VALUE DETERMINATION OF PESTICIDE RESIDUE-TESTED POTATOES

Value Determination of Pesticide Residue-Tested Potatoes*

by

Stephanie PeaveyAssistant Scientist

Department of Agricultural and Resource EconomicsUniversity of Maine

Duane SmithAdjunct Professor


Alan KezisProfessor


Abstract

This study analyzed consumer response topotatoes tested for pesticide residues. Thesepotatoes were packed in five pound bags andpriced at three different levels in participatingsupermarkets. Even when sold at identical prices,consumers continued to favor the traditional roundwhite over the residue-tested potatoes. However,sales of residue-tested were equal at all three pricelevels, indicating little price resistance among con-sumers interested in this type of product.

Introduction

Consumer preferences have been greatlyinfluenced by growing concerns about food safety.The February 1989 release of the controversialreport, “Intolerable Risk: Pesticides in our

Children’s Food, ” by the Natural ResourcesDefense Council spurred a nationwide fear thatbrought food safety issues into the public andpolitical spotlight (Shimskey, 1989).

The actual health risks continue to bedebated. Nevertheless, the results of a consumerattitude survey conducted by the Food MarketingInstitute show that chemical use and pesticideresidue in the food supply is a major worryamong consumers (Winter, 1988). This has hadsubstantial impact on growers, shippers and buy-ers. Specifically, more and more food suppliersand retailers are contracting with commercialservices for pesticide residue-testing on variouscommodities to offer consumers an added level ofassurance about food safety (Gordenker, 1989).There is little systematic information about con-sumer response to residue-testing or their willing-

*Maine Agricultural Experiment Station

Journal of Food Distribution Research

Publication #1497

September 90/page 21

ness to pay for it. A perspective on this questionis vital to growers and suppliers as the food safetyissue continues to gain momentum.

This report describes the proceeding andresults of a market test conducted in storesthroughout central and southern Maine on potatoestested for selected pesticide residues. The studywas designed to analyze consumer response toresidue-tested potatoes with the purpose of acquir-ing a better understanding of the value consumersplace on the testing feature.

Objectives

1.

2.

3.

4.

The study was based on four objectives:

To determine if Maine consumers preferpotatoes tested for pesticide residue overtraditional Maine round white potato offer-ings.

To identify the additional price, if any,consumers are willing to pay for the pesti-cide residue-tested potatoes, relative to thestandard round whites.

To examine the effects of selling the pesti-cide residue-tested potatoes on the sales ofstandard round white potatoes.

To understand why consumers purchasedthe pesticide residue-tested product, assessthe importance of this characteristic in theirproduce purchasing decisions, and analyzetheir willingness to continue buying residue-tested potatoes.

The results are expected to provide packers,shippers and retailers with insights about con-sumer response to residue-tested potatoes and helpthem develop more refined marketing decisions onthe product.

Methodology

The study design was based on two partsrelating to the objectives. To meet the first threeobjectives, part one consisted of ‘in-store experi-ments and statistical analyses of potato shipmentdata from participating retail stores. The second


component, designed to accomplish objective four,incorporated a consumer survey of attitudes aboutthe residue-tested product and consumer satisfac-tion with the potatoes. Brief survey forms wereenclosed in one-third of the bags containing resi-due-tested potatoes.

In-Store Experimental Design

The store experiment was conducted over aconsecutive seven week period from October 2through November 18, 1989. In cooperation witha major New England retail chain, twelve grocerystores located throughout central and southernMaine were divided into four groups labeled I toIV. Each group contained a large, medium andsmall sized store assessed in terms of square feetand customer counts.

Actual sales information on potato sales wasunavailable. As an alternative, potato shipmentdata had to serve as a proxy for sales of roundwhite and residue-tested potatoes. The producedirector at the chain’s headquarters provided threesets of data for the analysis: 1) shipments of totalround white potatoes received by each store, 2)shipments of total round white potatoes in fivepound bags, and; 3) shipments of five ~oundresidue-tested round whites. Shipment data wereadjusted for changes in store inventories. Duringthe first three week pre-test period, shipments ofMaine round white potatoes were monitored toobtain a basic profile of each store and subse-quently, each study group.

