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FACTORS A F F E C T I N G C O N S U M E R P U R C H A S E D E C I S I O N F O R R O U N D W H I T E POTATOES H. Cheng, A. S. Kezis, S. R. Peavey, and D. A. Smithl

Abstract Potatoes are typically marketed by type, such as Russet or Round White, rather than by va¡ However, sensory tests have shown that varieties with similar outward appearance have distinguishable internal and cooking characteristics. This study summarizes tests of consumer ability to differentiate visually similar round white potato varieties based on the performance of the potatoes in home use and examines how consumer satisfaction, purchasing habits and demographic variables influence the repurchase decision.

Compendio Las papas son comercializadas normalmente por tipos tales como Russet o Redonda Blanca, m• que como variedades. Sin embargo, pruebas sensorias han mostrado que las variedades con apariencia externa similar tienen caracterŸ internas y culinarias diferentes. Este estudio prueba la habilidad de los consumidores para distinguir visualmente las variedades similares de papa blanca redonda bas• en el comportamiento culinario de las papas y examina c£ la satisfacci£ de los consumidores, sus h• de compra y las variables demogr• influyen sobre las decisi£ de seguir comprando.

Introduction Like many other vegetables, Maine potatoes are marketed by type (russet, round white, etc.) rather than by variety (Burbank, Katahdin, etc.). Maine currenfly generically markets over fifteen different round white varieties. Consumers rarely know what va¡ they are purchasing. However, sensory tests have shown that varieties with similar outward appearance have distinguishable internal and cooking characteristics. In the past few years, there has been industry concern as to whether consumers could actuaUy differentiate between round white varieties in home use, and if variations in performance of these varieUes impacted the consumer's purchasing behavior. lMaine Agricultural Expefiment Station Publication No. 1443. The authors are Assistant Professor, Associate Professor, Assistant Scientist and Adjunct Professor, respectively, Department of Ag¡ and Resource Economics, University of Maine. Accepted for publication Ma)' 19, 1990.

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Previous smdies on potato consumption have focused on price effects and impacts of socioeconomic factors, and treated aU types of potato as a homogeneous product (Capps and Love 1983, Cox, Ziemer, and Chavas 1984). The effects of potato type, packaging, potato origin and terminal potato market, and the level ofpotato stocks on price have also been investigated (Goodwin, Fuller, Capps, and Asgill 1988; McRae, Fleming, and Fisher 1984). However, little work addressing the effect of potato varieties on consumer purchase decision is available. The objectives of this study are to determine if consumer acceptance of potatoes in home use varŸ by variety and to quantify how their level of acceptance and other characteristics impact their purchase decision. Four round white varieties were selected for testing: the Katahdin, Ontario, AF303-5, and the FL657. The Katahdin potato has long been considered a standard by the Maine potato industry. All new varieties are compared to the Katahdin in lab sensory tests. The Ontario is one of the predominate round white potatoes produced in Maine for tablestock marketing. The AF303-5 is a variety developed within the Maine Potato Breeding Program. The FL657 had previously been used exdusively asa chipping potato by Frito-Lay. The company recently released it in favor of improved chipping va¡ However, the FL657 was still being produced by a number of growers for tablestock. T h e Data

A survey instrument was developed and extensively pretested. The final questionnaire was printed on a two-color postage paid card containing twelve questions pertaining to why the consumer had purchased the product, how the product was used, and how suitable the potatoes were for different preparations. In addition, consumers were asked to list any complaints, to compare the potatoes to their usual purchase, and to state whether or not they would purchase the same potatoes again, if available. Respondents were also asked to provide basis demographic information such as household income, household size, age and sex of the respondent. The questionnaire a n d a colorful recipe insert were placed in a heat sealed clear plastic package. The different varieties were separated, sized 2 88 - 3 89 washed and packed into five-pound poly bags labeled Maine white, premium potatoes, U.S. No. 1. The questionnaire package, which included a code to identify the specific variety, was inserted in each five-pound bag. In late February 1988, a total of 17,400 bags containing the four varieties were shipped through normal market channels to a major New Engiand supermarket chain, and then sold at an identical price throughout the stores. A total of 733 questionnaires were returned yielding a response rate of 4.2 %. This analysis includes data from 538 useable responses reporting

