Consumer Profiles of Buyers and Non-Buyers of Organic Produce
Desmond A. Jolly
Cooperative Extension Specialist, Department of Agricultural Economics, University of California, Davis
Modern marketers have increasingly moved away from directing their products to an undifferentiated mass market. A few products, such as table salt, are perceived as substantially homogeneous and, as a result, marketers of table salt aim their efforts at a total market. However, even when marketers aim at a total market, they often attempt to differentiate their products through advertising and promotion.
But consumer perceptions and preferences differ markedly among age, income, occupational, cultural, and lifestyle components of the consumer population. As a consequence, marketers have developed, and successfully utilize, a strategy of market segmentation-subdividing the mass consumer market into smaller identifiable groups with relatively similar product needs. The design of a potentially successful marketing mix-the product, prices, promotion and distribution channels-is then matched to each identified market segment (Smith 1956). It is more cost effective to design a marketing mix that meets the needs of a specific market segment than to aim at the broad undifferentiated market, as it allows the marketing effort to focus on meeting the needs of that market segment. This approach is referred to as a concentration strategy. Some firms and industries utilize a multi-segment strategy-varying products, prices, promotion methods, and distribution channels to reach more than one market segment.
The food industry increasingly markets a wide variety of products to exploit differences in demand among various consumer groups. Products vary by size, degree of maturity, type of processing, packaging, and prices. These products are also promoted and distributed in different ways. Convenience is one attribute that food marketers have recognized as important to many segments of today's consumer market, and many products now incorporate services that had previously been performed in the home.
ORGANICALLY PRODUCED FOODS
Organically produced food is an emergent type of product that presents consumers with a specific set of attributes. Actually, what conceptually distinguishes organic food from conventionally produced is the method of production. According to the Basic Book of Organically Grown Foods (Goldman and Hylton 1972):
"Organic food" is grown in soil rich in organic matter. Organic matter-or humus-is the living part of the soil. In that moist, woodsy part of the soil exist the uncountable billions of bacteria, fungi and other minute organisms which give soil remarkable powers to feed tremendous amounts of minerals, and other nutrients to plant roots.
When American land was virgin, before the days of commercial agriculture, our soil contained a significant amount of organic matter. Each growing season a small amount was consumed by plants, then in the fall as leaves fell and annual plants died, the humus was built up again. Insects, earthworms and other small animals burrowed in the soil, sometimes carrying the humus to depths of several feet.
The past 150 years of large-scale farming have depleted soil organic matter. Now, many soils contain less than 1 percent humus. Manure is spread on fields less often, and the stalks or other waste portions of plants are often removed from the land. Many soils are therefore less alive than they used to be, and the crops they produce are less healthy and sometimes are lower in nutritional value.
A steadily growing number of gardeners and farmers are working to restore the organic quality of the soil. Using old, time-tested methods, they're restoring humus to the soil. They're eschewing artificial fertilizers and poisons, because they con-taminate soil or plant and simply aren't in tune with the idea of producing food that is natural and of high quality.
Thus, we see that organically grown foods emphasize principally a production regime that relies on high organic content in the soil. Organic foods also are purported to taste better and to be more nutritious because they are processed in ways that do less damage to the nutritional integrity of the raw product's value:
The phrase natural food, less widely used, helps us tell the difference between good and bad types of the same food. Mom's chicken soup is a natural food, but dehydrated chicken soup is not. Honey, especially the raw kind, is a natural food, while refined sugar is not. A fresh fruit salad is natural, while the canned, sugared kind is not. Organically grown food is the most precise term of all, referring specifically to food that has been grown on a certain kind of farm, using special methods. No chemical fertilizers are used in growing organic food. No toxic pesticides are used, and weed killers are avoided, too. (Goldman and Hylton 1972)
Organic foods, then, present consumers with a perceived set of attributes as well as a perceived set of disadvantages. In the way of attributes, organically produced foods could be perceived as "green" products (environmentally friendly), as safer products (produced with less herbicides and pesticides), and as generally more wholesome and nutritious. The Basic Book of Organically Produced Foods states that:
The word organic is crucial to the appreciation of the concept of ecological purity in food. Organically grown is a label that is easily understood by city people, who, after all, know very little about farming. Organically grown means food as it used to be grown, without the latest chemical aids that have backfired on the environment in so many ways. Organically grown means food that helps the land and the bodies of people, instead of tearing them down. (Goldman and Hylton 1972)
But while organically produced foods embody specific attributes potentially valuable to consumers, they also, from many consumers' standpoints, have several disadvantages. Generally, organic production methods have lower yields, which would mean lower rates of return for farmers unless compensated for by higher prices. But higher prices represent a disadvantage for many consumers. Additionally, the non-use of chemical pest and disease controls may lead to a higher incidence of product blemishes and a potentially reduced span of shelf life. Thus, the consumers who would represent a viable target market for organically produced foods would be those who value their purported attributes highly with lower valuations for the disadvantages.
