Intriguing Start For Future Studies

By Jim Prevor, Editor-in-Chief, Produce Business

The design of this study is truly ingenious and the industry really owes a debt to Professor Rickard, his associates, and Cornell for attempting to inject some rigor into a debate that often has depended more on superstition than science.

As is typical with ground-breaking research, the study raises many questions that only time and more research will be able to answer. For example, one question deals with the long-term impact of advertising on purchase and consumption patterns. It is plausible to believe that effective advertising might boost the short-term value perception on a given item or range of items. So in a burst of enthusiasm after seeing an ad, research subjects may well bid higher to get fresh fruits and vegetables.

Typically, though, the question to be addressed in running such a campaign is a financial one. Even if such a campaign were to be run by the government as a promoter of public health, there would be an examination to ascertain the costs and benefits of such an effort. This would involve many elements, but a crucial one would be the ability of the advertisements to foster behavioral change over long periods.    

Another intriguing issue for future exploration would be the degree to which this result would change in the competitive media environment that we live in. Today, an ad promoting fresh produce on television is highly likely to be preceded by an ad for beer and followed by an ad for ice cream. Possibly this study actually examines a “media monopoly” effect, and if those ads had been for beef, chicken or baked goods, those categories might have found a similar effect.

Another question is to further explore the issue of value perception vs. purchase propensity. One might be willing to pay more for a given item without necessarily wanting to buy more of that item.    

Indeed, one wonders if we could adapt this type of research to determine optimal pricing at retail, meaning the price level that would produce the highest dollar value for the crop at retail.

Of course, as is always true in research, the answer you get depends on the question you ask. Even if we were to accept this study as definitive proof that a generic promotion program would increase produce consumption, that doesn’t make it a slam dunk that the industry would or should be willing to pay to conduct such a program.

Increasing consumption may be a worthwhile public health goal, but for individual produce producers, the issue with an investment in generic promotion is the same as with any other investment — what is the return on the investment?

On the one hand, you have a great division between growers of different crops. Some tree crops take many years to grow and so, presumably, if there was a sudden increase in demand, these producers would enjoy a windfall of profits at least until production could be increased many years later. On the other hand, many row crops can be increased in production almost immediately, so there would be less likelihood of a price increase from generic marketing.

Given this, the ability to benefit from an increase in consumption varies by type of company. A large marketer might benefit from an increase in consumption by growing its business, representing more acreage, etc. Some producers or family businesses, though, grow a fixed amount of acreage or stop the growth of their businesses based on the capacity of family members to handle business. If this family grows 500 acres of zucchini, and consumption of this item increases 20 percent and production increases 20 percent, it is not obvious that this family farmer will benefit in any way from increased consumption of his crop — yet he will be paying for the generic promotion program. This means, of course, that he will be poorer, even if the program succeeds in its goal of increasing consumption of his items.

In fact, there is no guarantee that a successful program will be successful for every crop. Indeed, it would be interesting to see this research expanded to ascertain how the value perception of individual items is changed by a generic promotion. Does it matter, for example, if a particular item is pictured in the ad?

Another issue is how to spread costs throughout the marketing chain. If the expectation here was that the effort will lift produce prices at the farm, it would make sense to say that growers should pay for the effort — they are the ones who would benefit. This issue was raised, however, in the context of an effort to increase consumption. As such, the expectation was that produce production would increase and prices would not go up. So the winner for any individual produce company had to be the ability to sell more volume. Yet if this is the case, it is not clear why producers should pay the bill.

Wouldn’t a wholesaler benefit from the doubling of its business as much as a producer? What about retailers or restaurants that would get to sell more produce?

One assumes that these retailers and restaurants would object. After all, would increase consumption of produce actually increase their sales or would it simply switch business from another department? Perhaps a future research study from Professor Rickard, his associates and Cornell will give us the answer.