In the four week test period, three of thefour groups sold the round white residue-testedpotatoes in five pound poly bags. These bagswere labeled with the brand logo that identifiedthe potatoes as tested for pesticide residues andwere displayed beneath a price card containing thesame logo. As the basis for comparison, the teststores also sold the standard Maine round whitepotatoes in five pound bags. Produce ma~agerswere asked to sell the two types of potatoes inclose proximity and in displays of equal size.

The residue-tested potatoes were virtuallyidentical to the standard round whites in terms ofthe physical appearance of the potatoes. Weeklystore visits were conducted to ensure that the


quality of the standard and residue-tested potatoeswere comparable. However, residue-tested pota-toes were sold in bags carrying the brand logo ofthe company sponsoring the research. This bagdesign was distinctly different from the standardfive pound bag sold at the participating stores.Although the package difference may have hadsome effects on purchasing behaviors, it is alsolikely to have alleviated the incidence of uninten-tional purchases of residue-tested potatoes. Hadthe two types of potatoes been sold in identicalbags, it is likely that many consumers would havemade their potato purchase without noticing theresidue-testing logo.

In each of the three store groups carryingboth types of potatoes, the residue-tested productreceived one of three price manipulations duringthe test period, constituting the treatment phase ofthe study. The specific treatment scenarios of thefour groups are described below:

I. Group I was designated as the non-treat-ment condition in which none of the stores soldthe residue-tested potatoes. Weekly round whitepotato shipments were monitored in these storesthroughout the pre-test and test weeks to providea benchmark for analyzing sales of round whites.By comparing average round white shipmentsfrom the other three treatment groups to the datarecorded for Group I, the results were expectedto show the impact of selling residue-tested pota-toes on round white shipments (sales).

II. Group II sold both the standard Maineround white packs (five, ten, twenty, and some-times fifty pound bags), as well as the five poundpoly residue-tested packages. The tested potatoeswere sold at the same price as the stores’ fivepound Maine round white package. Analysis ofthese shipment data was used to determine ifconsumers exhibited a general preference for theresidue-tested potatoes, net of price.

III. Group III maintained the same formatas Group II. However, the price of the residue-tested potatoes was ten cents higher per bag than,tie price of the control potatoes throughout thefour week experimental period. Data obtainedfrom this treatment were expected to reveal theeffects of a slight price change on the quantity of

the residue-tested potatoes sold, relative to thestores’ standard five pound round white packs,

IV. Group IV stores followed the sameprocedures as the other test groups except that theprice of the residue-tested was set at thirty centsper bag above the price of the standard five poundround white potatoes. This differential was set totest a price level which allowed a substantialpremium over the cost of producing, testing,packing, shipping and retailing.

Chsumer Surveys

To accomplish objective four, question-naires were enclosed in 1/3 of the bags. Thesesurvey forms consisted of five questions regardingthe consumer’s perspective on different aspects offood safety and level of satisfaction with the prod-uct, based on the respondent’s willingness tocontinue buying the same type of potatoes.Responses were expected to indicate the potentialfor capturing an enduring share of the potatotablestock market.

Store Observations

Both the control and test stores were visitedevery week during the pre-test and test weeks.Produce managers were asked to keep the size ofthe residue-tested display equal to the size of theregular five pound round white display. Forexample, if the manager usually maintained fourrows of five pound round whites, he or she dis-played two rows of residue-tested potatoes andtwo rows of the regular five pound bags duringthe study period. The two types of potatoes werealso sold on the same shelf line, typically adjacentto each other.

The only merchandising done for the resi-due-tested product was a special price card withthe brand logo that read, “Tested for PesticideResidue, Your Assurance of Safety. ” The cardcontained the appropriate price, depending uponthe store’s group assignment, and was placeddirectly above the product display. In addition,the produce managers were given an informationsheet entitled “Facts About the Pesticide Residue-Testing Experiment in Your Store, ” whichexplained the meaning and purpose of the testing,

Journal of Food Distribution Research September 90/page 23

and briefly described the residue-testing proce-dure.

During each test week, the featured potatospecial was recorded to account for possibleeffects on the study. These are listed in Table 1.

