGI European label

The objective of this research is to explore the decision-making process of consumers when faced with food products that have values-based labels. An experimental methodology was used to test the impact of a label of origin guaranteed by the European Union, the Protected Geographic Indications (PGI) label. Consumers' reactions to two different products were investigated with four different presentations: without a specific label, with a simple regional label, with both a regional label and the PGI label and, finally, with the previous two labels along with an explanation of the nature of the PGI label. Using a semiotic perspective and based on the existing model of brand equity, a framework of label equity was constructed. An experiment was devised that tested the framework on a sample of 488 consumers. Perceptions of two food products were tested using photographs of each with different levels of regional and PGI labelling. The perception of overall quality was found to depend on both the consumer's awareness of the label and the label's subsequent ability to generate positive descriptive and inferential beliefs. Label equity thus enhanced purchasing intention. The impact on overall quality and purchase intention only emerged, however, when the relatively unrecognised PGI label was explained to consumers, thus highlighting the importance of building awareness of a values-based label. When it was explained, the values-based label was shown to operate as an effective market signal that generated both descriptive and inferential beliefs in relation to the products bearing the label. These beliefs in turn explained consumers' perception of overall quality and influenced purchasing intention. By investigating the dimensions of label equity and by explaining the mechanism whereby values-based labels are perceived by consumers, this research offers firms a methodology for improving the commercial viability of values-based labelling schemes. Policy makers can also benefit from these insights to develop clearer understanding of how labels are actually interpreted by consumers. Finally, consumers – individually and collectively – will be better served by labelling schemes that incorporate an understanding of their perspective and thus reduce misinformation.no