The development of demographic, psychographic, and economic profiles of consumers with an expressed demand for organic foods requires market research-the acquisition and analysis of data and information on values, preferences, purchasing patterns, and socioeconomic characteristics. Our operational hypotheses are that differences in perceptions, preferences, psychographic, and socioeconomic characteristics are systematically related to differences in purchasing patterns of organically produced foods. To test these hypotheses we need to test the null hypotheses of no significant differences between buyers and non-buyers.
MATERIALS AND METHODS
Late in 1987 we carried out a household consumer survey in three California counties: Marin, San Diego, and Sacramento. We utilized a mail survey of 1,946 randomly selected households based on a sampling frame provided by a national mailing list service.
The purpose of the study was to better understand consumer perceptions of and motivations for purchasing organically grown products. We also asked consumers to indicate whether or not they had ever purchased organic products and whether and what type of organic products they had purchased in the previous three months. Additionally, we asked respondents for personal information as to their age, income, gender, place of residence, and the like.
Respondents completed and returned 54 percent of the 1,769 deliverable questionnaires, and analysis of the questionnaires revealed no significant problem of responder bias. Qualitative responses were coded numerically to facilitate statistical analysis. Levels of importance or concerns were, for example, numerically coded from 1 to 5 to reflect the relative levels of importance of, or concern for, various perceived attributes or disadvantages.
Analysis of the data indicated, among other findings, that fully 65 percent of the consumer respondents perceived organic foods as better than or about the same as their conventionally produced counterparts; 40 percent rated them as better than conventional. While 30 percent gave no opinion on this question, a mere 5 percent perceived organic foods as worse than conventional (Jolly et al. 1989). This is not surprising in light of other data. When asked to rate the relative importance of five factors-food safety, nutrition, flavor, healthfulness, and food cost-in motivating food purchasing decisions, 75 percent of the respondents rated food safety as very important, 75 percent rated nutrition as very important, approximately 70 percent rated general healthfulness as very important, and 49 percent rated food costs as very important (fig. 1).
Figure 1. Importance to consumers of selected food puchasing factors (%)
Furthermore, when asked to assess changes in the quality of fresh produce currently available with what was available five years earlier, more than 50 percent perceived the level of flavor to be lower and approximately 50 percent perceived the level of healthfulness to be lower. Only 18 percent perceived an improvement in flavor and 29 percent in healthfulness (table 1).
TABLE 1. Perceptions of current fresh produce quality as compared to 5 years ago (%)
|Higher||Lower||About the same|
Considering that the 1970s and 1980s had been punctuated periodically by a number of food scares particularly related to chemical constituents and chronic health effects, and that a number of these constituents had been banned by regulations, its not surprising that consumers evidenced high levels of concern for food constituents and practices deemed to be significantly related to health risks for chronic conditions such as cancer, heart disease, diabetes, and hypertension. Figures 2 and 3 show levels of concern for a number of health-related food risk factors.
As shown, in figures 2 and 3, the highest levels of concern were reported for chemical residues, irradiation, and fat-from 50 to 60 percent of our respondents indicated the highest levels of concern for these factors.
Figure 2. Levels of consumer concern about chemical food risk factors (%)
Figure 3. Levels of consumer concern about nutritional food risk factors (%)
We could tentatively infer on the basis of this information that organically produced foods would be strategically positioned to take advantage of extant consumer concerns and preferences. In fact, when we analyze the attributes that appealed to the 40 percent of our respondents who rated organic as "better" than its conventional counterpart, we found that approximately 60 percent perceived organics as safer and as having a salutary effect on the environment. More than 50 percent identified perceived health benefits and nutrition value with organic products. Organic products also were perceived favorably in relation to freshness.
We have seen that purchasers of organic products highly value attributes such as safety, the environmental impacts of agricultural production practices, general health and nutrition impacts, freshness, and flavor. They value appearance less highly. This analysis seeks to further analyze the responses for systematic differences in demographic, economic, and psychographic characteristics between buyers and non-buyers. If there are significant differences, those factors on which they differ could be instrumental in the shaping of target marketing strategies. Since most of the consumer responses were translated into numerical scores, the data are amenable to parametric methods of statistical analysis. We employ analysis of variance to test for differences in means. F and t statistics are given for each pair of means and levels of statistical significance noted where appropriate.
