BULLETIN 392 JUNE JJE16 1969 Adh ertising.. Pro motion . M/a rket Acceptance, Pasteu.,rized /Re frig'eratedI Peaches in - - Agricultural A UB U RN E. V. Smith, Director Experiment Station Auburn, Alabama U NIV ER S IT Y CONTENTS Page EXPERIMENTAL METHODS ANALYSIS OF MARKET 4-- TEST DATA-- -- 6 Economic Evaluation of Advertising and -Promotion Methods -CONSUM ER 7 PANEL ------------------------------------- 10 ------- 12 D iary A nalysis ----------------------------Questionnaire Analysis ------------------ -----------13 THE INSTITUTIONAL MARKET----------------------------14 SUMMARY AND CONCLUSIONS ---------------------------- 15 LITERATURE CITED ------------------------------------ AP PE N DIX -- - - - - - - - - - - - - -- - - - - - - - - --- - - - - - - - - - - - - - --- 18 19 FIRST PRINTING 3M, JUNE 1969 Advertising, Promotion, Market Acceptance of Pasteurized-RefrigeratedPeaches* BILL R. MILLER, Former Assistant Professor of Agricultural Economics and Rural Sociology CHARLES E. STRAIN, Former Graduate Research Assistant of Agricultural Economics and Rural Sociology INTRODUCTION OF A NEW PRODUCT is often risky and costly. A well-planned marketing program supplemented when possible by a pre-test with consumers under actual market conditions would be helpful in reducing risk. By using this approach, fewer new products would be introduced and more probably would be successful. Advertising and promotion programs play an important part in the introduction of new products. However, the technology available for new product development may be more abundant than knowledge about appropriate methods of advertising and promotion to develop a sufficient marketing program. Effectiveness of methods of advertising and promotion on market acceptance of a product must be known to develop such a program. Since sales act as a yardstick in measuring market acceptance, the study reported here had these three objectives: (1) to determine the effect of specific methods of advertising and promotion on the sales of an experimental pack of pasteurized-refrigerated peaches (chilled peaches); (2) to determine per capita consumption and the repurchase pattern of chilled peaches as related to the socio-economic characteristics of consumers; and (3) to evaluate the institutional market for the experimental chilled * This study was based on research work carried out under Hatch Research Project Ala-606. It was supported by Hatch and State Research funds. 4 ALABAMA AGRICULTURAL EXPERIMENT STATION peach product and a new commercial chilled peach product using sodium benzoate as the principal preservative.' Several studies conducted specifically to determine effectiveness of a special coupon offer have been generally favorable with respect to positive economic returns to the advertiser (3,5). Similar positive results have been shown in evaluating promotional themes (4,1) and levels of expenditures on advertising and promotion (2). Standard methods of time series analysis have been criticized because the preconditions for the applicability of the statistical model are not met (7). An alternative approach to advertising research is the use of classical methods of statistics and experimental design. Miller and Harris of the Auburn University Agricultural Experiment Station (6) conducted a study utilizing an experimental design to determine price elasticity and level of demand for pasteurized-refrigerated peaches (brand names "Chilco" and "Georgia Boy"). Analysis of variance of the data indicated that price was an important source of variation in peach sales. They concluded that a larger test with more stores would be required to show the effect of store size. In addition, they concluded that the effect of hand-lettered signs at point-of-sale was significant in the introductory period and indicated that a more extensive study of advertising would be useful. Accordingly, this study was begun as part of a continuing research project. EXPERIMENTAL METHODS A three by eight factorial experimental design containing three store sizes and eight methods of advertising and promotion was used to determine the effect of methods of advertising and promotion on sales of experimental chilled peaches. Weekly store audits were made using broker-salesmen, mail-in cards, and telephone to compare sales in 24 test stores serviced by a regional grocery chain. Three store sizes (small, medium, and large) were used as criteria for dividing 24 test stores, Appendix Table 1, into 8 groups of 3 stores each, each group containing a small, medium, and large store. These eight groups were then subjected SDefinition of the technical process used in producing chilled peaches and initial market development of the product are given by Miller and Harris (6). ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 5 to eight methods of advertising and promotion. The eight methods were as follows: bl - newspaper only (control) b2 - newspaper and posters and recipes b3 - newspaper and cents-off coupons b4 - newspaper and trading stamps b5 b6 b7 bs- newspaper, posters and recipes, and cents-off coupons newspaper, posters and recipes, and trading stamps newspaper, cents-off coupons, and trading stamps newspaper, posters and recipes, cents-off coupons, and trading stamps Newspaper advertising consisted of inserting once per 15 weeks a 1/2-inch by 2-inch column insert in the weekly food advertisement from the grocery chain. The poster and recipe promotion consisted of erecting a point-of-purchase display simultaneous with publication of the newspaper advertisement. The point-ofpurchase display consisted of a 15-inch by 22-inch, three-color poster and a box of free recipes. This display remained up until it was removed in the ordinary course of store business. The cents-off coupon and trading stamp promotion consisted of attaching 5-cents-off labels and 20 trading stamp labels on the jars for a fixed period rather than a fixed quantity of labels per store. Methods of promotion are illustrated on page 6. Value of the 5-cents-off coupon equals the cost of 20 trading stamps when stamps are $25 per 10,000; however, this is not equal to the cost of trading stamps to all retailers. Yet, advertising managers were interested in this comparison because the redemption value of the 20 trading stamps was approximately equal to 5 cents of retail value in items redeemed when the redemption value of 1,200 trading stamps was $3. At the end of the first 15-week period of the study, methods of advertising and promotion were repeated and sales were audited for the second 15-week period. A consumer panel of 38 known buyers of chilled peaches was chosen from 75 consumers responding to a special coupon offer of 300 trading stamps. An audit of selected commodities was received weekly from panel members. Data from weekly audits were collected to determine per capita consumption and repurchase pattern for the product. Panel members were given a questionnaire at the end of the study to determine socio-economic characteristics. The questionnaire indicated where they bought chilled peaches, what influences prompted their purchases, how ALABAMA AGRICULTURAL EXPERIMENT STATION 'ftflflSS3 WItT Per62tO FIt FLAVORRCHILLED PEACHES L «..0 er nsSr$"* , 4* b 'wf - . -- 0 Z "°.. .__..k FLAVOR-CICE Three types of promation used in selected chain stores-posters ond recipes, 5-cents-off coupons, and trading stamps-ore shown with a jar of the peaches. thvused the product, ia taste rating,~ andl comparisons of peach products. A judigement sample was mi ade of the institiitional restauran t organizations in \ hntgoinerv, Alabama. Each institution in the sample wxas giv en a case of ex\perimntal chilled Peaches and a case5~ of commercial b~rand~ chilled peaches. A stirvey was made of these institutionls to determine uses of the produLcts, x olme of uisc, and preferences. ANALYSIS OF MARKET TEST DATA The twvo 15-we ek periods were aggregatedl into one :30-\x cek L)(riodl, October 19, 1967, to Mlay 15, 1968. This allowsed the indlirect action forms of promotion ( posters andl recip~es ) a longer p~eriod to shows an effect, as comtipared with the dlirect action forms of adv ertising ( cents-off andl trading stamps), wxhich has e an im-~ miedliate effect. Store size wxas the most impjortanlt source of x ariatio)n, Table I ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 7 TABLE 1. TOTAL SALES OF 16-OUNCE JARS OF PASTEURIZED-REFRIGERATED PEACHES, BY STORE SIZE AND METHOD OF ADVERTISING AND PROMOTION, 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 16-ounce jars sold Method of advertising and promotion al (small) Store size a2 (medium) a3 (large) Totals Average No. 100 b2__________________________ 63 28 b3----------------bb4-----------------------------b5 b------------------69 534 TOTAL 67 AVERAGE---------------. b -------------------------------- No. 78 110 567 58 83 92 72 1,222 153 No. 68 70 129 149 118 150 77 No. 246 243 724 333 270 262 218 No. 82 81 241 111 90 87 73 126 69 20 59 b8 _______________________________ 162 151 912 114 372 2,668 124 111 (newspaper and trading stamps); b5 (newspaper, posters and recipes, and cents-off coupons); b1 (newspaper, posters and recipes, and trading stamps); b7 (newspaper, cents-off coupons, and trading stamps); b8 (newspaper, posters and recipes, centsoff coupons, and trading stamps). 