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complete relevant information. Responses were fairly evenly distributed among the four varieties; 28.4% ofretums corresponded to the Katahdin, 23.6% were from those who had purchased the Onta¡ 22.7% pertained to the FL657 and another 25.3% reported on the AF303-5. Over 44% of the respondents were between the ages of 25-44 while only 4.6% were under 25; and 27.3% and 23.6% of the respondents were betweem 45-64 and above 65 years old, respectively. In this study, the respondents were assumed to be the person responsible for food purchase and representing the consensus of the household. Furthermore, 34.4% of the respondents had annual household income less than $20,000, 50.9% between $20,000 and $50,000, and 14.7% above $50,000. Over 90% of the respondents stated that they would be willing to continue purchasing the same type of round white potatoes, if available; and 93.3% indicated the price ofthese potatoes as reasonable. Of the 538 respondents, 17.8% named round whites as the only type of potato they usuaUy purchase while 48.1% named russets, and 21.4% indicated they usuaUy bought more than one type of potatoes. The Model

The model specified in this study hypothesizes the following factors to influence the consumer's repurchasing decision: (1) the degree of consumer satisfaction in home use, (2) variety used, (3) type of potatoes the consumer typically purchases, (4) age of the respondent, and (5) household annual income. Consumers rated the potatoes as poor, fair, good, or excellent for each preparation used. These were coded as scores ranging from 1 for poor to four for exceUent. A s a measure of serving quality an average score was calculated using the composite consumer ratings of potatoes when boiled, baked, mashed, or fried. To test ifconsumer acceptance of potatoes varies by variety, three binary variables were defined for the four varieties with the FL657 serving as the base (or omitted) category. The type of potatoes typically purchased by the respondents was included in the model to account for possible consumer loyalty to any one particular type, which may influence their willingness to purchase the potatoes considered in the study. Consumers were divided into four groups according to the type ofpotatoes typically purchased: 1) russets only, 2) round whites only, 3) other types of potatoes specified by respondents, p¡ red or long whites, and 4) mixed (usuaUy buy more than one type ofpotatoes). Three binary variables are used to represent the four groups of consumers with those who usuaUy buy the other types of potatoes as the base category. Age and income of the respondents ate included in the model to account for possible differences in consumer preferences and tastes. Two bina/ry variables are specified to classify responsents into three age groups--

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u n d e r 45, between 45 and 65, a n d above 65, with those u n d e r age 45 as the omitted category. 2 In addition, two binary variables are used to classify respondents into three income groups--under $20,000, between $20,000 a n d $50,000, and over $50,000. Assuming that there exists ah u n d e r l y i n g response variable y*, the probit model for this study is given by: (1) Y * - - ~ + ~IOT i + ~ K A i + ~ A F i + ~4SQi + ~sRS i + ~ R W i + ~ M I X i + ~ A G E 1 i + ~ A G E 2 i + ~loINC1 i + ~ n I N C 2 i + e i, and,

P U R H i = 1 if Y~' >0 = 0 otherwise. Where, if the respondent reports willingness to purchase again otherwise, ir the variety used is the O n t a n o otherwise, ir the variety used is the K a t a h d i n otherwise, ir the variety used is the AF303-5 otherwise, an average composite rating of serving quality ranging = from 1 for poor and 4 for excellent = 1 if usuaUy b u y russet only = 0 otherwise, = 1 if usually b u y r o u n d white only = 0 otherwise, = 1 if usually b u y more than one type of potatoes =0 otherwlse, = 1 ir the respondent is 45 to 64 years of age, = 0 otherwise, = 1 if the respondent is over 64 years of age, = 0 otherwlse, = 1 if annual household income between $20,000-$50,000 = 0 otherwise, = 1 if annual household income equals of above $50,000 = 0 otherwise, disturbance term of the statistical model.