Table 1

Featured Potato Specials During Test WeeksOctober 23 through November 19, 1989

Test Week 1Oct. 23-28 4 lb poly pack Red Potatoes,

$1.49

Test Week 2Ott 30-Nov. 4 20 lb paper Maine Round

White Potatoes, $1.99

Test Week 3NOV. 6-11 5 lb Yukon Golds, $1.49

Test Week 4NOV. 13-18 10 lb poly pack Maine

Russets, $1.77

Statistical Analysis

The data were analyzed using the T-Test formeasuring differences in shipments between pre-test and test weeks for each group, and the one-way analysis of variance to test for differences inthe means between groups. The three sets of dataused in this analysis were: 1) Total weekly ship-ments of all round white potatoes, including resi-due-tested potatoes, 2) Shipments of five poundround whites, including residue-tested potatoesand; 3) Shipments of residue-tested round whitesonly. These totals were divided by the customercounts of each store so that the data reflect ship-ments in units of pounds per 1000 customers.

The first section of the amdysis examinesthe significance of differences in round whitepotato shipment data during the pre-test and testweeks for each group of stores for both total

round whites and five pound packs of roundwhites. The results indicate the possible effectson round white shipments that might be associatedwith the residue-tested product.

In addition to analyzing the differences inaverage shipments of residue-tested productamong the three groups, the share of total roundwhites accounted for by the residue-tested ship-ments and five pound shipments are also com-pared. Taken together, this information providesan estimate of the impact of residue-testing onshipments of round whites, and the effects of pricevariations on shipments of residue-tested potatoes.

Results

Shipment Changes betweenPre-Test and Test Weekx

Shipment data of total round whites and fivepound bags of round whites were analyzed foreach group to identify any unusual changes thatmay have occurred from pre-test to test weeks ofthe study period. Specifically, it was expectedthat the three test groups would follow the samepattern as the control group regarding changes inround white shipments. The results of the T-Testsare reported in Table 2.

These results show that each group sub-stantially increased their total shipments of roundwhites during the test weeks. This is most likelydue to the featured special of the 20 pound bag ofround whites for $1.99 during test week 2.

However, shipments of five pound bags ofround whites show a statistically significantincrease only in two groups: Group II, whichsold residue-tested potatoes at the same price asthe regular round whites, and Group III, whichsold residue-tested potatoes at ten cents aboveregular. Although both Group I, the control, andGroup IV show increases in their shipments of thefive pound pack during the test weeks, their aver-age five pound shipments were not statisticallydifferent between pre-test and test weeks.

September 90/page 24 Journal of Food Distribution Research

Table 2

Tests For Differences in the Averages of Round White Shipments,in Pounds Per Thousand Customers

Group I Group II Group III Group IV(Coqfrol) @gg’J@r) cents) 30 centsl

Average Total

m-test 438.41 282.36 294.59 313.77Test Weeks 669.06 483.93 555.27 530.50

t-statistic: -3.03 -10.97 -9.56 -8.10probability: 0.09* O.01* O.01* oo~ul

Average 5 lb Bagsita

Fre-Test 136.83Test Weeks 154.35

t-statistic: 4.45probability: 0.70(NS)

92.32 76.21 102.35122.91 121.38 . 160.72

-4.71 -6.36 -1.54OJ-J$* 0.02* 0.26(NS)

NS denotes no significant difference

* denotea significant difference at or below the 10% level

Journal of Food Distribution Research September90/page 25

Table 3

Results of the Analysis of Variance on Averages of Total Round White Deliveries,In Pounds Per Thousand Customers

Pre-Test Weeks Test WeeksGrour) Oct. 2-oct 21 Ott 23-Nov. 18

I. Control Stores 438.41A 669.06’

11. Residue-tested at Same 282.36A 483.93APrice as Regular Round Whites

III. Residue-tested at 294.59A 555.27A10 cents above regular

IV. Residue-tested at 313.77A 530.49A30 cents above regular

F=l.41 F=O.64p= O.31(NS) p=o.61(Ns)


For comparisons in each column, averages with the same letters are not significantly different


Table 4

Results of the Analysis of Variance on Averages of Total Five Pound Round White Deliveries,In Pounds Per Thousand Customers

