CONSUMER PREFERENCES FOR FRESH GRAPEFRUIT: FRUIT AND PACKAGE SIZE AND RESPONSE TO PRICE LEVEL. Parr Rosson and Robert Branson.

Transcription

1 A REPORT FROM C t's Texas ;11 Consumer Survey CONSUMER PREFERENCES FOR FRESH GRAPEFRUIT: FRUIT AND PACKAGE SIZE AND RESPONSE TO PRICE LEVEL Parr Rosson and Robert Branson June 1979 ",',1r THE TEXAS AGRICULTURAL MARKET RESEARCH AND DEVELOPMENT CENTER ~ in cooperation with The Department of Agricultural Economics The Texas Agricultural Experiment Station Texas A&M University

2 THE TEXAS AGRICULTURAL MARKET RESEARCH AND DEVELOPMENT CENTER An Education and Research Service of The Texas Agricultural Experiment Station and The Texas Agricultural Extension Service The purpose of the Center is to be of service to agricultural producers, groups and organizations, and governmental agencies, as well as processing and marketing firms in the solution of present and emerging marketing problems. Primary emphasis is given to research and educational activities designed to improve and expand the markets for food and fiber products of present or prospective interest to Texas agriculture. Analyses are also directed toward an analysis of consumer food and fiber needs. The Center is staffed by a basic group of professional agricultural and marketing e~onomists from both the Experiment Station and Extension Service. In addition, support is provided by food technologists, statisticians and specialized consultants as determined by the requirements of individual projects. Robert E. Branson Coordinator i i

3 PREFACE The research report herein pertains to questions of interest to the Texas citrus industry. It is faced with decisions as to the sizes and quajity of fruit and packaging that most appropriately serve consumers' needs. Without consumer information arid industry guidance, for example to package sizes, an undue number of package sizes results causing marketing costs to unnecessarily increase to the cost disadvantage of both producers and consumers. The Texas Consumer Survey was developed in 1978 as a means of obtaining current readings as to consumer preferences, opinions and interests regarding agricultural food and fiber products and methods of marketing them. The Texas Consumer Survey is a probability sample of Texas households designed to reflect the composite views of all Texas consumers as well as particular market segments of the total population. Periodic surveys are planned to measure changes in consumer food and fiber product marketing needs as well as to address new problems as they arise. Appreciation is expressed to the Texas Valley Citrus Committee for their cooperation in the study. Linda Short, Madeline Stiles and Cheri McBurnett, research technicians, and Johnnie Stanford, secretary, in the Center and D. L. Hawkins, computer programmer, of the Department of Agricultural Economics deserve special credit for their contribution to the research. iii /

4 TABLE OF CONTENTS Page SUMMARY FINDINGS AND RECOMMENTDATIONS ix INTRODUCTION CONSUMER BUYING PATTERNS FOR GRAPEFRUIT 2 General Buying Behavior.. 2 Household Income Effect on Grapefruit Buying 2 Urbanization Effect on Grapefruit Purchasing. 2 Consumer Income Relationship to Buying Patterns for Bulk and Bagged Grapefruit Urbanization and Purchase from Bulk Grapefruit Displays 5 BEHAVIOR PATTERNS IN BUYING FROM BULK DISPLAYS 9 Number of Fruit Bought per Purchase 9 Fruit Size Preference. 9 Consumer Size Perceptions 14 Smallest Acceptable Fruit Size. 14 CONSUMER PURCHASE BEHAVIOR REGARDING BAGGED GRAPEFRUIT Consumer Preference for Bag Sizes EFFECT OF PRICE ON EXPECTED CONSUMER PURCHASES 23 Bulk Display Purchases Bagged Fruit Purchases Price Elasticity of Demand for Grapefruit 26 v