P U R H i -- 1 --0 OT i -- 1 --0 KA i -- 1 --0 AF i -- 1 =0 SQi RS i RW i MIX i AGE1 i AGE2 i ING1 i INC2 i el

2Four age groups were specified in the questionnarie: under 25, 25 to 44, 45 to 64, and over 65, and only 4.6% of the respondents were under 25 years of age.

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T h e estimation technique for the probit model is m a x i m u m likelihood ( A m e m i y a , Pindyck a n d Rubinfeld). T h e m a x i m u m likelihood estimates are consistent and asymptotically normally distributed. Consequently, conventional tests of significance a n d likelihood ratio tests are applicable.

Empirical Results T h e m a x i m u m likelihood estimates of the probit analysis are exhibited in Table 1. T h e estimates can be used to obtain predictions of the underlying response variable Y*. T h e value of the s t a n d a r d n o r m a l c u m u l a t i v e dist¡ function F(Y*), gives the probability of repurchasing the potatoes. T h e partial derivatives of the n o n l i n e a r p r o b a b i l i t y function evaluated at s a m p l e m e a n s are shown u n d e r the c o l u m n h e a d i n g "change in probability" in Table 1. T h e r e s p o n d e n t s w h o p u r c h a s e d the O n t a r i o a n d AF303-5 have significantly lower probabilities of b u y i n g the s a m e potatoes again as c o m p a r e d to those w h o p u r c h a s e d the FL657, ceterisparibus. O n the o t h e r h a n d , r e p u r c h a s i n g decisions between c o n s u m e r s using the K a t a h d i n a n d those u s i n g the F L 6 5 7 are not statistically different. T h e average composite r a t i n g o f serving quality in h o m e use h a d a significant positive effect on their probability ofrepurchasing. T h e statistical results also indicated significant differences in the probabilities o f r e p u r -

TABLE 1.--Maximum likelihood estimates for the probit analysis.

Variable

Parameter Estimate

Standard Error

Change in " Probability

OT KA AF QLTY RS RW MIX AGE1 AGE2 INC1 INC2 Intercept

- 1.0341"* - 0.4949 - 0.8898** 1.4234* * 0.7688** 0.9312" * 0.6315" 0.5473" - 0.0847 - 0.2631 0.0332 - 2.7441 **

0.3864 0.3985 0.3859 0.1595 0.3143 0.4079 0.3453 0.3020 0.2857 0.2677 0.3744 0.6679

- 0.050 b - 0.024 - 0.043 0.069 0.037 0.045 0.031 0.026 - 0.004 - 0.013 0.002

Pseudo-R ~ 0.4127 *Statistically Significant at 10% level. **Statistically Significant at 5% level. "At the sample means Y* = 2.05397, f(Y*) = 0.048 (value of standard normal probability density function). Uparameter estimate times the value of the probability density function.

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chasing due to the type of potatoes consumers usually buy. Respondents who typically purchased round whites only, russets only, and mixed (usually buy more than one type of potatoes) had significantly higher probability ofrepurchasing the potatoes than those who usually purchased other types of potatoes (primarily red or long whites). Respondents who usually purchased round whites ordy were estimated to have the highest probability of repurchasing the potatoes. However, the t-tests employed to examine the equality between coefficients indicated no significant difference in repurchasing decision between consumers who usually bought round whites, russets, or mixed. Respondents between the age of 45 and 64 had significanfly higher probability of repurchasing the potatoes than those who were in the younger or older age catego¡ No statistically significant impact ofhousehold mcome on repurchasing decision was found. Various specifications for income variable were made. Similarly, no significant effect of income was estimated. The parameter estimates from the probit analysis can be used to develop proffles of the likelihood of repurchasing. As an example, Table 2 presents the probabilities of repurchasing the selected varieties by the type of TABLE 2.--Profile of the probability of repurchasing the potatoes by the type of potatoes consumers typically purchaxed. ~