Pre-Test Weeks Test WeeksGroup Oct. 2-oct. 21 Oct. 23-Nov. 18

I. Control Store 136.83A 154.35A

II. Residue-tested at same 92.32’ 122.91Aprice as regular round whites

III. Residue-tested at 76.21B 121.38A10 cents above regular round whites

IV. Residue-tested at 102.35M 160.72A30 cents above regular round whites

F=7.45 F=O.52p=o.ol” p=o.68(Ns)


* denotes statistical differences at or below the 10% level

For comparisons in each column, averages with the same letters are not significantly diflerent


Shipment Differences Between Groups

The second stage of the analysis focuses ondifferences in average shipments between groupsfor each time period. To detect any changes thatmight have occurred between the two periods, twoseparate tests were conducted with each set ofshipment data; one for the pre-test period and onefor the test period.

The first analysis tests for differences intotal round white shipments between groups. Theresults based on the pre-test weeks are shown inthe first column of Table 3, and the test weekfindings are shown in column 2.

The results indicate that the averagesrecorded for the pre-test weeks are not statisticallydifferent. Similarly, the averages for the testweeks shown in column 2 are not significantlydifferent. Each group increased their total ship-ments of round whites, as reported in Table 2, butthere were no differences between groups regard-ing the magnitude of these increases.

The second analysis, shown in Table 4,tested for differences in the averages of fivepound bags of round white shipments betweengroups for each time period. These results showthat during the pre-test period, shipments of fivepound bags of round whites were statisticallydifferent between groups. Specifically, Groups IIand III received significantly fewer pounds of fivepound round whites in comparison to the ControlGroup. Shipments received by Group IV, how-ever, were not significantly higher than Groups IIand III, nor significantly lower than the ControlGroup.

The information in column 2 shows thatduring the test weeks, the preliminary situationwas substantially altered. All groups increasedtheir overall shipments of five pound roundwhites. But Groups II and III increased theirshipments to such an extent that the pre-test differ-ences between groups were diminished. InGroups II and HI, sales of five pound roundwhites increased significantly during the fourweeks when residue-tested potatoes were sold intheir stores.


Table 5

Results of Analysis of Variance on Averagesof Total Residue-Tested Potato Deliveries,

In Pounds Per Thousand Customers

Test WeeksGrou~ Oct. 23-Nov, 18

II. Residue-Tested at Same 30.16APrice As Regular Round Whites

III. Residue-Tested at 10 Cents 31.77AAbove Regular

IV. Residue-Tested at 30 Cents 30.86AAbove Regular

F=O.02p= O.97(NS)


Quantities with the same letters areicantly different

not signif-

Shipments of Residue-Tested Potatoes

The effects of the price variation on ship-ments of residue-tested potatoes were examined bycomparing the shipments of residue-tested potatoesamong the three store groups that sold the testpotatoes. Table 5 reports the average shipmentsof residue-tested potatoes and the statisticalresults. There were no significant differences inthe average shipment of residue-tested potatoesamong the three store groups, indicating that eachgroup received virtually the same amount of resi-due-tested potatoes, regardless of the price atwhich stores sold the product.

Share Analysis

As a second indicator of the possible effectsof the price treatments, the residue-tested ship-ment data were analyzed as a share of total roundwhite shipments per thousand customers and as ashare of total five pound round white shipmentsper thousand customers. These are shown inTable 6.


Table 6

Comparison of Average Residue-TestedShipments per 1000 Customers as a

Percentage of Average Round White Shipments

Residue-Tested Residue-TestedShare of Total Share of 5-lbRound White Round White

Shipments Shi~ments

@Q!u2

II. Residue-Testedat Regular Price 6.2%

III. Residue-Testedat 10 cents higher 5.7%

IV. Residue-Testedat 30 cents higher 5.8%

24.5%

26.0%

19.0%

These sets of figures give another perspec-tive on the performance of the residue-testedbrand. The first column shows that as a percentof total round white shipments, residue-testedpotatoes accounted for an average of 6 percentoverall. The largest difference is found betweenGroups II and III, which differ by only one half ofone percent. Percentages are more varied in thesecond column, with residue-tested potatoesaccounting for 19 to 26 percent of five poundshipments.

Most important, these figures show thatconsumers favored the standard five pound bag byat least a 3 to 1 margin, even when the standardand residue-tested potatoes were sold at the sameprice. Although the previous results indicate thatprice differences did not greatly influence sales ofresidue-tested potatoes, Maine consumers did notexhibit an overall preference for the residue-testedproduct.