5 LIST OF TABLES Table Page Grapefruit Purchases: Texas Consumer Survey, Total and by Household Income, November Purchase of Grapefruit by Urbanization, Texas Consumer Survey, November Households Purchasing Grapefruit: Bulk Display Versus Bagged Purchases by Household Income, Texas Consumer Su rvey, Novembe r Purchase of Bulk Versus Bagged Grapefruit, Su rvey, November Texas Consumer. 7 5 Households Purchasing Grapefruit: Bulk Display, Bag, and Percent of Purchases, Texas Consu!"er Survey, November Households Buying Bulk Grapefruit by Number of Fruit Usually Purchased and Household Income, Texas Consumer Survey, November Households Buying Bulk Grapefruit by Number of Fruit Usually Purchased and Sample Area, Texas Consumer Survey, November Average Number of Grapefruit Bought per Purchase from Bulk Displays by Household Income, Texas Consumer Survey, November Household Preference for Individual Grapefruit Sizes by Household Income, Texas Consumer Survey, November Household Preference for Individual Sample Area, Texas Consumer Survey, Grapefruit Sizes by November Household Perceptions and Preferences for Individual Grapefruit Size, Texas Consumer Survey, November Households Buying Grapefruit: Acceptable on Special Sale and Income, Texas Consumer Survey, Smallest Size Fruit in 10 Pound Bag, by Household November Households Purchasing Bagged Grapefruit: Size of Bag Bought by Household Income, Texas Consumer Survey, November vi

6 LIST OF TABLES (continued) Table Page 14 Bagged Grapefruit Purchases: Proportion of Total Pounds Purchased by Size of Bag and Household Income, Texas Consumer Survey, November Grapefruit Purchases: Bulk and Bag Display by Volume and Percent Composition, Texas Consumer Survey, November Grapefruit Container Count, Texas Average Number of Grapefruit Households Said They Would Buy per Week at Prices of 20 and 10 Each, by Sample Area, Texas Consumer Survey, November Average Number of Grapefruit Households Said They Would Buy per Week at Prices of 20 and 10 Each, by Household Income, Texas Consumer Survey, November 1' Average Number of Times per Month Grapefruit Would Be Bought in Five Pound Bags at 98 and 49, by Household Income, Texas Consumer Survey, November vii

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8 SUMMARY FINDINGS AND RECOMMENDATIONS * A statewide sample survey of 300 Texas consumers was completed in November Included were several questions relating to marketing of Texas fresh grapefruit. * Objectives of the questions regarding citrus included the foj1owing: I. Determine the proportion of Texas households buying bulk versus bagged grapefruit. 2. Obtain information as to consumer preferences regarding the sizes of fresh grapefruit. 3. Seek a reading as to sizes of bags desired for fresh grapefruit. 4. Find a measure of the possible ~esponse of consumer purchases to changes in retail grapefruit prices * Sixty-nine percent of the Texas households buy fresh grapefruit. * About two-thirds of the Texas consumers of grapefruit buy from bulk displays only. * About a fourth of the Texas consumers of grapefruit buy the fruit only in the bagged form. * Some tendency was found for more of the lower middle income households to use fresh grapefruit than high income households. This may reflect wider use of other fruits by high income consumers. * More rural households were grapefruit users than large city dwellers. This and the preceding finding suggest continued need to promote grapefruit use by large city, high income consumers. * Upper income consumers in large metro cities purchased grapefruit from bulk displays more than did other buyers. ix

9 Summary--continued * Fruit size preferences were generally for the medium to large size fruit: that is sizes 96 to 64, or about 3.75 to 4.5 inches in diameter. Size 112 fruit, near 3.3 to 3.6 inches, was preferred by only about 4 percent of the households. * Generally speaking the smaller size grapefruit that was acceptable in bulk displays was 3.5 to 3.75 inches in diameter or comparable to size 96. * The smallest acceptable fruit size for bagged fresh Texas grapefruit was reported to be about 3.0 to 3.25 inches in diameter or a 112 to 126 size. * Bag sizes preferred for fresh grapefruit were 5 pound bags, by 68 percent of bagged fruit buyers, while 18 percent desired an 8 to 10 pound bag. Only 8.7 percent said they bought the 18 pound size bag. On the basis of these findings, it appears that a retail store market test of bag sizes would be advisable to determine what sizes would meet best with consumer preferences and maximize consumer purchases. * Although the amount of bagging of bulk fruit by retail stores is not known, at least the proportion shipped in bags from the Texas Valley may be below the indicated levels desired by consumers. * Consumers indicated that more fresh grapefruit would be purchased at 10 cents than at 20 cents per fruit from bulk displays. The average for a 20 cent price was 4.4 fruit per week. At 10 cents, the amount increased to 5.2 fruit per week. t, With a price of 98 cents for a 5 pound bag, grapefruit would be bought an average of 1.8 times per month. At 49 cents per bag, grapefruit would be purchased an average of 2.5 times per month. x

