April, 2008

Research Perspective and Comments & Analysis

Finding Our Way To Innovation

Automaker Henry Ford once said, “If I’d asked people what they wanted, they would have asked for a faster horse.” Ford felt that consumers who don’t have their heads in a particular market day in and day out have limited ability to anticipate the marketplace. Yet to think we can single-handedly understand consumers and create meaningful solutions to their everyday problems is just plain old-fashioned.

Today, dialogue drives discovery and marketplace innovation, and Produce Marketing Association (PMA) helps foster that dialogue — with the industry, with experts and with consumers. Today’s consumers are much more complex than Ford’s. With little patience for products and services that don’t speak directly to them, they want a voice and a choice. After all, their breadth of choice is driven by a myriad of information sources as varied as the Food Network on TV and many Internet recipe sites suggesting new uses for staple produce items as well as easy ways to use exotics.

From Jan. 22-24, 2008, Opinion Dynamics Corporation conducted a national telephone survey for PMA of 1,000 primary-shopper consumers. To keep produce marketing on track with consumer insight, we examined a range of issues dealing with produce-department shopping habits.

In the supermarket, it is clear that choice rules. The ability to choose from an array of fruits and vegetables ranks as extremely important for 63 percent of respondents. We all know the bounty our industry produces. Case in point, PMA’s I Know Produce fruit and vegetable database offers in-depth information for nearly 175 produce commodities and more than 2,800 varieties with continually updated content about the newest varieties and offerings.

Meanwhile, consumers are split on how they like to check out, once again indicating they like to have choice; a little over half (53 percent) of shoppers tell us they never use self-checkout, while another 47 percent of respondents use self-checkout most or all of the time.

When asked what they think would improve their produce department, not surprisingly, the consumers we surveyed place lower prices (aka the “faster horse”) at the top of what would most ease their produce department frustrations. With only 8 percent saying their stores need a wider selection, it seems that we are offering consumers a good selection — though how they define a “good” selection constantly evolves.

Retailers should also be glad to know that 48 percent of shoppers can’t suggest anything they’d change in the produce department; 62 percent say the department’s organization makes sense. If department layout is going unnoticed and shoppers aren’t slowed, then today’s model seems to be working — for today, anyway.

The recent market entry of Fresh & Easy stores from Tesco, however, suggests that Tesco thinks it has a new insight into what consumers’ want that others haven’t yet met — or it suggests that consumers’ interests may change if they grow to find the Tesco format appealing.

In reality, few consumers have time to evaluate the flow of their produce department. Set on their needs and not wanting to waste time, most shoppers know in advance what produce they are looking to buy, with 48 percent sticking to a predetermined shopping list and 14 percent shopping for a specific recipe.

This presents an opportunity for produce retailers to use the full arsenal of marketing tools at their disposal, such as store-special circulars, in-house magazines and Web sites, to influence those shopping lists. Conversely, 25 percent of the consumers surveyed report they are impulse buyers, who could then be encouraged to make more impulse produce purchases if influenced by informative displays and eye-appealing products. More impulse purchases spurred at point of sale means higher produce sales and profits.

One thing that can affect the likelihood and expenditure of produce shoppers is how produce is priced. When asked about their habits concerning weighing produce prior to purchasing, 44 percent responded they never weigh produce before arriving at the checkout line. This data point provokes the age-old debate about pricing produce by the piece or by the pound.

Ford’s weakness was that he himself lacked vision of all the possibilities. Ford also said of the revolutionary Model T, “The customer can have any color he wants so long as it’s black.” Advances today rarely are one-sided, and all voices are vital. Are you part of the dialogue?

Food-Safety Footnote: January’s survey participants also told us their confidence in produce safety continues to increase, reaching the highest level since we began measuring in September 2006, a mean safety score of 5.0 on a scale of 7. We can’t rest in our efforts by any means; the recent ground beef recall of 143 million pounds was a painful reminder of what’s at stake.

PMA’s food safety initiative first announced in October 2006 continues to march forward. On the research front of that initiative, we are pleased to welcome Bonnie Fernandez as new executive director of the Center for Produce Safety at University of California, Davis, partially funded by PMA. Her voice will be critical to the ongoing food-safety dialogue that is vital to the future of our industry.