Table 2 presents data on buyer and non-buyer responses on demographic and economic characteristics and the results of ANOVA tests of the null hypothesis of no difference between buyer and non-buyer. As indicated, the null hypothesis is rejected for occupation, age, and size of community. Buyers tended more to have service and white-collar as compared with blue-collar occupations. Interestingly, average income was not significantly different. However, buyers tended to be significantly younger then non-buyers, and tended to live in smaller cities and towns than non-buyers.
TABLE 2. Demographic factors: buyers of organic produce vs. non-buyers
|Mean scores for|
|Size of community||39.4||44.5||-4.069
MOTIVATIONAL FACTORS, PERCEPTIONS, AND CONCERNS
We hypothesized that there may well be differences in the prime considerations that inform food-purchasing decisions. Consumers were asked to rate the importance of nutrition, food safety, healthfulness, flavor, and cost of food in their food purchasing decisions. They were also asked to rate organic foods in comparison with their conventional counterparts in terms of whether organics were "better than," "about the same," or "worse" than conventionally produced foods. Finally, respondents gave their ratings of their levels of concern for a number of food attributes-most of them associated with perceived levels of health risk. These included concerns over pesticide residues, artificial coloring, additives, and preservatives, radiation by-products, cholesterol, salt, sugar, fiber, and fat.
Means and ANOVA results are presented in table 3. As the table's data show, buyers differ from non-buyers in some important attitudinal characteristics. In a broad sense, buyers and non-buyers attach the same levels of importance to nutrition, overall food safety, healthfulness, flavor, and food cost. We should note, however, that while not statistically significant, there were evident differences in mean scores for these factors. Nutrition was more important to buyers than to non-buyers, as were food safety, healthfulness, and flavor. And the cost of food was more important to non-buyers than to buyers. There was a large difference in the rating of organic foods vs. conventional foods as between buyers and non-buyers. The difference was signficant at the 99 percent level for both F-and t-statistics.
TABLE 3. Psychographic factors: buyers vs. non-buyers
|Mean factors for|
|Importance of nutrition||1.79||1.71||1.961
|Cost of food||1.36||1.42
|Rating of organic food||.45||.04||8.763
|Level of concern for residues||4.37||3.92||7.279
|Additives and preservatives||4.21||3.71||5.492
With respect to levels of concern for perceived risk factors, there were fairly consistent observed differences between buyers and non-buyers, and five of the variables were statistically significant for differences between buyers and non-buyers. Levels of concern about residues were significant, as were levels of concern for artificial coloring, additives and preservatives, radiation by-products, sugar, and salt. Concerns over cholesterol were almost identical for the two populations. But, interestingly, even where differences were not statistically significant as in the cases of fat and fiber, the levels of concern for buyers were greater than for nonbuyers.
DISCUSSION AND IMPLICATIONS
Organic production methods do not per se guarantee agricultural sustainability. However, to the extent that organic methods emphasize the health of the soil and employ soil building and maintenance techniques, they do increase the probability of a sustained resource base. Whether a given organic farm is economically sustainable depends on a complex array of factors-access to production resources, management ability, access to markets, consumer demand, and the entrepreneurial ability of the farm operator. To the extent that organic methods can be viable in an overall sense, they offer an alternative paradigm that may serve to motivate experimentation and change in conventional methods even if the bulk of agricultural production continues to occur in conventional production regimes.
It is in this latter context that organic systems may have their greatest impact. It may be imperative, therefore, that a reasonable level of viability be achieved and maintained for these systems. In this regard, experimentation and research are essential to develop data that can reduce risk levels and enhance overall economic performance.
This analysis has focused on consumer demand with a view to deriving inferences that may contribute to better strategic and tactical marketing decisions. In particular, target marketing could benefit from information on differences in the characteristics of buyers and non-buyers. Our analysis shows some important differences. We found it interesting that there was no difference between the mean incomes of buyers and non-buyers, nor was there a significant difference in educational achievement. Buyers, however, tended to be in non-blue-collar occupations-service and white-collar jobs and were significantly younger than non-buyers-8.5 years younger. And the average size of community in which buyers lived was 39,400, compared with 44,500 for non-buyers. Buyers also tended to be more health conscious, particularly regarding chemical residues, preservatives, and additives.
The development of cluster marketing techniques using Geographic Information Systems offers a potentially useful technological tool for target marketing. For example, the Claritas Corporation has developed a methodology that identifies 40 lifestyle clusters in the U.S. population. Further, the methodology enables analysis at the micropopulation level by zip code. The Claritas model analyzes hundreds of household and consumer characteristics but organizes them into five principal groupings: social status and rank, mobility, ethnicity, family life cycle, and housing style (Weiss 1988). The Claritas model organizes cluster types on a scale from 1 to 40, with 1 having the highest income and social ranking.