'Possibly biased upward by uncontrolled advertising at the local level. 1 Key to method of advertising and promotion: b (newspaper only, control); b2 1 (newspaper and posters and recipes); b3 (newspaper and cents-off coupons); b4 and Appendix Tables 2 and 3, and effective means of advertising varied according to store size. Only three methods of advertising were important in small size stores, all methods were important in their effect on sales in medium size stores, and only one method was effectively different from all others in large size stores, Appendix Tables 4, 5, and 6. Methods were significant in their effect on sales, Appendix Table 7, but the main effects of advertising were more pronounced in small and medium size stores than in large stores. Allocation of advertising and promotional expenditures, however, was assumed to be made generally the same in all size stores. Therefore, average sales resulting from each method of advertising and promotion in all stores were calculated for use in an economic analysis. Average sales from treatments significantly different from each other during the aggregate test period are shown in Appendix Table 8. Economic Evaluation of Advertising and Promotion Methods Six of the eight methods of advertising and promotion solicited significantly different sales of chilled peaches. The aggregated market study data for the period October 19, 8 ALABAMA AGRICULTURAL EXPERIMENT STATION 1967, to May 15, 1968, indicated that addition of posters and recipes to newspaper advertising was not justifiable by increased sales. In addition, average chilled peach sales for newspaper advertising, cents-off coupons, and trading stamps (treatment b 7) were lower and significantly different from average sales for newspaper only (treatment bl). The other methods of advertising and promotion increased sales above those expected from newspaper only and had significantly different effects. Cost of each method of advertising and promotion was calculated as follows: Total cost of the newspaper advertising was based on cost data provided by the advertising manager at the grocery chain and was divided equally among the 24 test stores. The contracted cost of the posters and recipes used was divided equally among the 12 test stores that received posters and recipes in the experimental design. Cost of cents-off and trading stamp promotion was based on number of 5-cents-off coupons and 20 trading stamp coupons used in each specific test store, Appendix Tables 9 and 10, rather than a fixed amount per store as in the cost for newspaper advertising, posters, and recipes. In the market test period, an increase in sales of one jar cost an average of $1.43 for newspaper, posters and recipes, and cents-off coupons (treatment b 5 $2.14 for newspaper, posters ), and recipes, and trading stamps (treatment b6), and $0.36 for newspaper, posters and recipes, cents-off coupons, and trading stamps (treatment b8 ). Since these costs were above the 12-centsper-jar return available to the advertiser, no method of advertising and promotion that included posters and recipes was economically justified. Net return of 12 cents per jar was based on approximately a 30 per cent mark-up. Newspaper, cents-off coupons, and trading stamps (treatment b7 ), had lower and significantly different sales than did newspaper advertising only (treatment b 1 ). Consequently, it was not profitable to pay for this increased cost of promotion and get less sales. Newspaper and cents-off coupons (treatment b3 ) had the highest average sales by far; however, the medium size store in this method had exceptionally high sales attributed to promotion by a local chamber of commerce. For economic analysis, sales in the medium size store having newspaper advertising and cents-off coupons were discounted by using the average sales figure of the medium size stores as representative of this store. On this basis, newspaper advertising and