t'
s
C
A REPORT FROM
;11
CONSUMER PREFERENCES FOR FRESH GRAPEFRUIT: FRUIT AND PACKAGE SIZE AND RESPONSE TO PRICE LEVEL Parr Rosson and Robert Branson June 1979
THE TEXAS AGRICULTURAL MARKET
RESEARCH AND DEVELOPMENT CENTER
",',1r
~
in cooperation with
The Department of Agricultural Economics The Texas Agricultural Experiment Station Texas A&M University Texas
Consumer Survey
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 emerg­
ing marketing problems. Primary emphasis is given to research and educa­
tional 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, statis­
ticians and specialized consultants as determined by the requirements of
individual projects.
Robert E. Branson
Coordinator
ii
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 regard­
ing 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 Agri­
cultural Economics deserve special credit for their contribution to the
research.
iii
/
TABLE OF CONTENTS Page
SUMMARY FINDINGS AND RECOMMENTDATIONS
ix INTRODUCTION
CONSUMER BUYING PATTERNS FOR GRAPEFRUIT
General Buying Behavior • . • • •
• ••.
Household Income Effect on Grapefruit Buying •
Urbanization Effect on Grapefruit Purchasing.
Consumer Income Relationship to Buying Patterns for Bulk and Bagged Grapefruit • • • • . • . . • . •
Urbanization and Purchase from Bulk Grapefruit Displays
2
2
2
2
5
5
BEHAVIOR PATTERNS IN BUYING FROM BULK DISPLAYS
Number of Fruit Bought per Purchase
Fruit Size Preference . • • •
Consumer Size Perceptions
Smallest Acceptable Fruit Size • • • • • • .
9
14 14 CONSUMER PURCHASE BEHAVIOR REGARDING BAGGED GRAPEFRUIT
Consumer Preference for Bag Sizes
18 18 EFFECT OF PRICE ON EXPECTED CONSUMER PURCHASES
Bulk Display Purchases..
. .••••.
Bagged Fruit Purchases. •
. •••••.
Price Elasticity of Demand for Grapefruit
23 23 v
9
9
26 26 LIST OF TABLES Table
Page
Grapefruit Purchases: Total and by Household Income,
Texas Consumer Survey, November 1978 . • . . • . . • •
3
Purchase of Grapefruit by Urbanization, Texas Consumer
Survey, November 1978 . . • • • • • . • • • . . • • •
5
Households Purchasing Grapefruit: Bulk Display Versus
Bagged Purchases by Household Income, Texas Consumer
Su rvey, Novembe r 1978 • . • . • • • • . •
6
Purchase of Bulk Versus Bagged Grapefruit, Texas Consumer
• • . • ••
Su rvey, November 1978 . . ••
••..
7
5
Households Purchasing Grapefruit: Bulk Display, Bag, and
Percent of Purchases, Texas Consu!"er Survey, November 1978 •
8
6
Households Buying Bulk Grapefruit by Number of Fruit
Usually Purchased and Household Income, Texas Consumer
Survey, November 1978 • • • • • • • • • • • • • • • •
10
Households Buying Bulk Grapefruit by Number of Fruit
Usually Purchased and Sample Area, Texas Consumer Survey,
November 1978 • . • • . • • • . . • • . . • . • • • . • • •
11
Average Number of Grapefruit Bought per Purchase from Bulk
Displays by Household Income, Texas Consumer Survey,
November 1978
• . . . • • • . • • .
12
9
Household Preference for Individual Grapefruit Sizes by
Household Income, Texas Consumer Survey, November 1978 .
13
10
Household Preference for Individual Grapefruit Sizes by
Sample Area, Texas Consumer Survey, November 1978
15
Household Perceptions and Preferences for Individual
Grapefruit Size, Texas Consumer Survey, November 1978
16
Households Buying Grapefruit: Smallest Size Fruit
Acceptable on Special Sale and in 10 Pound Bag, by Household
Income, Texas Consumer Survey, November 1978 .
. .•••
17
Households Purchasing Bagged Grapefruit: Size of Bag Bought
by Household Income, Texas Consumer Survey, November 1978
19
2
3
7
8
11
12
13
vi
LIST OF TABLES (continued)
Page
Table
14
Bagged Grapefruit Purchases: Proportion of Total Pounds
Purchased by Size of Bag and Household Income, Texas
Consumer Survey, November 1978 • • • . • . . • . • . . .
