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In recent years, the numbers of functional foods being developed and subjected to scientific evaluation have increased substantially. The main characteristic of functional foods that distinguishes them from conventional foods is the potential health benefit, which can be considered to be a credence attribute of product quality. Because this characteristic cannot be easily assessed even after consumption, an asymmetric information environment for health benefits has emerged where producers have more information than consumers. Thus the government intervenes by regulating the provision of health information on product labels in order to avoid potential market failures. The Food and Drug Administration (FDA) recently amended the way health claims on labels of conventional food and dietary supplements are managed. The new policy on qualified health claims allows claims to be made based on different levels of supporting scientific evidence. The policy goal is to encourage firms to make accurate, science-based claims about the health benefits of their products while helping consumers prevent disease and improve their health through sound dietary decisions using nutrition information. This marks a break from the previous environment where a lengthy approval process was argued to provide a road block for food firms wanting to market functional foods based on emerging evidence of diet to health links. This study has two objectives. First, to determine how consumers use health and nutrition information on food labels to form judgments about product quality, using the Elaboration Likelihood Model (ELM) as a theoretical framework. Second, to examine whether consumers can differentiate various levels of health claims, specifically the new qualified language, approved by FDA in 2003. It is interesting to determine whether consumers understand the different levels of scientific evidence supporting such claims and whether they can distinguish between the disclaimer languages used. Understanding how consumers use health and nutrition information on product labels has implications for both public policy and food manufacturers who use health claims as tools to market their products e.g., functional foods. This study used a still hypothetical functional food product a wheat cracker containing soy protein. It has been shown that soluble fiber and isoflavones, which can be found in wheat and soy products, respectively, independently help prevent the risk of several maladies including cancer and heart disease. A 5 (claim information on the front label a control condition and the four levels of qualified health claim) x 2 (information on Nutrition Facts) between-subjects factorial design was applied. Five versions of claim information were manipulated, including a control condition and four levels of qualified health claim. Each claim contained explicit relationships between nutrients and diseases i.e., isoflavones - heart disease and soluble fiber - cancers, but had different disclaimers explaining the level of scientific evidence supporting the claim. A report card was also included to inform consumers about the various claim levels, ranging from level A to D. Information on the Nutrition Facts panel was manipulated representing a "healthy" and an "unhealthy" version. Three hundred and seventy-two undergraduate students participated in the study, receiving extra credit for a Marketing class. Several multi-item scales are used as dependent variables, including attitude toward the product, buying intention, strength of evaluation about scientific studies to support claim, confidence about claim statement, perception of product's health benefit, and information search. A univariate analysis of variance (ANOVA) is conducted to test main and interaction effects among independent variables on a dependent variable. The results of this study suggest that consumers pay attention to information from all sources including the front label and Nutrition Facts panel. Even though it is shown that consumers react more positively to versions with health claims, there is no evidence to support the first hypothesis that consumers are more careful in evaluating product quality when health and nutrition information is present on the front package. Nevertheless, consumers are able to differentiate healthy products from unhealthy products, regardless of the presence of health and nutrition information on the front label. This study examines whether consumers understand and can distinguish various levels of qualified health claims. Although evidence suggests that consumers react differently to various claim levels, it is not clear whether people understand differences in the scientific support of these claims, as described in the disclaimer. Despite an increasing trend in attitude and purchase intention from the weakest claim (level D) to the strongest claim (level A), there is no statistically significant difference among claim levels when using measures of evaluation of strength of scientific studies, confidence about claim information, and perception of product's health benefit. From the public policy perspective, the results of this study can help determine how consumers evaluate health and nutrition information. It is shown that consumers do not overlook information from other parts of the label specifically the Nutrition Facts panel and that the presence of health and nutrition information on the front label is not likely to mislead consumers. The key issue here that needs further investigation is how to effectively provide information on the front label to consumers. FDA's goal is to permit the use of more, better, easily understood, and up-to-date scientific information about how dietary choices can affect consumers' health on food labels. It is important to identify optimal levels of qualified health claims, perhaps only two levels instead of four levels, so that consumers can distinguish and understand differences in terms of the scientific support for the claims and product benefits. As for the food industry, the results of this study can help food manufacturers decide what level of health and nutrition information they should provide to consumers. In addition to understanding the petitioning procedures for different claims, food firms must determine which, how, and when consumers understand and use health information in order to find the most efficient marketing communication channels.


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