10 Summary--continued The above price responses estimated by consumers reveal an interesting difference in response by bulk versus bagged fruit buyers. Response to the price reduction for bagged fruit may be twice as large, having a demand elasticity of -0.45, as that for bulk fruit where the demand elasticity is only In other words, a 10 percent price reduction.on QCiggedfruit would increase retail sales by 4.5 percent, whereas the same drop in bulk fruit price would increase retail sales by only 2.2 percent. These tentative conclusions suggest the need for retail tests to be made to see if these differences are borne out. If they should be, it suggests that lowering of prices on bagged fruit results in more sales increases and is a better marketing strategy than a comparable price reduction for bulk fruit. xi

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12 INTRODUCTION It is important to periodically examine the marketing strategy followed for Texas fresh grapefruit sales. Texas' 46 million dollar citrus industry accounted for 16.6 percent of the nation's grapefruit production in 1977.!I About half of Texas' 1978 grapefruit p~oduction was sold on the fresh fruit 2 market. / The objective of this report is to examine the effectiveness of grapefruit packaging by the industry, as well as to look at various grapefruit sizes permitted to enter the fresh market under the market order in comparison to consumer preferences. And, finally a test is made of the effect of grapefruit price changes on quantity purchased. This research report is based on the result of a statewide Texas consumer survey conducted between August 2~ and November 2, Three hundred households were surveyed by teleph~ne interview. Consumer perceptions of selected aspects of citrus, beef, and milk marketing were included in the survey as well as various consumer issues about foods today. Only those results pertinent to the citrus industry are addressed in this report. The survey objectives with respect to citrus were as follows: 1. Determine the percentage of Texas households buying bulk versus bagged grapefruit. 2. Obtain consumer preferences as to the sizes of grapefruit bags purchased. 3. Find the possible effect of price changes on the purchase of bulk and bagged grapefruit. Associated or related questions were: 1. Do consumers evidence a demand for size 112 grapefruit? 2. Will marketing grapefruit only in 5 and 18 pound bags adequately serve consumer market preferences? This question is important because of scheduled changes in the marketing order as to sizes that can be shipped Texas County Statistics, U.S. Department of Agriculture and Texas Department of Agriculture, October 1978 and 1977 Texas Agricultural Cash Receipt Statistics, U.S. Department of Agriculture and Texas Department of Agriculture, September /Texas Valley Citrus Committee, Final Report, McAllen, Texas, June 22, 1978.

13 2 General Buying Behavior CONSUMER BUYING PATTERNS FOR GRAPEFRUIT Of the statewide sample of 300 Texas households surveyed, 69 percent purchased grapefruit, Table 1. About two-thirds of the buyers said they select grapefruit only from bulk displays, whereas 27 percent buy only bagged grapefruit. less than 5 percent buy sometimes from bulk displays and at other times in bags. Household Income Effect on Grapefruit Buying There is a tendency for slightly more lower income households to buy grapefruit. Eighty percent of the hous~holds in the lower income class said they purchased fresh grapefruit compared with only 64 percent in the upper income category, Table 1. However, this does not necessarily mean that the total quantity purchased by lower income households was larger. However, it does suggest that a marketing strategy might be developed to focus on the lower income households market to take advantage of their interest in buying grapefruit.. The top income group in terms of the market share of households buying is the weakest segment since a third of them did not buy grapefruit (Table I). Suggested is the need for further research to determine the reasons these consumers are not buying grapefruit. Such information could be used to design effective market development activities for that part of the market. Urbanization Effect on Grapefruit Purchasing Rural areas reported the greatest proportion of households purchasing grapefruit, Table 2. The 74 percent buying was significantly greater than the 64 percent in the SMSA cities. lower inclination to buy by high income households may be also reflected here.

14 3 Table 1. Grapefruit Purchases: Total and by Household Income, Texas Consumer Survey, November Annual Household Buying Not Buying Total Income Percent percent of households----- Under $10, (13.2) (13.2) $10-19, ( 9.9) ( 9.9) $20-29, ( 6.9) ( 6.9) $30,000 and over ( 9.2) ( 9.2) ~- Total State ( 4.4) ( 4.4) Sample size = 300 households in statewide consumer telephone survey. as. e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

15 4 Table 2. Purchase of Grapefruit by Urbanization, Texas Consumer Survey, November ~ Area Buy Don't Buy Total Percent --percent of households- Metro S.e. a 67 ( 8. 1) 33 ( 8.1) SMSA 64 ( 7.8) 36 ( 7.8) Rural S.e. 74 ( 7.2) 26 ( 7.2) Total state 69 ( 4.4) 31 ( 4.4) Sample size = 300 households buying grapefruit in a statewide survey. as. e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

