Marketing implications based on contingent valuation and maximum likelihood estimates of consumers' willingness to pay for flowering Dogwoods that are resistant to powdery mildew

Powdery mildew is a disease affecting flowering dogwoods which can limit growth, detract from the appearance, and may cause plant decline and death. The dogwood is an important source of revenue for Tennessee's landscape nursery industry and the landscape industry in general. The University of Tennessee has developed a series of dogwood trees that are resistant to powdery mildew and is considering their commercial introduction. The feasibility of introducing a series of resistant trees depends to a large extent on consumer acceptance. Since the trees are not commercially available and growers require some indication of the demand before they are likely to produce the trees, estimates of the value consumers place on the disease-free trees are needed. This report summarizes a study of consumers' willingness to pay, in Tennessee, Mississippi, and Michigan, for a powdery mildew resistant tree. The goal is to provide information about marketing strategies for the introduction of the new tree. It is addressed in three parts. The first is to estimate the willingness to pay. The second is to estimate the willingness to pay as a function of homeowner characteristics. Third, results of the estimation are used to draw marketing implications. Analysis is based on the contingent valuation approach, which asks respondents (consumers) how much they would be willing to pay for products under specified conditions. An extension involves comparisons among goods or services that have slightly different bundles of characteristics, and respondents are asked to indicate how much more they are willing to pay. The present context is a comparison between a traditional dogwood tree, in a five gallon container, versus the same tree in terms of shape, size, and appearance, but powdery mildew resistant. On average, survey respondents indicated that they are willing to pay a $13.35 premium for a dogwood tree, in a standard 5 gallon container, that is resistant to powdery mildew. It is also important to note that this premium was measured at the retail level and reflects a cumulative effect, so that each agent in the supply chain cannot expect to receive this premium. Regression results led to inferences that the following variables had significant effects on the willingness to pay: presence of dogwoods in the respondent's yard, presence of dogwoods infected with powdery mildew in the yard, landscape expenditures, presence of flower beds, landscape satisfaction, criteria for selecting plants and trees, retail outlets where respondents shop for landscape materials, geographic location, and income. Marketing implications include the need to provide information at the point of sale and to interact with shoppers to determine characteristics of their yards.