AGB 405 - Final Project

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  • CalPure Market Research

    13 December 2016

    Agribusiness Marketing Research Methods

    Market Research Team:

    Shane Gillard, Matt Quontamatteo

    Matt Emslie, Mitchell Woods

  • 2

    Executive Summary

    In recent years, concerns about the impacts of foods consumers eat on a daily basis have dramatically

    changed. People seek local fresh goods to experience delicious healthy products. In todays society

    customers go the extra mile to connect with local family farms to share a positive experience in food.

    With social, environmental, and health views changing, all of these variables alter the consumers buying

    motives when selecting a product. CalPure's goal is to create healthy, versatile cooking oil they can share

    with their family and friends. This research will help further develop CalPures marketing strategy based

    on consumer trends and perceptions. The goal of this case study is to help CalPure make more informed

    decisions when applying their marketing strategy towards their products.

    CalPure strives to determine if consumers prefer their extra virgin avocado oil to be branded as a

    Product of California. The research team outlined five key objectives to aid CalPure in its decision

    process: (1) Does the California name add positive brand value with respect to a consumers preference

    for specialty cooking oils? (2) Do consumers prefer a point of origin when purchasing avocado oil? (3)

    How often do consumers know where their food products come from and do they prefer their food

    grown locally. (4) Are consumers more inclined to shop online to purchase food products? (5) How much

    more are consumers willing to pay for a 'California branded' bottle of avocado oil? A total of 668

    respondents were surveyed through an online questionnaire via SurveyMonkey.com. In order to take

    the survey respondents had to live in the United States.

    Objective 1: The data shows us that a majority (55.6%) of respondents feel likely or very likely to

    purchase California-made avocado oil products over products not made in California. California

    respondents on average show a mean closer to the response likely than the Neutral option. Non-

    California respondents feel a little less likely to purchase a California product with a mean closer to the

    neutral response than likely. All respondents are slightly more likely to purchase a California brand

    avocado oil, instead of a non-California brand. Californians are more susceptible to "California"

    branding, but out-of-staters still have greater than a neutral favorability to the "California" name

    when it comes to food branding. Testing shows, the California Label adds positive brand influence

    towards consumers influenced by this label (%%).

    Objective 2: Shows that 61% of people dont have a preference of where the avocados are grown.

    Thirty-nine percent of respondents do have a preference where the avocados are grown for food

    products; 63% of these individuals prefer their avocados to be grown in California. People who have a

    preference of where their avocado products are grown for cooking oil and other products are 80% more

    likely to purchase an avocado product of California over a product of a different origin. The likeliness of

    people purchasing a product with the origin of California is statistically greater than neutral. People with

    the income level of $50,000 - $149,000 are willing to pay more for a California Product than people with

    an income level of under $20,0000 and above $150,000.

    Objective 3: 73% of respondents reported that they Agree or Strongly Agree to purchase products if

    they are advertised as Local Products. A frequency ran indicated that specialized origin branding like

    locally products is in demand. Over 70% of respondents who have a preference of where their avocado

    products come from are Likely or Very Likely to check where their avocado products come from.

    There was a 54.9% respondents that do have a preference where their avocados are grown and are

    more likely to check where their avocado products like oil come from.

  • 3

    Objective 4: Cal Pure should expand the selling of their products online, and look into advertising on

    food related websites. CalPure may also want to consider advertising on Facebook ads, linking their

    product to their Amazon page. A Chi Squared test was conducted to see if respondents would pay more

    on Amazon for a food product with a product of California label, we found no relationship. If a

    customer is willing to purchase food products off Amazon, they probably dont care as much to where

    the products are coming from. Amazon makes it easy for consumers to purchase items from across the

    world, which takes away the locality from ones purchasing decision.

    Objective 5: The last test confirmed that a majority (over 88%) agreed that they are willing to pay no-

    more than $13.99 for an 8.5fl oz. bottle of California-made avocado oil. The results also show that

    people from California and the people not from California are willing to pay the same price for an 8.5fl

    oz. bottle of California-made avocado oil. If CalPure chooses to include the California Label onto their

    avocado oil a majority of consumers will be willing to pay a slightly higher price.

    Recommendations:

    Continue using a Product of California label, as it is associated with positive brand value.

    Expand online Advertisements - Facebook linking to Amazon.

    Emphasize on marketing their products as local as well as continue using their Product of

    California label.

    A majority (88%) of respondents agree that they are willing to pay no more than $13.99 for

    an 8.5 fl oz. of California-made Extra Virgin Avocado Oil.

  • 4

    Table of Contents

    Introduction and Research Objectives ...................................................................................................... 5

    Methodology ............................................................................................................................................. 8

    Findings

    Demographics ................................................................................................................................ 9

    Objective 1 .................................................................................................................................... 11

    Objective 2 .................................................................................................................................... 13

    Objective 3 .................................................................................................................................... 16

    Objective 4 .................................................................................................................................... 18

    Objective 5 .................................................................................................................................... 20

    Conclusions, Recommendations, and Limitations ................................................................................... 23

    Works Cited ............................................................................................................................................. 26

    Appendix .................................................................................................................................................. 27

  • 5

    Introduction

    Management Problem:

    CalPure owners Michael and Erika Rutledge from Camarillo, California, wanted to find a healthy, tasty

    and versatile cooking oil that they could use to make their favorite dishes for friends and family. In their

    endeavor to search for a healthier alternative, they stopped using olive oil and began cooking with extra

    virgin avocado oil. Yet, they quickly discovered it was difficult to find in stores and online - almost all of

    the avocado oil on the market was refined and imported from other countries. In fact, they loved the oil

    so much, they decided to focus their efforts on creating their own extra virgin avocado oil (Our Story).

    Avocado consumption has been on the rise for the past 20 years, with a 3.4-pound increase in per capita

    consumption (Agricultural Marketing Resource Center, 2013). This helped Michael and Erika with their

    decision, and starting in 2016, they created a team and began building one of the first avocado cold-

    pressing facilities in the United States. Since CalPure sources exceptional fruit from some of the best

    avocado farmers in California, their Extra Virgin Avocado Oil is very high quality and unique - while every

    bottle has a story to tell (Our Story). Currently, consumers are willing to pay $0.20 more for a California

    origin avocado, however no research has been done on avocado oil specifically (Bosio, 2015, p. III).

    Additionally, California is responsible for 90% of the total U.S. avocado production, and is quickly

    becoming Americas new favorite fruit (Ferdman, 2015).

    CalPure owners, Michael and Erika are seeking to have market research conducted in order to

    determine if consumers prefer their extra virgin avocado oil to be branded as Product of California, to

    meet current consumer demands. Overall, increasing brand associations such as a Product of

    California label may play a key role in increasing their revenue.

    Decision Alternatives:

    The