20
Grapefruit Purchases: Bulk and Bag Display by Volume and
Percent Composition, Texas Consumer Survey, November 1978
21
16
Grapefruit Container Count, Texas 1977-78
22
17
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 1978 • . . . • • . • • . • •
24
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 1'978 • . • •
25
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 . . . . . . . . . . . . .
27
15
18
19
vii
SUMMARY FINDINGS AND RECOMMENDATIONS
*
A statewide sample survey of 300 Texas consumers was completed in
November 1978.
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
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 per­
cent 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
Summary--continued
The above price responses estimated by consumers reveal
difference in response by bulk versus bagged fruit buyers.
an interesting
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
is only -0.22.
where the demand elasticity
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 tenta­
tive 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
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 grape­
fruit 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 con­
sumer survey conducted between August
households were surveyed by
teleph~ne
2~
and November 2, 1978.
interview.
Three hundred
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.
111977 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 1978.
2/Texas Valley Citrus Committee, Final Report, McAllen, Texas, June 22, 1978.
2
CONSUMER BUYING PATTERNS FOR GRAPEFRUIT
General Buying Behavior
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.
3
Table 1. Grapefruit Purchases: Total and by Household Income, Texas
Consumer Survey, November 1978.
Annual
Household
Income
Buying
Not Buying
Total
Percent
------percent of households-----­
~-
Under
$10,000 s.e. 80
(13.2)
20
(13.2)
100
$10 - 19,999
s.e. 69 ( 9.9)
31
( 9.9)
100
$20 - 29,999
s.e. 72 ( 6.9)
28
( 6.9)
100
$30,000 and
over
s.e.
64
( 9.2)
36
( 9.2)
100
Total State
s.e. 69 ( 4.4)
31
( 4.4)
100
Sample size
= 300
households in statewide consumer telephone
survey.
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 Re­
search and Development Center, Texas Agricultural Experiment
Station.
4
.-~
Table 2. Purchase of Grapefruit by Urbanization, Texas Consumer Survey,
November 1978.
Area
Buy
Don't Buy
Total
Percent
--percent of households-­
Metro
S.e. a
67
( 8. 1)
33
( 8.1)
100
SMSA
s.e.
64
( 7.8)
36
( 7.8)
100
Rural
S.e.
74
( 7.2)
26
( 7.2)
100
Total state
69
( 4.4)
31
( 4.4)
100
Sample size
= 300 households buying grapefruit in a state­
wide 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.
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 100 percent of the time, Table 5. Another 2 percent bought bulk
between 67 and 99 percent of the time. Therefore, in total about two­
thirds 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.
of bagged fruit were important at all income levels.
were the strongest market for bagged purchases.
bought the bagged fruit, Table 4.
Nonetheless sales
The major metro areas
In those cities, 37 percent
6
Table 3. Households Purchasing Grapefruit: Bulk Display Versus Bagged
Purchases by Household Income, Texas Consumer Survey, Nov. 1978
Annual
Household
Income
Percent
Buying
Grapefrui t
Bulk
Display
Bagged
Display
Total
Percent
--percent of households-­
Under $10,000
s.e.a
80
(13.2)
62
( 9.3)
38
( 9.3)
100
$10 - 19,999
s.e.
69
( 9.9)
70
( 7.0)
30
( 7.0)
100
$20 - 29,999
s.e.
72
( 6.9)
73
( 9.5)
27
(9.5)
100
$30,000 and over 64
s. e.
( 9.2)
80
(13.2)
20
(13.2)
100
Total state
s.e.
69
( 5.3)
31
( 5.3)
100
Sample size
69
( 4.4)
= 208 households which bought grapefruit.
a s • 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.
,~
7
Table 4. Purchase of Bulk Versus Bagged Grapefruit, Texas Consumer Survey,
November 1978.
Area
Bulk
Bag
Total
percent
percent of households-­
/~
Metro s.e. a
63
( 7.9)
37
( 7.9')
100
SMSA s.e. 72
( 7.4)
28
( 7.4)
100
Rural s.e. 72
( 7.4) .
28
( 7.0)
100
Total State
69
(4.3)
31
( 4.3)
100
Sample size
= 300
households purchasing grapefruit in a statewide survey,
a s . e • = Probable sampling error, or 1.65 standard errors, which is
equivalent to 95 percent confidence level for single tail distribution
compa rison s •
Source: Texas Consumer Survey by Texas Agricultural Market Research
and Development Center, Texas Agricultural Experiment Station.