16 5 Consumer Income Relationship to Buying Patterns for Bulk and Bagged Grapefruit Whereas bulk displays served 69 percent of all households purchasing grapefruit; Table 3, the greatest proportion of households bu7ing bulk fruit, 80 percent, were in the top income cagegory, Table 3. This porportion was significantly greater than 62 percent in the lower income group using bulk displays. This underlines the importance of a marketing strategy that attracts maximum bulk sales from the higher income ($30,000 and over) groups. Urbanization and Purchase from Bulk Grapefruit Displays A significantly smaller proportion of metro households (63 percent) bought grapefruit from bulk displays, Table 4. the major metropolitan areas: These were households in Houston, Dallas-Ft. Worth, and San Antonio. Interest in buying bagged grapefruit, on the other hand, was strongest in these major city markets. This lends importance to the proper selection of bag sizes for these large population centers, Table 4. It appears that this is an area of marketing that needs research evaluation of alternate strategies so maximum sales demand can be achieved. Sixty-three percent of the households making bulk grapefruit purchases did so percent of the time, Table 5. Another 2 percent bought bulk between 67 and 99 percent of the time. Therefore, in total about twothirds of the households were consistent purchasers from bulk display. Bagged grapefruit were purchased by about one-third of the households and 80 percent of these bought only the bagged fruit, Table 3. The bagged fruit was identified slightly more with the lower income category where 38 percent of the households made purchases, Table 3. Nonetheless sales of bagged fruit were important at all income levels. were the strongest market for bagged purchases. bought the bagged fruit, Table 4. The major metro areas In those cities, 37 percent

17 6 Table 3. Households Purchasing Grapefruit: Bulk Display Versus Bagged,~ Purchases by Household Income, Texas Consumer Survey, Nov Annual Percent Bulk Bagged Total Household Buying Display Display Percent Income Grapefrui t --percent of households- Under $10,000 a 80 (13.2) 62 ( 9.3) 38 ( 9.3) $10-19, ( 9.9) 70 ( 7.0) 30 ( 7.0) $20-29, ( 6.9) 73 ( 9.5) 27 (9.5) $30,000 and over s. e. 64 ( 9.2) 80 (13.2) 20 (13.2) Total state 69 ( 4.4) 69 ( 5.3) 31 ( 5.3) Sample size = 208 households which bought grapefruit. as e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa r j sons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

18 7 Table 4. Purchase of Bulk Versus Bagged Grapefruit, Texas Consumer Survey, November Area Bulk Bag Total percent percent of households- Metro a ( 7.9) ( 7.9') SMSA ( 7.4) ( 7.4) Rural ( 7.4). ( 7.0) /~ Total State (4.3) ( 4.3) Sample size = 300 households purchasing grapefruit in a statewide survey, as. e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa risons Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

19 8 Table 5. Households Purchasing Grapefruit: Bulk Display, Bag, and Percent of Purchases, Texas Consumer Survey, November 1978 Percent Purchases from Indicated Display Bu'l k Frui t Display percent of households- Bag Frui t Display,a b ( 5.6) ( 5.1) ( 1.8) ( 1. 4) S.e. ( 0.8) ( 0,8) ( 1. 4) ( 1. 8) s. e. 0.0 ( 0.8) Sample size = 208 households purchasing grapefruit in a statewide sample of 300 households. alncludes all sizes of bags: 5, 8, 10 and 18 pound. Two households that bought from overwrap trays are excluded from the data. bs e = Probable sampling error, or 1.65 standard errors, which Is equivalent to 95 percent confidence level for single tail distribution compar i sons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

20 9 BEHAVIOR PATTERNS IN BUYING FROM BULK DISPLAYS Number of Fruit Bought per Purchase About a third of the households reported buying two grapefruit at a time from bulk displays. Another third took three grapefruit at a time, Table 6. Only one in five households bought four or more fruit per purchase. There was no significant difference in the number of fruit purchased according to the location of the household in terms of rural, city or large metro area, Table 7. Statewide an average of about four fruit were bought per purchase, Table 7. Neither did household income appreciably affect the number of fruit taken per purchase, Table 8. Fruit Size Preference By far the most popular grapefruit size was the medium diameter fruit, 3.75 to 4.00 inches in diameter. Almost 60 percent of the buyers selected that size, Table 9. box. This size is equivalent to the pack per bushel A third of those buying bulk display grapefruit selected the large, 4.0 to 4.5 inch size, or the equivalent of a 64 pack per bushel box. Only about one buyer in 25 selected size 112 fruit, 3.3 to 3.6 inches in diameter. For the Texas market, this indicates that the s find very little market when sold as bulk fruit, Table 9. The upper income households, as would be expected, showed the greatest preference for large (size 64) fruit. Almost 98 percent of the households in that group bought either medium or large grapefruit, Table 9. This proportion was significantly larger than the 82 percent of the households in the lower income group. The size 112 fruit had most acceptance among the low income households, but even there it was only about one buyer out of ten, Table 9.

