Product Characteristics Affecting Consumers' Fresh Beef Cut Purchasing Decisions in the United States, Japan, and Australia

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1 Product Characteristics Affecting Consumers' Fresh Beef Cut Purchasing Decisions in the United States, Japan, and Australia Glade R. Erikson, Thomas I. Wahl, Raymond A. Jussaume, and Hongqi Shi The effects of product and economic characteristics on consumers who purchase six cuts of fresh beef (blocks/parts, steak, thinly sliced, diced, chopped, and ground) in urban areas of the United States, Japan, and Australia will be examined in this paper. Certain product characteristics (such as product freshness and display case cleanliness) were important to consumers of beef in all three countries while other product characteristics (such as price considerations for ground beef consumers) were important for consumers of different beef cuts in all three countries. Some product characteristics varied in importance across consumers from different countries and consumers of different beef cuts. As Kerr et al. (1994) noted, "The first step in U.S. Meat Export Federation survey reported that understanding any market must be the identification Japanese meat consumers' purchasing decisions of those product characteristics that are desired by were influenced by beef freshness (40 percent of consumers." Product characteristics that are valued consumers surveyed), price (18 percent), product in one region may or may not be valued as highly safety (11 percent), and cleanliness (7 percent) (Kerr elsewhere. In an increasingly global market, learning et al., 1994; Hayes, 1990). which product characteristics are important to Research on beef cuts in the United States consumers in specific countries is becoming includes studies by Namken et al. (1994) and Capps increasingly important to successful marketing et al. (1994) who examined the seasonalities in U.S. strategies. demand for different cuts of beef. Also, Capps and Japan is the largest market for U.S. agricultural Nayga (1990) estimated demand equations for exports and is the largest importer of beef from the several beef cuts (brisket, chuck, ground beef, loin, United States in terms of value (U.S. Department of rib, and round), using data from stores in Houston, Agriculture, 1998). Japan is also an important Texas. importer of Australian beef. Understanding the There has been little work done to compare the characteristics of beef that are important to Japanese importance of beef cut characteristics to consumers consumers will facilitate continued beef exports to in different countries. However, some researchers Japan for both the United States and Australia by have noted that cultural reasons, based on the helping exporters to supply and promote products attributes of the cut, exist for the preference of one with the characteristics that are valued by Japanese cut of meat over another. For example, Kerr et al. consumers. (1994), and Comeau, Mittelhammer, and Wahl Some researchers have examined product (1996) suggest that Japanese prefer beef that shows characteristics that are important to beef consumers. relatively less blood (that is, thinly sliced beef Menkhaus et al. (1993) found that-for beef instead of roasts or steaks) because of cultural and consumers in the United States-cholesterol, calorie religious beliefs. content, artificial ingredients, convenience, store This paper examines the importance of beef cut display, and the cost of beef affect consumer characteristics to U.S., Australian, and Japanese perceptions of beef quality. Others, such as Capps consumers. By doing so, the importance of beef cut and Schmitz (1991), have found health issues to be attributes can be compared among the three important attributes for beef consumers. A 1984 countries. The comparisons of particular interest are those between the beef-exporting countries of Glade R. Erikson and Thomas I. Wahl are graduate research Australia and the United States and the beefassistant and associate professor, respectively, in the importing country of Japan. Comparing the product Department of Agricultural Economics, and Raymond A. attributes that are important to consumers in Japan Jussaume is an associate professor in the Department of Rural and the exporting countries will allow beef Sociology, Washington State University, Pullman, WA. Hongqi m s t i s a d Shi is an econometrician Shi is at American earketersconometrcan Express, Phoenix, to AZ. and identify similarities differences in