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
Bag Frui t
Display ,a
percent of households-­
63.0
( 5.6)
( 5.1)
67-99
s.e.
2.0
( 1.8)
2.0
( 1. 4)
34-66
S.e.
1.0
( 0.8)
1.0
( 0,8)
2.0
100 b
s.e.
27.0
1-33
s.e. ( 1. 4)
2.0
( 1. 8)
0
s. e. 0.0
0.0
1.0
( 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.
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.
Table 6.
Another third took three grapefruit at a time,
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.
that size, Table 9.
Almost 60 percent of the buyers selected
This size is equivalent to the 80-96 pack per bushel
box.
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 112 1 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.
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
2
Gra~efruit
3
Usually Bought
5 6 & over
4
Total
Percent
- percent of households Unde~
5.2
(6.2)
100
24.2
(10.3)
0.8 - 1.7
(1.8)
(1.3)
100
35.0
(14.3)
9.5
(7.9)
3.7
(5. ])
100
17.9 (12.8)
5.2
(6.1)
100
4.5
(2.9)
100
s.e. 7.5
(].7)
34.9
(14.8
46.7
(15.5)
4.3
(3.6)
$10-19,999
s.e. 0.8
(l. 3)
38.0
(11. 8)
34.3
(11.5)
51.7
(15.0)
$10,000
$20-29,999 s.e. $30,000 & over
s.e. 9.5
(6. ])
31.4
( 7.7)
35.8
(19.4)
Total state
s.e. 3.0
(2.3)
39.2
( 7.2)
34.8
( 7.0)
Sample size
17.7
( 5.4)
1.4
(2. 1)
0.8
(0.8)
= 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.
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
Purchased
Hetro
SHSA
- percent of households
s.e. a
Total
State
Rural
~
,
6.8
(6. I )
1.9
( 3. 1)
3.0
( 2.3)
2
s.e. 40.0
{12.7}
40.9
(12.2)
34.6
(10.7)
39.2
( 7.2)
3
s.e. 42.5
{12.8}
31.8
(11 .5)
25.0
( 9.9)
34.8
( 7. J)
4
s.e. 12.5
( 8.5)
18.2
( 8.5)
26.9
(10.0)
17.7
( 5.4)
3.8
{ 4.2}
(
5
s.e. 6
s.e. Total percent
Sample size
.8
.8)
5.0
( 5.6)
2.3
( 3.6)
7.7
( 5.9)
4.5
( 2.9)
100
100
100
100
= 142 households purchasing grapefruit from bulk display in
a statewide telephone 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 Harket Research
and Development Center, Texas Agricultural Experiment Station.
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
Sample si
a s •e .
2e
4.0
Under $10,000
a
s.e.
(0.7)
$10-19,999
s,e.
4.3
(0.4)
$20-29,999
s.e.
3.8
(0.8)
$30,000 & over
s,e.
(1.9)
Total
s.e.
4.4
(0.5)
4.2
= 142
households making bulk grapefruit purchases in a
statewide survey of 300 households.
= 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.
13
Table 9. Household Preference for Individual Grapefruit Sizes
by Household Income, Texas Consumer Survey, November, 1978
Annual
Household
Income
4.5-511
very
large (46)
4-4.5 11
large
(64)
Size Preference
3.75-411 3.3-3.611
medium
(80-96)
sma II
(l12)
no
3-3.3 11
very
prefer- Total
sma II (126) ence
Percent
percent of households
Under $10,000
s.e. a
7.7
(8.4)
19.6
(8.4)
62.2
(15. J)
10.4
(9.3)
100
$10-19,999
s.e.
1.7
(2.6)
40.2
(9.7)
56.7
(9.7)
1.3
100
(I. 3)
$20-29,999
s.e.
5.0
(5.6)
29.7
(10.3)
59.9
(12.2)
2.7
(4. I )
$30,000 & over
s.e.
2. 1
(4.9)
43. I
(17.3)
54.8
(16.0)
Total state
s.e.
3.7
(2.1)
32.6
(5.6)
59.3
(5.9)
Sample size
2.7
(4.1)
100
100
3.7
(2.1)
0.6
100
(I • 0)
= 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.
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.
Other­
wise premature price declines for all fruit sizes can result due to over
supplying usual fresh fruit market outlet demand.
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 - -
4.5 - 5"
very ~a rge (46)
s.e. a
4 - 4.5"
large
s.e.
