DOC

A Consumer Survey to Identify Marketing Issues for Organic Milk

By Debbie Stone,2014-01-20 20:51
14 views 0
A Consumer Survey to Identify Marketing Issues for Organic Milk

    Value-Added Dairy Processing

    Feasibility Report

    “A Study of Marketing Issues with

    Organic Milk”

    July 2003

A Study of Marketing Issues with Organic Milk

    By

    RAY HAMMARLUND

    B.S., Kansas State University 1988

    ________________________________________

    A THESIS

    submitted in partial fulfillment of the

    requirements for the degree

    MASTER OF AGRIBUSINESS

    Department of Agricultural Economics

    College of Agriculture

    KANSAS STATE UNIVERSITY

    Manhattan, Kansas

    2001

     Approved by:

     ____________________

     Major Professor

    Michael Boland

     ii

    ABSTRACT

    Milk production and consumption is changing. This thesis summarizes the survey

    data collected on 500 milk drinkers and 500 organic food consumers in Kansas City. Several differences were found between both consumer groups. First, organic consumers purchased significantly fewer soft drinks (diet and non-diet) than the milk drinkers. Organic consumers were significantly more aware of the caloric content of milk and were more aware of differences between organic milk and non-organic milk. Upon reading an informational brochure on organic milk, 50% of the organic consumers and 62% of the milk drinkers were more inclined to purchase organic milk. Organic consumers had a significantly lower income and fewer children than milk drinkers. It was found that both milk drinkers and organic consumers would increase their purchases of organic milk if its price decreased. Clearly there is a market for organic milk, but its size is small. More than half of the consumers would consider purchasing organic milk after reading informational information about organic milk. Likewise, it is clear that smaller-sized families are more likely candidates to purchase organic milk. Families with more children and greater consumption are less likely to purchase organic milk. Household income was not a significant factor in determining who purchases organic milk as milk drinkers had a significantly greater income than organic consumers. The fact that families with greater milk consumption are less likely to purchase organic milk suggests that a consumer‟s overall expenditure on milk is more important than the individual price of organic milk.

     iii

    TABLE OF CONTENTS

     .............................................................................. ?? ACKNOWLEDGEMENTS

    DEDICATIONS ...................................................................................... ??

    LIST OF EXHIBITS ...................................................................................... ??

I. INTRODUCTION

    1.1 Motivation .................................................................................... 1

    1.2 Previous Literature ........................................................................ 3

    1.3 Objective ...................................................................................... 4 II. SURVEY DATA AND RESULTS

    2.1 Statistical Procedures .................................................................... 5

    2.2 Demographic Information. ........................................................... 6

    2.3 Consumer Consumption Questions .......................................... 8

    2.4 Choice of Preferences Between Whole, 2%, 1% or Fat Free .... 9

    2.5 Milk Consumption By Size of Package ................................. 10

    2.6 Ranking of Milk by Product Characteristics .......................... 11

    2.7 Organic Milk Awareness ....................................................... 13

    2.8 Attitude to Organic Milk Label ............................................. 14

    2.9 Demographic Questions: Gender ........................................... 16

    2.10 Demographic Questions: Age .............................................. 16

    2.11 Demographic Questions: Education ..................................... 17

    2.12 Demographic Questions: Income ......................................... 17

    2.13 Demographic Questions: Number of Children ..................... 18

     iv

    2.14 Summary ............................................................................. 18 III. CONSUMER WILLINGNESS TO PAY FOR ORGANIC MILK

    3.1 Willingness-to-Pay Data. ........................................................... 19

    3.2 Double Bound WTP Model ......................................................... 22

    3.3 Regression Procedures ................................................................ 24

    3.4 Regression Results ...................................................................... 25

    3.5 Summary .................................................................................... 26 IV. CONCLUSIONS

    4.1 Survey Summary ........................................................................ 27

    4.2 Implications ................................................................................ 27

    4.3 Suggestions for Future Research ................................................. 29

    V. REFERENCES

    V. References .............................................................................................. 30

     v

    APPENDICIES

    I. Appendix A Survey Cover Letter, Insert, and Survey ........................... 31

    II. Survey ................................................................................................... 34

    II. Appendix B Comments from Milk Drinkers ........................................ 37

    III. Appendix C Comments from Organic Consumers................................ 39

     vi

    LIST OF TABLES

Table 2.3.1 Summary Statistics for Beverage Consumption by Each Population ……...8

Table 2.3.2 Income Levels of Organic and Milk Drinker Consumers by Category ……9

Table 2.4.1 Difference in Product Characteristics........................................................ 10

Table 2.5.1 Package Size Preferences for Milk Drinkers and Organic Consumers ....... 11

Table 2.6.1 Summary Statistics for Milk Purchasing Factors ....................................... 12

Table 2.6.2 Summary Statistics for Ranking Milk Purchasing Factors ......................... 13