21 10 Table 6. Households Buying Bulk Grapefruit by Number of Fruit Usually Purchased and Household Income, Texas Consumer Survey, November 1978 Annual Household Income Number of Gra~efruit Usually Bought & over Total Percent - percent of households - Unde~ $10, (].7) (14.8 (15.5) (3.6) (2. 1 ) (6.2) $10-19, (l. 3) (11. 8) (11.5) (10.3) (1.3) (1.8) $20-29, (15.0) (14.3) (7.9) (5. ]) $30,000 & over (6. ]) ( 7.7) (19.4) (12.8) (6.1) Total state (2.3) ( 7.2) ( 7.0) ( 5.4) (0.8) (2.9) Sample size = 142 households purchasing grapefruit from bulk display in a statewide survey of 300 households. as e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa r i sons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

22 II Table 7. Households Buying Bulk Grapefruit by Number of Fruit Usually Purchased and Sample Area, Texas Consumer Survey, November 1978 Number of Fruit Usually Hetro SHSA Rural Total State Purchased - percent of households ~, a (6. I ) ( 3. 1) ( 2.3) {12.7} (12.2) (10.7) ( 7.2) {12.8} (11.5) ( 9.9) ( 7. J) ( 8.5) ( 8.5) (10.0) ( 5.4) { 4.2} (.8) ( 5.6) ( 3.6) ( 5.9) ( 2.9) Total percent Sample size = 142 households purchasing grapefruit from bulk display in a statewide telephone survey of 300 households. as. e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Harket Research and Development Center, Texas Agricultural Experiment Station.

23 12 Table 8. Average Number of Grapefruit Bought per Purchase from Bulk Displays by Household Income, Texas Consumer Survey, November 1978 Annual Household Income. Grapefrui t Purchased -number Under $10,000 a $10-19,999 s,e. $20-29,999 $30,000 & over s,e. Total 4.0 (0.7) 4.3 (0.4) 3.8 (0.8) 4.2 (1.9) 4.4 (0.5) Sample si 2e = 142 households making bulk grapefruit purchases in a statewide survey of 300 households. as e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

24 13 Table 9. Household Preference for Individual Grapefruit Sizes by Household Income, Texas Consumer Survey, November, 1978 Annual Household Income Size Preference no very large medium sma II very prefer- Total large (46) (64) (80-96) (l12) sma II (126) ence Percent percent of households Under $10,000 a 7.7 (8.4) 19.6 (8.4) 62.2 (15. J) 10.4 (9.3) $10-19, (2.6) 40.2 (9.7) 56.7 (9.7) 1.3 (I. 3) $20-29, (5.6) 29.7 (10.3) 59.9 (12.2) 2.7 (4. I ) 2.7 (4.1) $30,000 & over 2. 1 (4.9) 43. I (17.3) 54.8 (16.0) Total state 3.7 (2.1) 32.6 (5.6) 59.3 (5.9) 3.7 (2.1) 0.6 (I 0) Sample size = 208 households purchasing grapefruit in a statewide survey of 300 households. a s e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

25 14 There were no significant differences among households in the rural, city and metro areas concerning their preferences for individual fruit sizes, Table 10. Consumer Size Perceptions An effort was made to determine consumers' perceptions of grapefruit sizes. Their perceptions were fairly consistent with their preferences, Table 11. To the majority, small fruit meant 3.0 to 3.5 inches in diameter, or about the 112 size fruit. Two thirds of the households preferring medium fruit saw their range as being 3 to 5 inches. Host thought this was 4.0 to 4.5 inches, which is possibly on the high side for medium size fruit, which for purposes of "thi's report were considered to be 3.75 to 4.00 inches in" diameter, Table 11. large grapefruit Were viewed as being moderately accurate perceptions of medium size grapefruit, Table 11, 4.5 to over 5.0 inches across and largely the latter size. Since size is not a subject which is easy to mentally depict, it is considered that the ability of consumers was rather good for grapefruit. Smallest Acceptable Fruit Size Generally speaking the smallest acceptable fruit size was between 3.5 inches (size 96) and 3.75 inches or larger, Table 12. The lower income group would accept size 96 fruit by a wider margin than the other income groups. This tends to support the earlier indications concerning the marketing of small fruit. Research designed to seek specialized markets for size 112 and smaller fruit is still worthy of high priority consideration. Otherwise premature price declines for all fruit sizes can result due to over supplying usual fresh fruit market outlet demand.