Consumer Responseto ResidueTested Potatoes

To accomplish the fourth objective of thestudy, a survey was designed to evaluate theimportance of the testing for pesticide residuesand their general attitudes about food safetyamong consumers who bought the residue-testedproduct. The survey form consisted of four ques-tions printed on a postage paid card. The firstwas an open ended question asking respondentswhy they bought the potatoes. The second ques-tion asked about the importance of food safetyconcerns with “not at all, ” “somewhat,” and“very” as optional responses. Another openended question was used to find out what otherresidue-tested products they would like to buy.Respondents were then asked if they would con-tinue buying residue-tested potatoes, if available,with a “Yes/No” response choice. Finally, aspace was provided for optional write-in com-ments. Analysis of these responses was expectedto show the level of dedication that consumersmight have for residue-tested potatoes.

This analysis is based on responses fromMaine consumers. Altogether, 92 residents whopurchased the residue-tested potatoes returneduseable surveys, yielding a response rate ofapproximately 3.5 percent. The following tablesreport their responses to each of the survey ques-tions.

The first question asked consumers to iden-tify what factors influenced their initial purchasingdecision. The four reasons listed by respondentsmost frequently are shown in Table 7.


Table 7

WHY DID YOU BUYRESIDUE-TESTED POTATOES?The Four Most Common Reasons

Percent ofRes~ondents

Product 27.7%Appearance

Concerned About 21.7%Food Safety

Because They 18.1%Were From Maine

Price 12.0%

product (Kezis, Smith, Peavey and Lloyd, 1988;Smith and Peavey, 1989).

Consumers had the option of listing morethan one reason for buying the potatoes. Themost common combination was appearance andfood safety. Although food safety concerns maybe highly influential, many respondents did notseem willing to compromise on product appear-ance. Similarly, price was typically listed withappearance, confirming that price alone is rarelythe single most important factor.

Responses to the question asking consumersto rate the importance of food safety are reportedin Table 8. An overwhelming majority indicatedthat food safety testing was very important tothem. This high percentage would be expected,since their feelings on the importance of this issueis likely to have influenced their willingness tocomplete the questionnaire.

Number of RespondentsWho Listed One orMore Reasons: 83

Table 8

HOW IMPORTANT IS FOODTESTING TO YOU?

SAFETY

Just as other consumer studies on potatovarieties have found, product appearance was themost common reason motivating the initial pur-chasing decision (Kezis, Smith, Peavey andLloyd, 1988). Since the appearance of both thestandard and residue-tested potatoes was moni-tored weekly to ensure the similarity of the twotypes of potatoes, “appearance” as a purchasingmotive does not necessarily imply that consumerswere drawing comparisons between the standardand residue-tested round whites.

Concern about food safety was also high,with close to 22 percent indicating that it influ-enced their choice. Others reported buying theresidue-tested potatoes because they were Mainepotatoes. However, the standard round whiteswere also identified as Maine potatoes. Among12 percent, price was important, although otherstudies have shown those concerned with price arenot necessarily looking for the least expensive


Percent ofRespondents

Not At All 1.1%

Somewhat 19.5%

Very 79 3%-

100.0%

Number ofRespondents: 87

Respondents were also asked to list otherspecific items that they would like to buy as testedfor pesticide residue. The most frequent listingsare presented in Table 9. Over 40 percent saidthat they would like to buy “all produce” or “allfood” as residue-tested. Another 31 percent


listed the general category of “vegetables” asproducts they would like t6 buy, whiIe “Fruits”was also a recurring answer. Not surprisingly,the response “apples” was listed more often thanany other specific product, indicating some linger-ing doubts caused by the alar publicity.

Table 9

WHAT OTHERRESIDUE-TESTED PRODUCTSWOULD YOU LIKE TO BUY?

The Four Most Common Listings

Percent ofRespondents

All Produce/Food 40.6%

All Vegetables 30.4%

All Fruits 24.6%

Apples 8.7%

Number of RespondentsWho Listed One orMore Products: 69

Note: Other specific products listed byrespondents included carrots, lettuce and broccoli.These tended to be isolated responses.