Table 2.7.1 Summary Statistics for Organic Milk Awareness ...................................... 14

Table 2.9.1- Summary Statistics for Gender ................................................................... 16

Table 2.10.1 Summary Statistics for Age .................................................................... 16

Table 2.11.1 Summary Statistics for Education ........................................................... 17

Table 2.12.1 Summary Statistics for Income ............................................................... 17

Table 2.13.2 Summary Statistics for Number of Children ........................................... 18

Table 3.1.1 Prices Offered to Consumers in Willingness-to-Pay Question ................... 22

Table 3.4.1 Marginal Effects Evaluated at The Mean and Selected Statistics for the

    Single Bound Logit Model with Whether a Milk Drinker would Purchase

    Organic Milk ............................................................................................ 25

Table 3.4.2 Parameter Estimates and Selected Statistics for the Double-Bound Models26

     vii

    LIST OF FIGURES

Figure 2.2.1 Age of Organic and Milk Drinker Consumers by Category ....................... 7

    Figure 2.2.2 Income Levels of Organic and Milk Drinker Consumers by Category ....... 7

    Figure 2.4.1 Type of Milk Bought Most Often by Organic and Fluid Milk Consumers .. 9

    Figure 2.8.1 Attitudes to “Organic Milk” Label Prior to Reading Informational

    Brochure ................................................................................................... 15

    Figure 2.8.2 Attitudes to an “Organic Milk” Label After Reading Informational

    Brochure ................................................................................................... 15

     viii

LIST OF EXHIBITS

    1. Age of Organic and Milk Drinker Consumers by Category ........................................ 7

    2. Income Levels of Organic and Milk Drinker Consumers by Category ........................ 7

    3. Summary Statistics for Each Population ..................................................................... 8

    4. Summary Statistics for Beverage Consumption Comparison ...................................... 9

    5. Type of Milk Bought Most Often by Organic and Fluid Milk Consumers .................. 9

    6. Difference in Product Characteristics ....................................................................... 10

    7. Package Size Preferences for Milk Drinkers and Organic Consumers ...................... 11

    8. Summary Statistics for Milk Purchasing Factors ...................................................... 12

    9. Summary Statistics for Ranking Milk Purchasing Factors ........................................ 13

    10. Summary Statistics for Organic Milk Awareness ..................................................... 14

    11. Attitudes to an “Organic Milk” Label Prior to Reading Informational Brochure ....... 15

    12. Attitudes to an “Organic Milk” Label After Reading Informational Brochure .......... 15

    13. Summary Statistics for Gender ................................................................................. 16

    14. Summary Statistics for Age...................................................................................... 16

    15. Summary Statistics for Education ............................................................................ 17

    16. Summary Statistics for Income ................................................................................ 17

    17. Summary Statistics for Number of Children ............................................................. 18

    18. Milk Drinker Willingness-to-Pay for Organic Milk .................................................. 20

    19. Organic Food Consumer Willingness-to-Pay for Organic Milk ................................ 20

    20. Prices Offered to Consumers in Willingness-to-Pay Question .................................. 21

    21. Marginal Effects Evaluated at the Mean and Selected Statistics for the Single Bound

    Logit Model with Whether a Milk Drinker Would Purchase Organic Milk ..………24

22. Parameter Estimates and Selected Statistics for the Double-Bounded Models .......... 25

     ix

    CHAPTER 1

    INTRODUCTION

    The dairy industry in Kansas, as well as in other states, is undergoing a period of change. The average dairy size, measured in number of cows per operation, is increasing,

    particularly in Western Kansas. In 1981, Kansas had approximately 1,327 dairies

    producing grade A milk. By the year 2000, that number had dropped to 632 dairies

    producing grade A milk. While this reduction of dairies was taking place, the number of

    dairy cows in Kansas also dropped from 123,000 in 1981 to 87,000 in 2000 (Kansas

    Agricultural Statistics Service, 2000). On a national level, 53.8 percent of total U.S. milk

    production in 2000 came from farms with herd sizes of 200 cows or more, up from 36.3

    percent in 1993.

    1.1 Motivation

    Milk consumption patterns are changing in the U.S. as changing income levels, demographics and tastes have driven the marketplace to a more health discerning public.

    Sales of all organic food products grew from $847 million in 1991 to $1.95 billion in

    1996. Sales of organic dairy products in 1999 totaled $171 million, with organic milk

    accounting for $75.7 million (Glaser and Thompson, 2000).

    American consumers have increasingly shown interest in organically produced food and fiber products in recent years. Concerns about environmental degradation,

    pesticide and hormone residues in food products and animal welfare issues all are

    contributing factors in this consumer interest. Organic milk is derived from animals that

    have been under continuous organic management beginning no later than 1 year prior to

     1

Report this document

For any questions or suggestions please email
cust-service@docsford.com