26 15 Table 10. Household Preference for Individual Grapefruit Sizes by Sample Area, Texas Consumer Survey, November 1978 Fruit Size Preferred Metro SMSA Rural Total State - - percent of households " very ~a rge (46) a (3.6) (3.7) (4.3) (2.1) 4-4.5" large (9.9) (9.4) (9.2) (5.6) " ~ medium (80-96) (10.2) (l0.0) (9.5) (5.9) " small (112) s. e. (3.6) (3.7) (4.3) (2. 1 ) 3-3.3" very small (126) S.e. No preference 1.6 (2.6) 0.6 Total percent Sample size = 300 households buying grapefruit in a statewide survey of 300 households. a s. e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

27 Table 11. Household Perceptions and Preferences for Individual Grapefruit Size, Texas Consumer Survey, November 1978 Household Size Preference Under 3-3 1/2" 3 11 (very sma II) Household Size Perceetion a 3 1/3 3 3/ /3" 4" 4 1/2" (sma 11) (medium) (large) 4 1/2 5" (very large) over 5" Total Percent Household Preference b percent of households Very small (3-3 1/3") c Sma 11 (3 1/3 3 2/3") s.e. (23.9) (31.0) (23.]) (2. 1) Medium (3 3/4-411) (4.2) (5.6) (4.4) (7.9) (4.6) (6. n (5.9) (7'\ Large (4-4 1/211) (5. 1) (5.9) (9.0) (5.2) (11.0) (5.6) Very large (4 1/ ) (23.9) (].5) (21.0) (29.0) (2. 1 ) Sample size = 208 households purchasing grapefruit in a statewide survey of 300 households. arespondents were asked for their estimate in inches of the grapefruit size they preferred: very large, large, medium, small, very small. bproportion of households preferring each indicated grapefruit size: very small-very large. Should not be confused with consumer perception percentages. cs. e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas,gricultural Experiment Station. ) / i

28 17 Table 12. Households Buying Grapefruit: Smallest Size Fruit Acceptable on Special Sale and in 10 Pound Bag, oy Household Income, Texas Consumer Survey, November, 1978 Annual Household Income Smallest Fruit Size Acce2table (J 26) ( 112) {96} Larger Donlt Total Other than Know Percent " percent of households Under a $10, (10.6) 5.5 (5. 1 ) 70.7 (13.9) 2.7 (2.3) 0.9 (1. 3) $10-19,999 s. e (8.0) 20.0 (8.0) 43.8 (10.0) 9.7 (5.9) 3.6 (3.9) 3.6 (3.9) $20"29, (11.0) 14.8 (8.5) 42.0 (11.]) 10.4 (7.7) 7.5 (6.7) $30,000 & over 20.8 (16.8) ) 41.8 (20.3) 11.4 (12.9) 4.9 (6.5) 4.6 (6.9) Total S.e. state 19.3 (4.9) 16.8 (4.6) 45.9 (6. 1) 8. 1 (3. J) 2.0 (1.8) 7.2 (3.3) Sample size = 208 households buying grapefruit in a statewide survey of 300 households. a s. e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