As a measure of consumer satisfaction withthe potatoes, respondents were asked if theywould buy the potatoes again. The results arepresented in Table 10.

Table 10

WILL YOU CONTINUE BUYINGRESIDUE-TESTED POTATOES

IF THEY ARE AVAILABLE?

Percent ofResr)ondents

Yes

No

90.5%

9.5%

Total Number ofRespondents: 84

The percentage of positive responses to thisquestion is consistent with the response to otherMaine potato varieties tested for consumer accep-tance (Kezis, Smith, Peavey and Lloyd; 1988).Based on the willingness to purchase the productagain reported by most respondents, residue-testedpotatoes appear to be able to maintain a consistentshare of the market.

To complete the survey, consumers weregiven the opportunity to write in any comments.Their remarks tended to be quite varied, but thefour categories listed in Table 11 capture themajor topics.

Journal of Food Distribution Research September 90@age 31

Table 11

COMMENTSThe Four Most Common Subject Areas

Expressed aConcern AboutFood Safety

Commented On TheGood Quality ofthe Potatoes

Complained Aboutthe Potatoes

Didn’t Understand“Residue-Testing” /Wanted to KnowMore About Testing

MaineResidents

33.9%

16.1%

16.1%

10.7%

Number of RespondentsWho gave one ormore comments: 56

Among the 56 Maine respondents whochose to comment, 34 percent were compelled toemphasize their feelings about food safety. Thehigh percentage who stressed the strength of theirfeelings about food safety as a write-in furtherdemonstrates the sincerity of their attitudes.

Interestingly, the proportion of respondentswho complained about the potatoes was offset byan equal proportion who praised the potatoes.There is an obvious disparity in viewpoints withboth sides expressing strong opinions on the qual-ity of the residue-tested product.

Close to 11 percent were confused about thetesting characteristic with many indicating theywere unaware they had purchased residue-tested

potatoes. In fact, the actual percentage of con-sumers who unintentionally purchased residue-tested potatoes is probably higher, since the onlymerchandising tactic was the brand price card thatsimply read, “Tested for Pesticide Residue, YourAssurance of Safety, ” These responses highlightthe need for better explanations about the testingprocedure, which can be accomplished throughmore sophisticated merchandising activities.

Summary and Conclusions

The purpose of this study was to analyzeconsumer response to residue-tested potatoes andevaluate the additional cost consumers are willingto pay for the pesticide residue-testing feature.

Weakness of lhe Study

Conclusions addressing the first three objec-tives are outlined in the next section. However,the results of the tests point to several conclusionsthat need to be qualified. First, the statisticalfindings do not define a causal relationshipbetween the selling of residue-tested potatoes andround white sales. At best, the analysis revealedsome associations that suggest a relationship.

More important, shipment data have beenused as indicators of potato sales and proxy infor-mation of this type carries several serious consid-erations. First, shipments are subject to variationsimply because of differences between producemanagers and their managerial styles. The studyis also based on the assumption that all of thepotatoes that were shipped were inevitably sold.Consequently, there is no accounting for shrink.

The results of the consumer survey cannotbe interpreted as representing the viewpoints of allMaine consumers. There is an obvious likelihoodof response bias, since those consumers who hadintense feelings about food safety were probablymost inclined to complete the survey. Neverthe-less, the overall response reveals a consumergroup that seems to constitute an interested clien-tele and concerted efforts should be extended toidentifying the characteristics of this group todevelop target market strategies.


Total Round White Shipments

In the first section of the analysis, residue-tested potatoes did not seem to be associated withany significant trend regarding the shipments oftotal round whites. The analysis showed that allstores exhibited an increase in total shipments ofround whites, but the magnitudes were similarbetween the four groups.

An analysis of five pound shipments uncov-ered some notable distinctions. Specifically, thegroup of stores selling the residue brand at thesame price as the regular round whites, and thegroup selling residue-tested potatoes at ten centsabove the standard round whites experienced asignificant increase in their shipments of fivepound round whites, more so than what would beexpected by chance. This implies that withinthese stores, sales of residue-tested potatoes corre-sponded to an increase in total sales of five poundround whites. It is possible that for the two testgroups selling the residue-tested potatoes at eitherthe same price or 10 cents above the standardprice, consumers were induced to buy the fivepound tested potatoes over other sizes of roundwhites. However, without data on five pound andtotal round white shipments gathered duringseveral post-test weeks in which residue-testedpotatoes were not displayed, there is insuf%cientevidence to confirm this possibility.

