Consumer Stigma and the Reputation Trap Hypothesis: An In-Store Experiment with Colorado Wines

Abstract

AbstractWe conducted an in-store experiment to test the hypothesis that Colorado wines may suffer from reputational stigma. The context relates to marketing challenges faced by novel wine regions entering the competitive retail environment, even in a local context, and the possibility of being stuck in a “bad reputation trap.” Adopting a 2×2 design where we varied region of production (Colorado vs. California) and grape variety (familiar vs. unfamiliar), we administered a between-subject information treatment that revealed the origin of production to only half of the participants. We measured taste perceptions using Likert scales, and we elicited valuation via a multiple price listing. Our results are consistent with the presence of stigma against wines produced in Colorado. In the discussion, we draw from the literature on stigmatized markets to suggest plausible strategies to remove or avoid stigma. (JEL Classifications: L1, L15, Q1, Q13)