29 18 CONSUMER PURCHASE BEHAVIOR REGARDING BAGGED GRAPEFRUIT Consumer Preference for Bag Sizes Two-thirds (68.2 percent) of the Texas Consumer Survey households bought bagged grapefruit in 5 pound bags, Table 13. Eighteen percent purchased an 8 or 10 pound bag. Only 8.7 percent said they bought grapefruit in 18 pound bags. A telephone survey among metro area retail chain grocery stores and produce wholesalers revealed that a 10 pound bag had not been used for grapefruit. Therefore, the almost 11 percent of the households who indicated grapefruit was bought in 10 pound bags was confusing it with the 8 pound size. The survey also indicated that about 20 percent of the fruit volume had been packed or repacked. into 8 pound bags. Combining the 8 and 10 pound size answers result in about 20 to 25 percent of the bagged fruit purchases being made in that size, Tables 13 and 14. Two out of three of the households in the top income group favored the intermediate size bags (8 or 10 pound), Table 13. This proportion is significantly greater than the 37 percent in the $29,999 group that bought intermediate bags, or the 12 percent among the $10,000 to $19,999 income households. The identification of this important high income market segment use of the 8-10 pound bag substantiates the importance of an intermediate bag size to serve the high income group. Calculations were made to interpret the importance of the 5 and 8 pound bags in terms of total fresh market sales in Texas. One can assume that purchases of bulk fruit were made once a week (averaging 4.5 fruit per purchase), once a week for the 5 and 8 pound bags, and once every two weeks for the 18 pound bag. If this is a reasonable ratio, then 32 percent of the fruit would be bought in 5 or 8 pound bags, with the latter accounting for more than half of that amount, Table 15. Comparison of the consumer preferences with actual shipments for reveals only about 12 percent of the fresh market supply moving in 5-8 pound bags, Table 16. Such a discrepancy may indicate a need to re-evaluate the bag sizes from the viewpoint of what combination of sizes will maximize consumer demand. Consumer demand versus orders by the food marketing firms may have inadvertently gotten out of phase with one another.

30 19 Tab Ie 13. Households Purchasing Bagged Grapefruit: Size of Bag Bought by Household Income. Texas Consumer Survey. November 1978 Annual Bag Size Household 5 lb 8 lb 10 1 b 18 lb,other Income Total Percent percent of households Under $10, a (10.8) (10.8) $ (13.3) (9. 0) (6.4) (8.5) $ (14.4) (9.7) ( 12.8.) (0.0) (]. 1 ) /'"~ $ & over (0.0) (11.8) (0. 0) (1J. 8) Total state I (9. ]) (5.7) (6.6) (5.7) (4.4) Sample size; 64 households making bag grapefruit purchases in a statewide survey of 300 households. as e.= Probable sampling error. or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa r i sons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

31 20 Table 14. Bagged Grapefruit Purchases: Proportion of Total Pounds Purchased by Size of Bag and Household Income, Texas Consumer Survey, November 1978 Annual Bag Size Houshold Income 5 lb. 8 lb. 10 lb. 18 lb. percent Under $10,000 a $10-19,999 $20-29,999 $30,000 & over Total state Sample size = 64 households making bagged grapefruit purchases in a statewide survey of 300 households. a = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution comparisons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

32 21 Table 15. Grapefruit Purchases: Bulk and Bag Display by Volume and Percent Composition, Texas Consumer Survey, November 1978 Percent Estimated of Type of Average Total Purchases Purchase Households Purchase Estimate Pu rchas i ng per Week percent pounds pounds percent Bulk Bag: 5 'I b b 'I b. 12 9'~ Total.0 *Assume one bag purchased per two-week period. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

33 22 Table 16. Grapefruit Container Count, Texas Container Container Number of Percent of Size Containers Pounds Total Sales thous. thou's. percent 5 'I b. bag 5 1bs. 9,262 46, 'I b. bag 8 lbs b. bag 18 lbs. 2,161 38, /4 std. carton 20 1bs. 1,959 39, /2 std. carton 40 1bs. 5, , bu. basketsl cartons 80 1bs * std. carton 80 1bs , /5 bu. boxes 112 1bs. 40 4, wire cribs bs. 6 7, Total 402,328.0 *Less than o. 1%. Source: Texas Valley Citrus Committee, TexaSweet Citrus Segments, Ha rch 8, 1979.

34 23 A related comment is also in order. Contacts with food chain fruit and vegetable merchandisers still show strong indications that the 18 pound bag is too large for optimum merchandising success and needs to be reduced in size. What appears to be called for is a retail store test of alternative grapefruit bag sizes so market demand can be maximized. EFFECT OF PRICE ON EXPECTED CONSUMER PURCHASES All households buying grapefruit were questioned concerning the effect of price changes on the quantity purchased. Those buying individual grapefruit from bulk display will be discussed first. Bulk Display Purchases Consumers indicated an average of 4.4 grapefruit would be bought when 20 cents each, while 5.2 grapefruit would be bought at 10 cents each, Table 17. This indicates a tendency to purchase more fruit at lower prices. These averages are significantly different at the 97 percent confidence level. Therefore, consumers indicated a lower price would cause a significant increase in the number of individual grapefruit purchased from bulk display. Households in the $10-19,999 income class indicated the greatest response to a lower price, Table 18. When prices are lowered seasonally, this suggests the advisability of possibly increasing in-store promotions in stores serving lower-middle income customers. Households in the top income category purchase a significantly greater number of fruit than households in the lower categories, as would be expected, particularly when the price is at the higher level of 20 cents each. Response to the lower price of 10 cents is less among higher income buyers, as would be anticipated. An additional market segment can be identified in Table 17. Rural households indicated they would buy a significantly larger number of fruit at 20C than either the metro or SMSA households. Identified again is a segment willing to buy more fruit at a higher price. Therefore, another prime target market segment for higher priced fruit should be households in the higher income rural areas.