The Efects of Price Manipulations

In section two, the average shipments ofresidue-tested potatoes were compared to test fordifferences that might be attributed to consumerresponse to the price differential between residue-tested and the regular five pound round whitepack. No significant differences were foundbetween groups, indicating that price variation hadlittle impact on the sales of residue-tested pota-toes.

Based on the three price levels tested in thisstudy, it seems that even at the highest differentialof thirty cents per bag, price is not a barrier tothose consumers who want residue-tested potatoes.However, most consumers were not induced toswitch to the residue-tested brand, even when theywere sold at the same price as the standard five

pound round white bag. The residue-tested pota-toes’ shares of shipments averaged approximately23 percent of the five pound shipments and only6 percent of the total round white shipments.Taken together, the results suggest that residue-tested potatoes appeal to a small group of consum-ers who are willing to pay for the cost of the resi-due-testing service.

Analysis of the survey responses addsanother dimension to the study. Respondents andnonrespondents constitute two distinct groups,especially in a study such as this. Consequently,the responses only provide a composite of thetypical consumer who completed the survey: heor she bought the potatoes because of personalconcerns about food safety coupled with theattractive appearance of the product. This personfeels very strongly about the importance of foodsafety and would also like to buy all produce asresidue-tested. These respondents represent apotentially loyal clientele, since most expressed awillingness to continue buying the residue-testedpotatoes, if available.

Recommendations

Based on the statistical analysis, surveyresponses, observations made during store visitsand discussions with produce managers, residue-tested potatoes have the potential for successfullyacquiring a small, but seemingl y dependable sharein the tablestock market. The product appeals toa small group of consumers whose doubts aboutthe general safety of food figure prominently intheir shopping decisions. This target group seemsto consist of individuals whose purchasing deci-sions are influenced by strong feelings about foodsafety, rather than by impetuous curiosity. Butalthough their concerns are genuine, it is difficultto predict the life span of their interest.

Another important finding is thatrespondents tended to report “product appearance”as a factor in their purchasing decision. Thequality of residue-tested potatoes, as implied bytheir appearance, will have to remain high toattract even those who are very concerned aboutfood safety.

Journal of Food Distribution Research September 901page 33

Since the price levels tested in this studyhad little impact on shipments of residue-testedpotatoes, the promotion of this product is likely tobe far more critical than low or competitive pric-ing. Suppliers, in cooperation with their retailers,need to run an aggressive promotional and mer-chandising campaign. These potatoes should bemarketed as an elite product with consistent] y highquality, and sold at sufilciently higher prices thancompeting untested products to compensate for thecost of the promotional campaign and residue-testing. Consistent quality, consistent availability,and well-targeted promotions along with the resi-due-tested guarantee are likely to sufllcientlydifferentiate this product to allow premiumpricing.


References

Gordenker, Alice. “Five Chains Sign Pesticide-Treated Produce Pledge, ” in lhe ProduceNews, Sept. 16, No. 35, Zim-Mer TradePubs. Inc., Fort Lee, N.J., 1989.

Kezis, A., D. Smith, S. Peavey and J. Lloyd.“Testing for Differences in ConsumerAcceptance of Identically Appearing PotatoVarieties, ” Journal of Food DistributionResearch, Sept. 88 pg. 54-62.

Shimsky, Donna S. “NRDC Study on ShakyGround, ” l%e American Vegetable Grower,May, 1989.

Smith, Duane and Stephanie Peavey. “ldiosyn-crasy is the Norm: A Study of Potato Buy-ing Consumers, ” presentation at the AnnualMeeting of the Food Distribution ResearchSociety, Albuquerque, NM, Nov. 1989.

Winter, Carl. “Pesticide Residues in Foods, ” inEnvironmental Toxicology Newsletter,Cooperative Extension, University ofCalifornia, Vol. 8, No. 1, July, 1989.


VALUE DETERMINATION OF PESTICIDE RESIDUE-TESTED POTATOES

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