Consumer attitudes to genetically modified food in Russia

Regards demographic and family characteristics of the individuals there are no any significant variables in this specification. It is important to note that model has not any irrationality in signs of the estimates.

The next specification used was the bivariate probit model. This model assumes that the first and the second responses differently affect individual`s WTA, so it were apart considered as two models. The parameter estimates are reported in Table 7.

Table 7.Parameter Estimates for Biprobit Model

* - p<0, 05; ** - p<0, 01; *** - p<0,001,

As in previous model we can interpret only significance and signs of the variables. From the table we can see that factors determining the first and the second responses are similar, excepting not big differences. So, domestic variable affects consumer response at the initial question. People who prefer domestic food products to imported goods are more skeptical about GMO and will consume it with less probability. Whereas factor of knowledge influences on the second answer of respondents. If an individual regards himself as well-known about GMO and biotechnologies, then his willingness to accept will be higher as a probability of purchase GM-bread.

The next significant factors have the identical impact on both consumer responses, so we interpret it together. According to biprobit specification, personal beliefs of Russian respondents concerning possible risk of GM-food consumption affect their WTA. So, if the individual perceives genetically modified products as risky, then there is less probability of choosing GMO and the bigger price reduction is required. The variable responsible for attitude regarding using of biotechnologies in food production is also significant. Respondents, who consider the use of biotechnologies as undesirable, have lower value of willingness to accept GM products and need higher discount. Finally, labeling determines WTA of Russian consumers. If an individual regards labeling as necessary for genetically modified products, then his willingness to accept will be lower.

Regards demographic and family characteristics there are no any significant variables as in previously specification. All signs before estimates are expected and logical.

Tables 8 and 9 represent results from the estimation for mean values of WTA. Willingness to accept from the first model has been received from doubleb STATA command as in paper by A. Lopez-Feldman (2012). WTA for the second model has been found using the formula introduced by Haab and McConnell (2002).

Table 8. Mean Value of WTA for 1st model

Table 9. Mean Value of WTA for 2nd model

The main conclusion is insignificant of estimates in both models. Hence WTA takes the zero value in both cases. These meanings of willingness to accept evidence of inappropriateness of suggested discount, which does not describe consumer behavior and does not satisfy its requirements. We can assume that Russian consumer`s willingness to buy GMO bread is small amount and required discount is more than 50% (the biggest suggested discount level) of initial price. This outcome is expectable, because of small-scale acceptance of GM bread in our survey (20, 3% including both: purchasing with and without reduction in price). The people who did not choose GM commodity at all are likely to reject it even if they were given away for free.

After the estimation we compared information criteria of both model specifications (see Table 10). These meanings testify that the better quality belongs to the first model, since meanings of Akaike`s and Schwarz's information criterion are lower.

Table 10. The comparison of information criteria

The building of different model specifications, matching and analysis of results, and also the estimation of the mean values of willingness to accept allow to test hypotheses and to draw conclusions.

Thus, the hypothesis about significance of negative impact of strict risk perceptions was proved. This feature of Russian GMO market coincides with markets of Japan (Grimsrud K. et al., 2003), China (Li Q. et al., 2002), USA (Kaneko N. et al., 2005) and Kenya (Kimenju S. et al., 2005). Nowadays, people from all countries tend to keep healthy lifestyle, to consume useful food and to avoid any disutility. Hence, concern about risk of GMO food consumption causes its rejection, despite the fact that there is no any precise evidence of its influence on people health.

Also there was confirmed hypothesis regarding significance of positive influence of individual`s self-reported knowledge level. Moreover this outcome corresponds with results from investigations conducted in China and Japan Actually, people awareness affects their attitude toward GM-food, since its harmfulness is a common stereotype. Doctors and scientists, which are familiar with recent researchers, have significantly positive attitude and does not avoid genetically modified products generally.

The next hypothesis that has been reasoned is about significance of a direct effect of individual`s attitude toward using biotechnologies in food production. Results from China and Norway (Grimsrud K. et al., 2004) researches proved the same conclusion. It is logically that respondents who prefer natural food production will tend to avoid genetically modified commodities in their consumer baskets. Moreover, the purchasing of ecologically clean food and food free from any supplements becomes popular. This tendency really decreases the demand of GMOs.

The significance of the labeling in our research was unexpected; however, this dependence is explainable and appropriate. People avoiding GMO in their consumption desire to know the composition of products, hence find it important to label genetically modified commodities. Furthermore, it is really relevance for Russian market, where the minority of producers attested their production as GMO-free.

The hypotheses regarding significance of social and demographic variables have been rejected. Thus, there was no impact on gender, age or income in our survey. Furthermore, any social characteristics have no influence on Russian willingness to accept. This result corresponds with findings from investigates conducted in the USA and Thailand (Yooyen A. et al, 2012). But it is necessary to distinguish results from the following paper, because of uniqueness. In contradistinction to American and Thai consumers, where WTA did not depends from individual characteristics because of overall adoption and readiness to purchase, Russian WTA is not sensible to socio-demographic variables due to wide common rejection and little awareness. So, consumers of all age categories and both males in Russia are trying to avoid genetically modified food, also income and employment status have no impact on purchasing decision generally. Concluded that Russian`s perceptions and attitude toward this product are strictly negative and did not affect by suggested price reductions or expected benefit.