2 Erikson, Glade R., Thomas I. Wahl, et al.... Consumers' Fresh Beef Cur Purchasing Decisions country-specific preferences for product attributes. percent), respectively, and 2,000 for Brisbane (30.0 This paper is intended to "identify those product percent) and Adelaide (27.5 percent). characteristics" that are desired by consumers and, The dependent variables were dichotomous by so doing, to increase the understanding of not responses for the purchase of various beef cuts, only the domestic markets for the United States and with "one" indicating that the consumer normally Australia but also an important export market, Japan. purchased the product in question and "zero" indicating that he or she did not. Specifically, Methods and Data survey respondents were asked, "Which type of meat cuts do you normally purchase? Please mark The framework for this study is analogous to a an 'X' in the appropriate space." Six general cuts hedonic price model. In this case, however, product of fresh beef (block/parts, steak, thinly sliced, characteristics, instead of prices, are used to predict cubed (diced), chopped, and ground) are examined quantities of goods consumed. Also, quantities of in this paper. goods consumed are proxied by categorical data. In constructing international surveys, it is often Consumer preferences, health concerns, and difficult to decide which items to include since each demographics are also included in the models. Logit country is unique in some respects. The beef cut models are then used to estimate the 18 equations categories were chosen in order to represent those (six cuts of fresh beef for three countries). cuts of beef that are consumed in one or more of the Data for this study were obtained from the countries but were defined in a way that was Consumer Survey of Animal Product Consumption intended to be as meaningful as possible for each and Lifestyle in the United States, Japan, and country. For example, in this survey, since thinly Australia (Nagano et al., 1995). The surveys were sliced beef is an important category of beef for conducted as a result of a joint project-sponsored Japanese consumers, it was included in the survey by Nihon University in Japan-between Washington for all countries. State University, Nihon University, and Queensland Of course, consumers in each country can and University in Australia. The sample sizes were do define product categories differently. For 1,217, 1,232, and 1,149, respectively, for the United example, Japanese consumers likely define "thinly States, Japan, and Australia. The surveys were sliced beef' as beef that will be boiled, either as completed in two metropolitan areas in each country shabu-shabu or as sukiyika, while U.S. consumers (respectively, Seattle and Kansas City; Osaka and may consider "thinly sliced beef" to be a deli meat. Tokyo; and Brisbane and Adelaide). While the Thus, interpretations of results must be made with samples were not drawn for the populations of each each context in mind. country and thus cannot be used to describe the The independent variables were consumers' attitudes of all classes of consumers in the country, responses toward product attributes, retail service, they can be said to provide information on the and other considerations related to fresh beef. These cultural orientation of each nation as drawn from response variables were measured on an ordinal major metropolitan areas of each country. It is on scale, indicating the degree of importance perceived this basis that consumers' attitudes in each country by consumers. The responses were coded: 1) doesn't are examined. matter; 2) slightly matters; 3) somewhat In the United States, the surveys were mailed to important\very important; and 4) extremely 2,800 (1,400 in each city) consumers randomly important. Independent variables included: 1) selected from phone listings. Follow-up mailings production date/expiration date; 2) price; 3) were also sent. The completion rate (ratio of number knowledge of where the meat was produced; 4) of returned surveys to number of potential eligible blood in package (presence of purge); 5) package respondents) was 49.8 percent (56.8 percent in size; 6) arrangement of product in the display case; Seattle and 43.3 percent in Kansas City). 7) selection of cuts; 8) cleanliness of the display In Japan and Australia, postal surveys were also case; 9) services provided by the butcher; 10) sent to a random sample of residents listed in the butcher's recommendation; and 11) preferences of telephone directory. Again, two mailings were sent. household members. The sample sizes and response rates were 2,121 and A variable was included to assess the impact of 1,901 for Tokyo (28.1 percent) and Osaka (33.5 consumers' cholesterol consciousness on the

3 18 November 1998 Journal of Food Distribution Research purchase decision. Cholesterol consciousness was effect shows that increasing the importance of measured by the extent to which the respondents freshness (date of expiration) by one unit increases agreed with the statement, "Low cholesterol is the probability that a person normally purchases essential for good health." The responses were steak by 6.27 percent. The elasticity column shows coded: 1) strongly disagree; 2) disagree; 3) neither; that a 1 percent increase in the importance of 4) agree; and 5) strongly agree. freshness increases the probability that a person In addition, demographic variables on normally consumes steak by 0.33 percent. Also household size and income were included in the shown in Tables 3, 4, and 5 are the percentages of model to assess how these factors influence purchase consumers who normally