A Blessing And A Curse

On Nov. 11, 1947, in a speech before the House of Commons, former Prime Minister Winston Churchill had this to say about democracy: “Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time.”

In much the same vein, market research is deeply flawed. Henry Ford was correct; it is almost impossible to get consumers to request truly great advances.

During the age of the great transatlantic ships, if you had surveyed the passengers about how they hoped to see transatlantic travel develop, they would have spoken of faster ships, roomier cabins and more frequent crossings. If anyone had said in a focus group that he wanted to sit inside a giant aluminum bird that would fly him across the Atlantic in a few hours, he would have been ridiculed.

So surveys and focus groups, mall intercepts and other research techniques are unlikely to be the source of paradigm-shifting advances, just as they were not the source of Whole Foods, Wal-Mart and warehouse clubs, each of which sprung from the minds of brilliant entrepreneurs — John Mackey, Sam Walton and Sol Price.

Yet market research is all most of us have. A few people blessed by great insight will see what others do not and develop the concepts of tomorrow. Most of us will have to be satisfied with incremental improvements and, for that, marketing research does a bully job.

Still, it must be interpreted carefully. The most common mistake is thinking that what consumers say is most important provides an action agenda for a particular business. It is rarely so.

To be useful, we have to view consumer responses within the context of the business environment. When consumers list traits that are vital to them in selecting a place to shop, they almost always will say things such as price, cleanliness and variety.

The problem is that such information, precisely because it is so consistent among such a large majority for such a long time, has been internalized into the business. We just don’t have many stores, and no large chains, that are successful but dirty, high-priced and with a poor assortment. Even saying it is kind of ridiculous.

Some chains may emphasize one element over another, so Aldi and Wal-Mart may highlight price, whereas Wegmans will highlight assortment. But in one way or another, these three values — price, cleanliness and assortment — are the ante that modern retailers pay to get in the game.

The trick is that the winning hand is likely to be played with cards valued by only a minority, often a small one. So once the price- cleanliness-assortment hurdle is breached and an adequate offer is made in these areas, the differential may be organic or kosher or halal; it may be taking coupons or a favorite credit card or offering gift baskets. In produce, consistently offering an assortment appropriate for particular ethnic groups very often can be the key to capturing the loyalty of a consumer segment.

Another problem with consumer research is that consumers may not know what actually motivates them. So when we get a report of sensible consumers being focused on price, we have to remember that someone out there bought all those pet rocks. Perhaps consumers think this is a sensible thing to say, but then the “treasure hunt” aspect at Costco or the Hawaiian-shirted staff at Trader Joe’s distracts them. Many consumers think it self-indulgent to say they want to shop where they have fun doing so.

Here is another thing that complicates consumer research: What consumers think of things is dependent on how they are presented to them. Pampers failed its first three test markets. In part this is because the marketing campaign was focused on mother’s convenience. A change of direction focusing on the comfort of babies led to an astoundingly successful product. We may learn from consumers that they value convenience, but that doesn’t mean they want to be sold that way.

Think about fresh-cuts…are they sold as a convenience or as a way to get a wide assortment of healthful produce items into the children? There may be many opportunities in switching emphasis. We’ve found similar issues in positioning product. A salad kit sold as complete can make some moms feel as if they are not doing their jobs in the kitchen. The same product promoted as a salad base, which consumers should complete by adding, say tomatoes and cucumber and onion, can attract a whole new clientele.

Henry Ford’s comment about not offering colors was his way of trying to balance between consumer desires and operational efficiency. He made a mistake and lost Ford’s lead in the automotive industry. That is why listening to consumers is vital. The key, though, is to listen shrewdly. To paraphrase Churchill, market research is the worst way of figuring out what consumers want, except for every other way we have ever tried.

Food-Safety Footnote: Bryan’s column was written just before the news of the FDA “Import Alert” on certain cantaloupes from Honduras. It will be interesting, and nerve racking, to see how PMA’s research finds consumer attitudes were affected by this “Alert” and subsequent recalls.

We welcome Bonnie Fernandez to the produce industry.