A Study Of The Price Premium Commanded By Organic / Natural Shampoos

• Main Authors: Jessica Kuo, 郭彥君
• Other Authors: Dr Edward Hsieh
• Format: Others
• Language: en_US
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/38610587548326053345

碩士 === 國立臺灣大學 === 企業管理碩士專班 === 100 === The primary objective of our research was to determine whether there is a price premium in relation to organic / natural labeled shampoo. We also wanted to examine whether the organic / natural shampoo brands that command higher price in fact tend to comply with stricter organic certifications. Our sample data consisted of thirty different brands of organic or natural shampoo and thirty different brands of conventionally labeled shampoo. By applying a quantitative methodology, we found that the average price per milliliter of organic or natural labeled shampoo was almost four times higher than conventionally labeled shampoo. Based on our results, we also see that the organic or natural shampoo brands owned by listed companies are able to command an average price per milliliter that is around 1.5 times higher than the brands owned by non-listed smaller companies. We suggest that the organic or natural shampoo brands owned by listed companies use price as a signal of superior quality. On the other hand, the brands owned by smaller companies tend to use lower price and or organic / natural certification on their shampoo product to effectively compete. We also found that it was not generally the case that organic / natural shampoo brands commanding higher price complied with stricter organic certification standards. In fact, 77% of the organic / natural shampoo brands that command above average price per milliliter did not have any organic certification. This suggests that many shampoo brands commanding higher price may in fact just be “organic or natural inspired” brands and not truly organic or natural. Despite a reasonable sample size of thirty products from the organic and nature category and thirty products from the conventional category, our research data is still limited by two factors being location and time. Location: our sample data was collected in Taiwan, the results may vary if data from another country is used. Time: our price data reflected only the specific time of research period in 2012, not the historical price or future price of the shampoos. The discoveries of our research clearly reveal the practice and the trend of the product and pricing strategies from organic / natural shampoo brands and thus may provide insight to those companies seeking to enter the continually growing organic and natural personal care products industry. It may also help existing organic / natural shampoo brands, in particular Taiwanese brands, to assess their strategy in relation to pricing, organic certification or brand image. Finally, the results may also help consumers with their purchase decision regarding organic or natural shampoo.