purchase different cuts of decisions. The household income variable was the beef. Note that ground beef and steak were the most midpoint of the survey income categories expressed popular cuts in the United States and Australia while in 1993 U.S. dollars. The mean was used for thinly sliced beef was the most popular cut in Japan. missing observations on all explanatory variables. The discussion of results will concentrate on these three cuts. Results For consumers who normally purchase steak, there are several comparative results of interest. A descriptive analysis of the independent First, as consumers' income increased, the log odds variables allows some comparisons about consumer ratio increased for all three countries. This can be purchasing behavior for beef products between each interpreted as meaning that consumers with higher of the three countries. The mean and standard incomes were more likely to purchase steak. This deviation for each independent variable is reported result is consistent with intuition and holds for all in Table I for each country. three countries. The first 11 items in Table I were ranked using Next, steak consumers in the United States and the same system. Of these 11, on average, consumers Australia were similar in that, as the importance of in all three countries valued display case cleanliness product freshness (expiration date) and selection of and expiration date as the two most important cuts increased, they were more likely to normally considerations when buying fresh beef. The selection purchase steak. For Japanese steak consumers, of cuts was the third most important consideration production date and cut selection were insignificant. for U.S. and Australian consumers when buying Australian and Japanese steak consumers were fresh beef. Beef cut selection was the fourth most similar in that, as household size increased and important consideration for Japanese consumers. preferences of household members became more The third most important consideration for Japanese important, they were more likely to purchase steak. consumers was household member preferences. Australian consumers were increasingly likely Preferences of household members was ranked to purchase steak as they became less cholesterolrelatively lower by U.S. and Australian consumers. conscious. American consumers were more likely to The least important consideration for U.S. and purchase steak as blood in the package became less Australian consumers was knowing where the meat of an issue. Neither of these results were significant was produced. In Japan, butcher services and the in the other two countries. recommendation of butchers were the least important Ground beef consumers shared several considerations for consumers when buying fresh beef. similarities between countries. First, price was an The significant t values for the estimated important consideration for ground beef consumers in coefficients of the 21 models are summarized in all three countries. Also, as household size increased, Table 2. Estimated coefficients, statistically different consumers were more likely to purchase ground beef from zero at the 5 percent or 10 percent significance in all three countries. Again, these results seem level, are indicated by ++, - -, and +, -, respectively. consistent with intuition if ground beef is considered The elasticities and marginal effects of the a "low quality" cut in all three countries. explanatory variables are presented in Tables 3-5 for Consumers in Australia and the United States significant variables. The elasticities and marginal both were more likely to purchase ground beef as effects were included to show the magnitude of the knowledge of where the meat is produced became effect of the independent variables on the dependent less important. Origin of beef was not significant for variables. For example, in Table 3, the marginal Japanese ground beef consumers.

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9 24 November 1998 Journal of Food Distribution Research Some interesting differences existed between arrangement of product in a display case). For countries. For example, as income increased, Japanese Japan, the least important considerations were consumers were more likely to consume ground beef. butcher's service and recommendations. The origin However, income was not significant for U.S. and of beef was relatively more important to Japanese Australian consumers. These results may illustrate the consumers. This perhaps reflects the preference for cultural differences between the three countries, that is, domestic beef by Japanese consumers (Kerr et al., beef is more likely to be viewed as an everyday food for 1994). Again, this reiterates an opportunity for beef U.S. and Australian consumers. exporters to change the perceptions of the Japanese For consumers who normally purchased thinly consumer by supplying beef of quality comparable sliced beef, there were no product attributes that to Japanese domestic beef and by informing were significant in all three countries. There were consumers about the quality