We have identified demographic clusters that, from cursory analysis of the Claritas lifestyle descriptions, appear to be promising targets for organically produced foods. These include the Young Influentials (ZQ7), Bohemian Mix (ZQ11), and Single City Blues (ZQ28).
Based on 1987 data, Young Influentials made up approximately 3 percent of the U.S. population, ranged in age from 18 to 34, and had a median household income of $30,398. This group resides primarily in the "yuppie inner-ring suburbs living in apartment and condo dwellings." Their occupations are predominantly white-collar with a high proportion of college-educated persons. Their index of participation in environmental organizations is three times the national average. Their consumption of yogurt and whole-wheat bread is 50 percent greater than the national average. As Weiss describes this group,
Many residents have the kind of high-tech, white collar jobs that provide substantial incomes (38 percent earned over $35,000) and that allow leisure-intensive lifestyles. On a sunny weekend, Young Influential residents can often be found jogging, biking or speed walking-sometimes to a bar for drinks and dancing. Young Influentials don't care about good schools, because they don't have children. They want a mall with a sushi bar, gourmet cookie shop, travel agency, and psychotherapy center. (Weiss 1988)
Further, with their double incomes and acquisitive ways, Young Influentials are a fast-track marketer's dream. They're more likely than average Americans to own a convertible, travel abroad, drink domestic champagne, and attend musical performances. Serious about fitness, they spend twice as much time as the general population sailing and skiing, playing racquetball and tennis. And they eat to win, as seen by their tendency to fill their shopping carts with healthy snack foods such as yogurt, nuts, cheese, and wheat bread. (Weiss 1988)
Bohemian Mix made up 1.1 percent of U.S. households. Its primary age range is from 18 to 34, with a 1987 median household income of $21,916. Major identifying demographic characteristics are bohemian inner-city neighborhoods, multi-unit housing, racially mixed singles, college graduates, and white-collar jobs. These neighborhoods consists of communities of "Éstudents, artists, writers, and actors" with a "unique income profile: a U-shaped graph with many high- and low-income residents but only a small middle class. An air of adventure pervades the funky brownstones and gentrifying apartment houses, sidewalk cafes, and benefit dances for the Sandinistas" (Weiss 1988). Food consumption patterns include whole-wheat bread, fruit and vegetable juices, cheese spread, dry soup, tea, and frozen TV dinners. Their index of participation in environmental organizations is nearly 600 percent of the national average (Weiss 1988).
The third cluster that shows promise for organic products is Single City Blues. This demographic group makes up 3.3 percent of the U.S. population. Its primary age range is 18 to 34, with a median 1987 household income of $17,926. Key demographic characteristics are downscale city districts, multi-unit housing, racially mixed singles, some college educations, blue- and white-collar occupations. While 57 percent of this group reported incomes under $20,000, they represent a logical target for organic foods. "Within ramshackle houses and funky apartments live immigrants, minorities, and working-class whites, aging hippies, blue-collar laborers, and struggling artists" (Weiss 1988). Furthermore, "as recruits in the natural foods revolution, locals are 50 percent more likely to shop at health-food stores and are big consumers of frozen yogurt, bottled spring water, and natural cheeses" (Weiss 1988). And their index of participation in environmentalist organizations is 250 percent of the national average.
The three cluster groups briefly described here made up a total of 7.3 percent of the U.S. population-a not inconsequential proportion. It is our contention that if organically produced products are to gain a durable foothold in the consumer marketplace, they must find a viable market niche. Our analysis has shown how organic food users differ essentially from non-users in key demographic, psychographic, and economic characteristics. We have also drawn on the lifestyle clusters developed by Claritas for its geodemographic marketing system. By targeting these three clusters of consumers, organic food marketing systems can exploit a potentially strong base of consumer demand, and can avoid the type of boom-bust experience that occurred in the wake of the Alar scare in 1989.
Goldman, M. C., and William Hylton (eds.). 1972. The Basic Book of Organically Grown Foods. Emmaus, Pennsylvania: Rodale Press.
Jolly, Desmond A., Howard Schutz, Jagjit Johal, and Kathy Diaz. 1989. Marketing Organic Foods in California.Davis: University of California Sustainable Agriculture Research and Education Program.
Smith, Wendell R. 1956. Product differentiation and market segmentation as alternative marketing strategies.J. Market., July 1956: pp. 3Ð8.
Weiss, Michael J. 1988. The Clustering of America. New York: Harper and Row.