Variety

Russets

Potato Typically Purchased Round Whites Mixed

Other

....... Probability ....... Ontario 0.548 0.611 0.494 0.259 Katahdin 0.746 0.795 0.700 0.457 AF303-5 0.604 0.666 0.551 0.308 FL657 0.876 0.906 0.846 0.651 "For female respondents aged between 45-64, rating the potato used as fair, and household annual income between $20,000 and $50,000. potatoes typically purchased for respondents between 45 and 64 years old, who rated the test varieties as "fair; and with annual household income between $20,000 and $50,000. The probability of repurchasing the FL657 was estimated to be the highest followed closely by the Katahdin. The Ontario exhibited the lowest repurchasing probability overall. For those consumers who typically bought other types of potatoes, the probability of repurchasing the Ontario and the AF303-5 was about 0.3. O n the other hand, for consumers who typically bought round whites only, the probabilities of repurchasing the FL657 and the Katahdin were 0.91 and 0.80, respectively.

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Summary and Conclusions Potatoes are typicaUy marketed by type rather than by variety. A1though different potato varieties may be indistinguishable by outward appearances, they vary gready in other physical characteristics. This study was designed to test ability of consumers to differentiate visually similar round white potato varieties based on the performance of the potatoes in home use, and to examine how consumer satisfaction, purchasing habits and demographic variables influence the repurchase decision. The data were obtained from a survey completed by respondents who purchased one of four different round white potato varieties in retail stores located throughout New England. A probit analysis was used to estimate the impacts of factors on the probability of repurchasing the specific test potatoes. The specific factors considered in the model were potato varieties, average serving quality ratings of the vafieties in home use, type of potatoes usually purchased, the age of the respondents, and annual household income. From the probit analysis, ir was evident that consumers do have the ability to differentiate round white potato varieties based on the performance of the potatoes in home use. Their willingness to repurchase the round white potatoes is affected by the variety used and the overaU serving quality of the potatoes in home use. Furthermore, usual type of potato purchase, and age of the respondent significanfly influenced the repurchase decision. This study identifies the FL£ and the Katahdin as having higher consumer acceptance than the Ontario and the AF303-5. Notably, the probability of repurchase was most influenced by the serving quality of the potatoes. Literature Cited 1. Amemiya,Takeshi. 1981."QualitativeResponse Models: A Survey;Journal of Economic Literature, 19: 1483-1536. 9. Capps, O., Jr. and J.M. Love. 1983. "Determinants of Household Expenditure on Fresh Vegetables,"SouthernJ of Agr Economics, 15:127-32. 3. Cox,T.L., R.E ZiemerandJ.-P Chavas. (1904). "HouseholdDemand for Fresh Potaroes: A Disaggregated Cross-Sectional Analysis, WesternJ of Agr Economics, 9:41-57. 4. Goodwin, H.L., Jr., S.W. Fuller, O. Capps, Jr. and O.W. Asgill. 1988. "FactorsAffecting Fresh Potato Price in Selected Terminal Markets, "WesternJ of Agr Economics, 13(2):233-243. 5. Kezis,A.S, S.R. Peaveyand D.A. Smith. 1988."Testingfor Differencesin Consumer Acceptance of IdenticaUyAppearing Potato Varieties"J of Food Distribution Research, forthcoming. 6. McRae, D.C.,J. Flemingand A. Fisher. 1984. "The Developmentofa Rigid Carton for Retailing Potatoes, Agr Engineer, 39:74-79.

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7. Pindyck, R.S. and D.L. Rubinfeld. 1981. Econometric Models and Economic Forecasts, New York: McGraw-HiU. 8. U.S. Department of Agriculture. 1986. Economic Res Ser National Food Review. 9. Work, T.M., D.A. Smith, S.R. Peavey, R. True, A.S. Kezis and A. Bushway. 1988. "Investigation of Consumer Attitudes Regarding Marketing of a Potato Product Through Focus Group Interviews: Abstract of papers given at the 72nd Annual Meeting of the PAA, Am Potato J, 65.