of imported beef. some similarities between pairs of countries, It is not surprising that income was important however. Product freshness (expiration date) and for consumers who normally purchased steak. butcher recommendations were important to thinly However, this gives additional evidence that beef sliced beef consumers in both the United States and marketers should target higher income consumers for Japan. Also, the importance of cut selection and steak promotion in all three countries. Household household size increased the likelihood that numbers and preferences were important for consumers in Japan and Australia normally Japanese steak consumers. This may be a reflection purchased thinly sliced beef. There were several of the younger generation's comparatively greater differences between sliced beef consumers in the preference for beef (Kerr et al., 1994) and indicates three countries. For example, consumers were more that steak promotions could be aimed at larger likely to purchase thinly sliced beef as blood in the families in Japan. meat package became more important in Japan and Larger households could be targeted for ground less important in the United States. Also, income beef promotion in all three countries. Also, since was related to sliced beef consumption negatively in price is an important characteristic in all three Australia but positively in Japan. countries, ground beef promotion could focus on The results on the other types of meat price issues. Since the study also indicates that (blocks/parts, diced, and chopped) can be similarly income positively affected the likelihood that interpreted. Again, for each of the meat cuts, some consumers normally purchased ground beef, ground attributes were similarly important for consumers beef promotion in Japan could also target higher across countries while others were not. income families. Thinly sliced beef was the most popular beef Summary and Conclusions cut in Japan. It seems that marketers should be particularly concerned with the freshness of beef In general, the descriptive analysis indicated destined to be sliced, the package appearance, and a that consumers in Australia, Japan, and the United quality retailer that can provide a wide selection of States ranked similar attributes of fresh beef cuts and appropriate recommendations. Also, purchases as most important. Cleanliness of the income and household size positively affected display case and production/expiration date were the consumers who normally consumed thinly sliced most important of the 11 product attributes when beef, suggesting that promotion of thinly sliced beef buying fresh beef in all three countries. These results could be aimed at consumers with higher income indicate common concerns of consumers across the and larger families in Japan. three countries toward freshness and health issues. While the results are perhaps expected, they References reemphasize the logistical challenges of getting fresh imported beef to Japan in a timely fashion and the Capps Jr., O., and R.M. Nayga, Jr "Effect of Length of importance of getting beef distributed through Time on Measured Demand Elasticities: The Problem quality retail chains. Revisited." Canadian Journal of Agricultural The least important of the 11 product attributes Economics. 38: Capps Jr., 0., and J.D. Schmitz "A Recognition of Health were similar for U.S. and Australian consumers and Nutrition Factors in Food Demand Analysis." Western (knowing where the meat was produced and Journal ofagricultural Economics. 16(1):

10 Erikson, Glade R., Thomas I. Wahl, et al.... Consumers' Fresh Beef Cut Purchasing Decisions Capps Jr., O., D.E. Farris, P.J. Byrne, J.C. Namken, and C.D. Menkhaus, D.J., D.P.M. Colin, G.D. Whipple, and R.A. Field. Lambert "Determinants of Wholesale Beef-Cut "The Effects of Perceived Product Attributes on Prices." Journal of Agricultural and Applied Economics. the Perception of Beef." Agribusiness: An International 26(1): Journal. 9(1): Comeau, A, R.C. Mittelhammer, and T.I. Wahl Nagano, M.,A. Baba, S. Takaku, S. Kobauashi, S. Koizumi, R.A. "Assessing the Effectiveness of MPP Meat Jussaume, P. Riethmuller, and J. Morison "Consumer Advertising and Promotion in the Japanese Market." Consciousness of Animal Products in Japan, the U.S. and R.B , National Institute for Commodity Australia" Poster Presentation at the WAAP/FAO Promotion Research and Evaluation, Cornell International Symposium on Supply of Livestock Products to University, Ithaca New York. Rapidly Expanding Urban Population, Seoul National Hayes, D.J. (ed.) Meat Marketing in Japan: A Guide for University, Seoul, Korea, May 19. U.S. Meat Exporting Companies. Des Moines and Ames, Namken, J.C, D.E. Farris, and 0. Capps, Jr "The Iowa: Midwest Agribusiness Trade and Research Center. Demand for Wholesale Beef Cuts by Season and Trend." Kerr, W.A., K.K. Kline, J.E. Hobbs, and M. Kagatsume. Journal of Food Distribution Research. 25(2): Marketing Beef in Japan. New York: Food USDA (U.S. Department of Agriculture) U.S. Products Press. Agricultural Trade Update. ERS, USDA, Jan. 23.