35 24 Table 17. Average Number of Grapefruit Households Said They Would Buy per Week at Prices of 20 and 10 Each, by Sample Area, Texa-s Consumer Survey, November Sample Area Average Purchases of Grapefruit by Buying Households Only number of fruit Metro I a (0.4]) (0.47 SMSA {0.34) (0.32) Rural (0.5]) {0.78} Total state 4.4t 5.2t (0.3) {0.2} Sample size = 142 households buying grapefruit individually from bulk display in a statewide survey of 300 households. a = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa r i sons. tsignificant difference at the 95% level of significance. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

36 25 Table 18. Average Number of Grapefruit Households Said They Would Buy per Week at Prices of 20C and 10C Each, by Household Income, Texas Consumer Survey, November Average Purchase of Average Purchases of Annual Grapefru i t per Grapefru it by Household Household Buying Households Only Income 20C. 10C 20c roc number of fru i t Under $10,000 a (0.9) 4.7 (1. 0) $10-19, * (0.5) 5.5* (0.5) $20-29, (0.8) 5.0 (1. 2) $30,000 & over (0.4) 5.2 (0.8) ~" Total t (0.3) 5.2t (0.3) Sample size == 142 households buying grapef ru i t i nd i v i dua II y from bulk display in a statewide survey of 300 households. *Significantly different at 90% confidence I eve I. tsignificantly different at 97% confidence 1eveI. as e = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compar i sons. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

37 26 Bagged Fruit Purchases Two prices, 98 cents and 49 cents, were also tested for 5 pound bags of grapefruit. The households using grapefruit said they would purchase 5 pound bags of fruit an average of 1.8 times per month at the price of 98 cents, Table 19. At the lower price of 49 cents each, the same households would buy the bagged fruit an average of 2.5 times each month. Although the means are statistically not significantly different at the 90 percent confidence level, it is felt this difference is real, and significance fails only due to the small sample involved. This conclusion is borne out by the significant difference in average purchases for all households, or.34 versus.46 times per month. Price Elasticity of Demand for Grapefruit Evidence from this study supports the contention that the demand for grapefruit is relatively inelastic. The price elasticity of demand for bagged grapefruit was -.45 while that for individual fruit was In this case a 1.0 percent price decrease would result in a.45 or.22 percent increase in the quantity purchased of bagged and bulk fruit respectively. These results further emphasize the earlier findings. If an increase in the supply of fresh market grapefruit occurs (such as adding the marketing of size 112) a decrease in the price for all Texas grapefruit can usually be expected. An interesting marketing strategy point is suggested by these survey data. Consumers respond about twice as much to reduced prices of bagged fruit than they do for reduced prices of bulk grapefruit. Consequently, in periods of large supply it may be better strategy to lessen the prices more on bagged fruit than on boxed fruit which is going to bulk display sales in retail stores. Verification of this possible strategy with retail market tests first would be advisable before any effort to apply it.

38 27 Table 19. Average Number of Times per Month Grapefruit Would Be Bought in Five Pound Bags at 98 and 49, by Household Income, Texas Consumer Survey, November 1978 Average Purchase of Average Purchase of Annual Grapefruit per Grapefruit by Household Household BUsing Households Only Income times per month /" ~. Under $10,000 a $10-19,999 $20-29,999 $30,000 & over Total (0.77) (0.31) (0.38) (0.50) (2.3) (1. 75) b (0.52) (0.43) Sample size = 64 households buying bagged grapefruit in a statewide survey of 300 households. as e. = Probable sampling error, or 1.65 standard errors, which is equivalent to 95 percent confidence level for single tail distribution compa r i sons. b Inadequate information to determine standard error. Source: Texas Consumer Survey by Texas Agricultural Market Research and Development Center, Texas Agricultural Experiment Station.

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