3.75 - 4"
medium (80-96)
s.e.
3.3 - 3.6"
small
3.2
3.3
5.5
3.7
(3.6)
(3.7)
(4.3)
(2.1)
33.9
27.9
38.2
32.6
(9.9)
(9.4)
(9.2)
(5.6)
59.7
63.~
50.7
59.4
(10.2)
(l0.0)
(9.5)
(5.9)
3.2
3.3
5.5
3.7
(3.6)
(3.7)
(4.3)
(2. 1)
(112)
s. e.
3 - 3.3"
very small (126)
S.e.
No preference
0.6
1.6
(2.6)
Total percent
Sample size
=
100
100
100
100
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.
Table 11. Household Perceptions and Preferences for Individual
Grapefruit Size, Texas Consumer Survey, November 1978
Household
Size
Preference
Under
311
3-3 1/2"
(very
sma II)
a
Household Size Perceetion
3 3/4­
4­
3 1/3­
4"
4 1/2"
3 2/3"
(large)
(sma 11)
(medium)
4 1/2­
5" (very
large)
over
5"
Total
Percent
Household
Preference b
percent of households
Very small
(3-3 1/3")
s.e. c
Sma 11 (3 1/3­
20.6
3 2/3")
s .e.
(23.9)
Medium
(3 3/4-411)
s.e.
25.9
(23.])
53.5
(31.0)
100
3.7
(2. 1)
59.3
(5.9)
13.5
(5.6)
7.9
(4.4)
38.5
(7.9)
8.8
(4.6)
23.9
n
100
Large
(4-4 1/211)
s.e.
7.9
(5. 1)
7.2
(5.9)
27.0
(9.0)
7.5
(5.2)
50.3
(11.0)
100
32.6
(5.6)
Very large
(4 1/2-511 )
s.e.
20.6
(23.9)
5.3
(].5)
18.7
(21.0)
55.3
(29.0)
100
3.7
(2. 1)
Sample size
7.4
(4.2)
=
(6.
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.
c 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 ,gricultural Experiment Station.
)
/
i
(7'\
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
(J 26)
3-3.2511
Smallest Fruit Size Acce2table
( 112)
{96}
Larger
Other
3.25than
3.5-
3.511
3.7511
Donlt
Know
Total
Percent
3.75"
percent of households
Under $10,000
s.e. a
14.3
(10.6)
5.5
(5. 1)
70.7
(13.9)
2.7
(2.3)
19.3
(8.0)
20.0
(8.0)
43.8
(10.0)
9.7
(5.9)
25.2
(11.0)
14.8
(8.5)
42.0
(11.])
10.4
(7.7)
20.8
(16.8)
16.4
05.1)
41.8
(20.3)
11.4
(12.9)
19.3
(4.9)
16.8
(4.6)
45.9
(6. 1)
8. 1
(3. J)
$10-19,999
s. e.
$20"29,999
s.e.
$30,000 & over
s.e.
Total state
S.e.
Sample size
0.9
100
3.6
(3.9)
100
7.5
(6.7)
100
4.9
(6.5)
4.6
(6.9)
100
2.0
(1 .8)
7.2
(3.3)
100
(1. 3)
3.6
(3.9)
= 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.
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.
purchased an 8 or 10 pound bag.
Eighteen percent
Only 8.7 percent said they bought grape­
fruit 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 per­
cent 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 1977-78
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.
19 Tab Ie 13.• Households Purchasing Bagged Grapefruit: Size of Bag
Bought by Household Income. Texas Consumer
Survey. November 1978
Annual
Household
Income
5 lb
8 lb
Bag Size
10 1b
18 lb
,Other
Total
Percent
percent of households
/'"~
Under
$10,000
s.e. a
86.4
(10.8)
$10-19.999
s.e.
79.6
(13.3)
8.0
(9. 0)
$20-29.999
s.e.
36.0
(14.4)
$30.000 &
over
s.e.
Total state
s.e.
13.6
(10.8)
100
4. 1
(6.4)
8.2
(8.5)
100
12·5
(9.7)
24.2
( 12.8.)
21.4
(0.0)
15.6
(0.0)
17.2
(11.8)
50.0
(0. 0)
68.2
(9. ])
7. I
(5.7)
10.8
(6.6)
5.9
(] . 1)
100
17.2
100
(1J. 8)
8.7
(5.7)
5. 1
(4.4)
100
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.
