Academic journal article Agricultural and Resource Economics Review

Consumer Preferences for Peach Attributes: Market Segmentation Analysis and Implications for New Marketing Strategies

Academic journal article Agricultural and Resource Economics Review

Consumer Preferences for Peach Attributes: Market Segmentation Analysis and Implications for New Marketing Strategies

Article excerpt

Consumers in today's marketplace have seemingly endless choices with regards to produce. Peach growers and retailers in Ontario, Canada, have begun taking steps to increase demand for their products. This study investigates the impact of those strategies on the market. Using conjoint analysis and market simulations, we evaluate the peach market to identify key drivers of peach purchasing. The results indicate that the market is heterogeneous and that price, origin, and quality indicators are the most important drivers of purchases. Our simulations indicate that adoption of new plastic packaging by the industiy is a viable strategy for increasing demand for local peaches.

Key Words: conjoint analysis, market simulation, tender fruit

(ProQuest: ... denotes formulae omitted.)

A quick look at the tender fruit industry in Ontario, Canada, reveals an industry that has tremendous potential. For instance, few industries can capitalize on "eat healthy" and "buy local" movements as well as producers of tender fruit. In the Ontario market, Ontario-grown fresh peaches held an average market share of 79 percent in-season and 51 percent year round from 2003 through 2007 (Deloitte and Touche LLP 2010] with a slight uptick in market share between 2007 and 2011, making up 84 percent of the market during the prime month of August and 51 percentin July and September (Marshall 2012], These market shares suggest a strong and vibrant industry.

However, a closer look reveals an industry that is threatened on several fronts. A report by Deloitte and Touche LLP (2010] described several types of barriers that are impeding Ontario peach producers. For example, many large retail outlets have traditionally used Ontario peaches as a loss leader at various times during the peach season, which can offset premiums associated with the fruit's high-quality "local" image. Furthermore, suppliers of tender fruit have little bargaining power within the value chain and have to compete with numerous potential substitutes (Deloitte and Touche LLP 2010], While many exporting countries have become more consumer-driven (e.g., by offering fruit with a consistent internal and external quality], the lack of bargaining power on the part of Ontario suppliers has prevented them from developing their produce to better meet consumer demand. Additional weaknesses identified in the report by Deloitte and Touche LLP (2010] are inconsistent quality at the consumer level and a lack of market-oriented approaches by Ontario producers, packers, and shippers.

The threat of potential substitutes is particularly ominous (Deloitte and Touche LLP 2010], especially the threat of consumers substituting imported peaches. Imports of peaches consist not only of new varieties but also of new types of packaging that are competing with traditional products and packaging for space once occupied primarily by domestic products. As imports claim retail space, they have the potential to erode demand for domestic product. For instance, U.S. peaches have maintained a visible presence in the Canadian market even with the increasing emergence of Chinese and Chilean products (Integrity Intellectual Property, Inc. 2009],

As a result of these market forces, simply sending peaches to market (domestic or international] is not a viable long-term strategy for Ontario producers endeavoring to increase demand for their produce. Thus, we seek to identify strategies that can successfully expand the Ontario peach industry. We first identify key factors that drive consumers to purchase fresh market peaches, focusing particularly on consumer segments and the consumer profiles associated with those segments. Of key interest is consumers' reaction to new plastic packaging that was introduced by some large Ontario retailers in 2010. We then use market simulations to examine (i] the impacts of changes in quality, packaging, and production practices on the Ontario market and (ii] the effect of introduction of Ontario-grown and competing peaches in various regional markets in Canada. …

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