The estimation of consumer`s willingness to accept genetically modified bread was the main task of the following research. The hypothesis about negative perception of GMOs has been confirmed by received results. The found WTA amount is equal to zero, because of inappropriate intervals. This conclusion coincides with findings from investigation conducted in Japan. There is similar percentage of people generally accepted GMOs in Russian and Japanese surveys - 20, 3% and 20, 2% respectively. To improve future investigations of WTA in Russia it is necessary to include much larger discounts (from 50% to 100%). Also, it could be real to comprise a fee to consume (i.e., a more than 100% discount).

Russia can be examined as a potential market for genetically modified bread or other products containing GMOs, in particular the consumer market in cities, since it was an object of our study. There are some features of the following market: firstly it is generally provided by large producers, secondly there are high fluidity and demand, and thirdly the availability of mass media sources and sales promotion. Taking into consideration these characteristics and results received from the study, derive the winning strategy of successfully entering of GM-products into the Russian market. There are two alternatives: creation a new product or expansion of existing production. Both need the same: conducting an advertising campaign directed on growth of consumer awareness toward GM-food safety and usefulness and on better familiarity of Russians concerning GM production technology and its advantageous impact on economical and environmental conditions. Also, the using of penetration pricing strategy of entering into the market is required, which supposes the setting of relatively low prices compared to competitive products. Anyway, there is much work for producer of genetically modified food products before entering the Russian market of GMOs, although the great potential of consumer demand exists.

Conclusion

The primary task of describing winning market strategies of entering GMO products on Russia market is more detailed analysis of consumer attitudes of Russian consumers toward these products. The following research investigated factors influencing willingness to accept GM-bread in Russia. Theoretical background analysis revealed the most relevance and appropriate approaches of investigation. The contingent valuation methodology was used, assumes the using of double-bounded dichotomous choice question for eliciting the value of WTA. Survey participants were asked about their willingness to buy GM-bread with a discount set at the one of a particular level: 5%, 15%, 25%, 40%, and 50% compared to non-GM bread without reduction in price. The construction of two econometric models was applied: likelihood function maximization using doubleb STATA command and bivariate probit model.

The results indicated that risk perceptions, attitude regarding use of biotechnologies in food industry, self-reported knowledge and importance of labeling are significant and determine consumer choice of GMOs, which matches the practice of the previous researches. The feature of Russian market is insensitivity of WTA to social and demographic variables, evidencing powerful impact of attitudes and perceptions and their ubiquitously among different population segments. The zero meaning of willingness to accept GMO demonstrated low value of such products to Russian consumers - about 80% of respondents rejected genetically modified bread alternative. Also, there are inappropriate price reductions were used, then it is required to use higher discount levels.

Comparing the described situation with the conditions on the GM markets of other countries, we can say that Russia has relatively unfavorable circumstances for development of production and purchasing of GMO. This resembles with Japanese and European Union markets and opposite to American and Chinese markets of GMOs. Such diversity explained by contradistinction in legislation toward producing and consumption of GM-food products, mentality differences and inequality of development level.

The represented results characterize the sample only from a Perm city, however could be informative and helpful to any firm entering the Russian GMO market. First of all, this study introduces the basic preferences of ordinary consumer concerning choice of products, in conditions of existence such alternative as more available commodity with genetically modified components. Thus, it was determined the winning strategy of GMOs producers to enter the market with minimal loses and highest benefits. So, it should consist of the following directions:

1. Increasing of Russian consumer`s awareness regarding GMO and using of biotechnologies;

2. Expansion of people knowledge toward actual impact of GMOs on human health and environment condition;

3. Provision of information concerning economical benefits and possible functional attributes of genetically modified products;

4. Conducting of marketing events directed to GM-food adoption among Russian buyers;

5. Using the strategy of penetration pricing, allowing great demand at the entering, due to relatively low prices;

6. Preservation of reduced prices for better competitiveness.

Furthermore, the results from the following investigation could be helpful for companies, producing natural food products, free from any supplements. There is high concern about healthy and usefulness of food in Russia, accordingly to the survey. Thus, the favorable positions for development of healthy food industry take place, which could be further strengthened by promotion. Marketing strategy of such companies need to include positioning their production as risk-free. Also, it is important to approve that production does not contain GMO components, despite the expensive procedure performing this.

However there are some problems we confronted with. First of all, small-scale positive response on GMOs purchasing obstructed estimation of willingness to accept. Due to the fact that people value of such products were greatly lower than expected, the discount levels were unsuitable. Further investigations require the expansion of discount set - from 5% to 100% or above 100%. Secondly, there is potentially biasness of consumer choice, because of hypothetically of investigated market. So, we can assume that in condition of real market individual`s behavior toward choosing of discounted GM-food could be less skeptical. Such outcome could be explained by dishonesty or delusion of respondents, based on their desire to be healthier and to consume only useful products. The anonymity of the choice decision (without any supervision) could detect that in fact people are ready to sacrifice their perceptions and lifestyle to save money. Hence it is interestingly to conduct a survey in conditions of market experiment for more precise estimation.

To sum up, it is necessary to note that the following paper brings an appreciable contribution in the area investigating consumer acceptance of genetically modified food products in different countries. The following investigations provides an estimate of Russian consumer`s WTA for GM-food, explains the significant factors affecting this value and the direction of its influence, and draws up a winning strategy of entering the Russian market for GM producing companies. Moreover, there are recommendations and assumptions for improvement of future researches outcomes.

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