20
Table 14. Bagged Grapefruit Purchases: Proportion of Total
Pounds Purchased by Size of Bag and Household Income,
Texas Consumer Survey, November 1978
Annual
Houshold
Income
Bag Size
5 lb.
8 lb.
10 lb.
18 lb.
percent
Under $10,000
s.e. a
63.8
$10-19,999
61.2
9.8
6.3
22.7
19.8
11.0
26.7
42.4
10.9
19.2
69.9
51.4
8.6
16.3
36.2
s.e.
$20-29,999
s.e.
$30,000 & over
s.e.
Total state
s.e.
Sample size
23.7
= 64
households making bagged grapefruit purchases 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.
21
Table 15. Grapefruit Purchases: Bulk and Bag Display by Volume and
Percent Composition, Texas Consumer Survey, November 1978
Percent of
Households
Pu rchas i ng
Estimated
Average
Purchase
per Week
percent
pounds
pounds
percent
69
4
276
48.6
5 'I b.
16
5
80
14. 1
8 1b.
13
8
104
18.3
18 'I b.
12
9'~
108
19.0
Type of Purchase Bulk
Total Purchases
Estimate
Bag:
Total
100.0
*Assume one bag purchased per two-week period.
Source: Texas Consumer Survey by Texas Agricultural Market Research
and Development Center, Texas Agricultural Experiment Station.
22
Table 16.
Grapefruit Container Count, Texas 1977-78 Container
Size
Container
5 'I b. bag 5 1bs. 8 'I b. bag 8 lbs. Number of
Containers
Pounds
Percent of
Total Sales
thous.
thou's.
percent
9,262
46,311
11.5
97 778 0.2
18 1b. bag 18 lbs. 2,161
38,906 9.7
1/4 std. carton 20 1bs. 1,959
39, 181 9.7
1/2 std. carton 40 1bs. 5,420
216,816 53.9
bu. basketsl cartons
80 1bs. .1 44 std. carton
80 1bs. 608 48,666
12. 1 112 1bs . 40 4,427
1.1
1200 1bs. 6
7,199
1.8
402,328
100.0
1 2/5 bu. boxes
wire cribs
Total
*Less than
Source:
Ha rch 8, 1979.
*
o. 1%.
Texas Valley Citrus Committee, TexaSweet Citrus Segments,
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 indivi­
dual 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 signi­
ficant 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.
Res­
ponse 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.
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 1978.
Sample Area
Average Purchases of Grapefruit
by Buying Households Only
20¢
10¢
number of fruit
Metro
s.e. a
4.5
(0.4])
5. I
(0.47
SMSA
s.e.
3.6
{0.34)
3.9
(0.32)
Rural
s.e.
5.6
(0.5])
6.4
{0.78}
Total state
s.e. 4.4t
(0.3)
5.2t
{0.2}
Sample size = 142 households buying grapefruit individually from bulk
display 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
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.
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 1978.
Annual
Household
Income
Average Purchase of
Grapefru i t per
Household
20C
. 10C
Average Purchases of
Grapefru it by
Buying Households Only
20c
rOC
number of fru i t
Under $10,000
s.e. a
1.5
$10-19,999
s.e.
2.0
$20-29,999
s.e.
1.8
$30,000 & over
s.e.
2.6
Total
s.e.
1.9
4. 1
(0.9)
(1. 0)
2.5
4.5*
(0.5)
5.5*
(0.5)
2.6
4.4
(0.8)
(1. 2)
2.7
5.0
(0.4)
5.2
(0.8)
2.2
4.4t
(0.3)
5.2t
(0.3)
1.8
4.7
5.0
~"
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 1eve I .
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.
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 -.22.
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 market­
ing 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.
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
Grapefruit per
Household
98¢
. 49¢
Annual
Household
Income
Average Purchase of
Grapefruit by
BUsing Households Only
9
¢
49¢
times per month
Under $10,000
s.e. a
0.45
$10-19,999
s.e.
0.34
$20-29,999
s.e.
0.34
$30,000
s.e.
/"
~.
&
over
Total
s.e.
Sample size
0.56
(0.77)
2.3
(0.31)
0.49
1.6
(0.38)
2.3
(0.50)
0.52
2.2
(2.3)
(1. 75)
1.8
3.4
0.32
0.40
2.6
---b
3.3
0.34
0.48
1.8
(0.52)
2.5
(0.43)
= 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.