cents-off coupons had slightly lower sales and greater cost than ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 9 TABLE 2. ORDERS BY 24 TEST STORES FOR CHILLED PEACHES AND THREE CHILLED CITRUS PRODUCTS, BY METHOD OF ADVERTISING AND PROMOTION, FEBRUARY 1 TO MAY 15, 1968 Cases ordered Chilled Method of advertising andipeaches and pro store size'dz 6o. pas(d Cases Amhrosia (d jars/case) jars /case) Cases 2 3 2 2 2 1 0 0 4 0 0 0 1 1 1 0 3 4 0 1 4 0 4 3 38 oz 6oz. Fruit salad oz 6 z Unsweetened grapefruit sections jars / case) jars/case)z Cases 0 3 3 1 3 Cases 0 2 1 0 2 1 0 0 6 0 0 0 0 3 1 0 2 4 0 1 2 0 3 3 a, --iL3------- 3 9 2 5 5 3 --- b2 meto a ,------a3---------- 4 1 1 5 0 2 3 1 2 2 b4 method ba m a , ------a3---------- 1 12 5 -- b5 method 4 2 5 a i -- -- -- -- -- a3------ - - - - 0 - b7 method 3 5 -b8 method a, - - - - - - a, - - - -- - - a, - - - -- - - - 0 5 8 0) 1 3 1 0 5 0 8 2 0 -- bTOmethod 0 4 8 - -1 7 99 51 33 Key to method of advertising and promotion for chilled peaches: h, (newspaper only, control); b2 (newspaper and posters and recipes); b3 (Dewspaper and cents-off coupons); b4 (newspaper and trading stamps); h5 (newspaper, posters and recipes, and cents-off coupons); b6 (newspaper, posters and recipes, and trading stamps); h7 (newspaper, cents-off coupons, and trading stamps); and b8 (newspaper, posters and recipes, cents-off coupons, and trading stamps). 2Key to store size: a, (small), a, (medium), a, (large). 10 ALABAMA AGRICULTURAL EXPERIMENT STATION did newspaper and trading stamps. Net returns from advertising were approximately equal to costs for each treatment. Newspaper advertising, common to all methods of advertising and promotion in the experimental design, was an aid in getting store managers to order sufficient shelf stock for advertising and promotion. Store managers, with few exceptions, ordered stock prior to an advertisement. Analysis of covariance with amount of shelf stock as a covariate indicated that increased shelf stock was a significant variable in explaining increased sales. Another economic implication in this study concerned market acceptance of experimental chilled peaches. One measure of acceptance was a comparison of the orders for this product and three chilled citrus products that were competing for shelf space, Table 2. These orders were obtained from order cards, described previously, for the period from February 1 to May 15, 1968. The comparison was by method of advertising and promotion, store size, and product. Data indicated that orders for experimental chilled peaches were higher than orders for any of the three chilled citrus products. Furthermore, orders for the chilled peaches were higher than for any two of the chilled citrus products combined. CONSUMER PANEL The relationship of per capita consumption and repurchase pattern to socio-economic characteristics of consumers was accomplished by use of diaries and a questionnaire. Distribution of selected panel members (those who sent eight or more diaries) by store size and method of advertising and promotion is shown in Table 3. Panel members were found to be equally distributed among store sizes or not significantly different from an equal distribution of 10.6 panel members per store size. In addition, distribution of panel members by method of advertising and promotion (b1 through b8 where a method included all three store sizes) was not significantly different from an equal distribution of 3.6 members per method. Chain store customers, however, may not be representative of the total population of consumers. A comparison of the distribution by family income of consumer panel members to the Alabama population is presented in Table 4. This comparison indicates that a high percentage of panel members were in the high income brackets. However, a comparison of the distribution by age of consumer panel members ADVERTISING, TABLE 3. PROMOTION OF NEW PEACH PRODUCT 11 1 DISTRIBUTION OF SELECTED PANEL MEMBERS IN 251 TEST STORES, BY STORE SIZE AND METHOD OF ADVERTISING AND PROMOTION, FEBRUARY 1 TO MAY 15, 1968 Panel member distribution Method of advertising and promotion= Store size (small ) No. b--- - - - -- - - - - -- - - -0 (medium) a2 a3 (large) Totals No. 2 4 3 3 6 7 2 3 2 32 No. 3 0 1 4 2 0 2 13 b3 -- - - - - - - - - -- - - - - - - --- -- -- --- -- -- -- - --b 5 0 2 b6 -- - - - - - - - - - - - - - - - --- 2 b8--- - - - - - - - - - - - - - - - - - TOTAL --------------1Method 1 8 No. 1 1 3 1 0 3 0 0 2 11 or treatment b9 contains one large store in which a special in-store demonstration was planned but not carried out. 2Key to method of advertising and promotion: b (newspaper only, control); 1 b2 (newspaper and posters and recipes); b3 (newspaper and cent-off coupons); b4 (newspaper and trading stamps); b5 (newspaper, posters and recipes, and centsoff coupons); b6 (newspaper, posters and recipes, and trading stamps); b7 (newspaper, cents-off coupons, and trading stamps); b8 (newspaper, posters and recipes, cents-off coupons, and trading stamps). TABLE 4. DISTRIBUTION OF CONSUMER PANEL MEMBERS, 1967, AND THE ALABAMA POPULATION, 1960, BY FAMILY INCOME Family income Distribution of consumer panel Distribution of Alabama population1 Less than $3,000----------------- $3,000 to $5,000 to $5,999---------------- $4,999 ---------------$9,999 Per cent 13.3 13.3 3.3 Per cent 42.2 20.6 8.8 $6,000 to $6,999------------------$7,000 to $10,000 and over-36.7 --. 6.8---------------1 U.S. Bureau of the Census, Twenty-first Census of the United States: 1960. Population, I, 65. TABLE 5. DISTRIBUTION OF CONSUMER PANEL MEMBER, BY AGE, 1968, AND THE ALABAMA POPULATION, 1960 Age in years Under 18--Distribution of consumer panel -. - 3.3 30.110.----------------- 6.8 8 18-64 ----65 and 1U.S. over- Per cent 40.9 45.5 13.6 Alabama population1 Per cent 39.5 52.5 8.0 Distribution of Bureau of the Census, Twenty-first Census of the United States: 1960. Population, I, 16. 12 ALABAMA AGRICULTURAL EXPERIMENT STATION to that of the Alabama population was found to be not significantly different, Table 5. 2 Diary Analysis The diary - a list of selected products that could be grown in Alabama, except orange juice - was used in obtaining a weekly audit of the panel members' purchases. Participants were rewarded with 100 trading stamps for each diary they returned. Data from the weekly diaries were collected over a 15-week period to determine per capita consumption and repurchase pattern of experimental chilled peaches. Some panel members dropped out or sent in too few diaries to be used. To determine the repurchase pattern and per capita consumption, diaries from 32 panel members who sent in eight or more diaries were analyzed. The panel members were divided into two income groups. The low income group, panel members with less than $7,000 annual family income, consisted of 12 members. There were 20 in the TABLE 6. AVERAGE PURCHASE, AVERAGE TIME BETWEEN PURCHASES, AND PER CAPITA CONSUMPTION OF PEACHES BY HOUSEHOLD PANEL CONSUMPTION, MEMBERS, BY INCOME GROUP, FEBRUARY 1 TO MAY 15, 1968 Resultant, by income group Item measured and unit of measure Average purchase, lb...................................... Average time between purchases', wk. 2 Household consumption- , lb.. Per capita consumption , lb............... All canned peaches Low High income 2.89 1.38 1.2.75 4.78 income 1.60 2.52 3.20 .94 Chilled peaches Low High income 2.30 3.93 5.17 1.94 income 1.22 2.63 3.35 .99 1 Based on the number of people who purchased chilled peaches more than once; 6 out of 12 in the low income group and 12 out of 20 in the high income group. 2 Based on a panel of 32 for the period indicated. high income group, panel members with $7,000 or more family income. The analysis indicated a difference by income group for average purchase, average time between purchases, household consumption, and per capita consumption for both experimental chilled peaches and all canned peaches, Table 6. Average purchase was higher for both products in the low income group; however, average time between purchases was longer in the low income group for experimental chilled peaches and was longer in the high income group for all canned peaches. Household con2 Chi-square value equaled 4.902 with two degrees of freedom. ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 13 sumption figures indicated that both chilled and canned peaches tended to have a negative income elasticity. In the low income group, total peach consumption was composed of 29 per cent chilled peaches and 71 per cent canned peaches. In the high income group, total peach consumption was found to be 51 per cent chilled peaches and 49 per cent canned peaches. The high income group's relative increase of 22 per cent in experimental chilled peach consumption coupled with a 22 per cent relative decrease in consumption of canned peaches indicated a substitution of chilled for canned peaches, even though their total peach consumption decreased. Questionnaire Analysis At the end of the study panel members were asked to react to questions concerning peach use. Experimental chilled peaches were the only chilled peaches in the test stores; however, there were several close substitutes, canned, frozen, and fresh (in season) peaches. Thus, a comparison of chilled peaches to each of these products was made. The comparison of chilled to canned indicated that 28 of the 32 panel members thought chilled peaches were better quality, while only 4 said they were about equal. When chilled peaches were compared to fresh peaches, 9 panel members said chilled were better, 19 rated them about the same, and 4 said they were not as good as fresh peaches. In addition, when chilled peaches were compared to frozen peaches, 21 of 31 members who responded said that chilled were better than frozen, 8 said they were about the same, and only 2 said that chilled were not as good as frozen peaches, Table 7. The pasteurization process (6) by which chilled peaches were preserved has the attribute of maintaining fresh taste in fruits. When panel members were asked what type of taste the product TABLE 7. RESPONSE OF PANEL MEMBERS TO COMPARISONS OF PEACHES, MAY, CHILLED PEACHES TO CANNED, FRESH, AND FROZEN 1968 Response No response .. Better About the same--------------------Not as good Comparison by panel members Chilled to Chilled to Chilled to canned fresh frozen No. No. No. 0 0 1 28 9 21 4 19 8 0 4 2 1~11 ~ 14 ALABAMA AGRICULTURAL EXPERIMENT STATION OF TABLE 8. NUMBER OF PANEL MEMBERS WHO REPORTED VARIOUS USES EXPERIMENTAL CHILLED PEACHES, FEBRUARY 1 TO MAY 15, 1968 Salads Use Desserts Number Use Number No response ........ With cottage cheese_ W ith jello ......... With other fruit Plain 10 16 3 1 2 Shortcakes .. Mixed with other fruit -- Ice cream .. Cereals 16 1 1 10 Plain 4 had, 30 thought that chilled peaches tasted fresh, while the remaining 2 said they had a canned taste. Chilled peach uses were divided into two major classes, desserts and salads, each with appropriate dishes. By far the most frequent use of chilled peaches in salads was with cottage cheese, while in desserts the most frequent use was with shortcakes, Table 8. At the time the questionnaire was completed by panel members, 14 reported the product in their homes and all panel members said they would buy chilled peaches again. THE INSTITUTIONAL MARKET The range of restaurants in the survey included clubs, motels, hotels, restaurants, and nursing homes. The average price of meals with which the peaches were served ranged from $0.65 in the nursing homes to $3 in a club, while price per serving in which TABLE 9. SERVING PER 16-OUNCE JAR OF PEACHES AND SELLING PRICE PER SERVING, BY TYPE OF USE IN SEVEN INSTITUTIONS, MONTGOMERY, ALABAMA, JANUARY, Commercial product Type of use Servings per 16ounce jar 1968 Experimental product Servings per 16ounce jar Selling price per 1 serving Selling price per serving' No. Cereal................. Cobbler Compotes -----------Cottage cheese salads--Jello salad Mixed fruit Salads Shortcakes Sundaes... Cents 25 40 27 20 10 15 45 35 40 29 Tarts AVERAGE 4 4 10 10 62 10 6 6 5 13 No. 4 3 4 8 8 62 7 5 6 4 11 Cents 25' 25 40 27 20 10 25 40 35 40 29 'The selling price of a serving includes cost of all ingredients, including peaches. 2 Cost to customer for adding fruit to cereal. ADVERTISING, TABLE PROMOTION OF NEW PEACH PRODUCT 15 1 10. ESTIMATED VOLUME, OF USE PER MONTH OF CANNED PEACHES AND DESIRED USE OF CHILLED PEACHES AS A SUBSTITUTE, BY TYPE OF INSTITUTION, MONTGOMERY, ALABAMA, JANUARY 1968 Type of institution No. 101 cans used or desired Use of Desired use of canned peaches chilled peaches No. Club -------------I 6 Club .-- ---- ---- --- ---- ---- ---- --- ---- ---- --33 M otel .--------- ---- ----- ---- ---- --------- ---21 M otel .-------- ---- --------- ----- ---- --------24 H o spital -------------------------------------84 13 N ursing hom e-----------------------------------Ho tel ---- --------- ----- ---- --------- ----- ---14 A VERAGE ---------------------------------------1 No. 5 33 12 9 24 13 28 17.7 27.9 A'No. 10 can contains 96 ounces. the peaches were used ranged from $0.10 when mixed with other fruit to $0.45 for a shortcake. Use of the new products was principally in desserts like tarts, sundaes, shortcakes, compotes, cobblers, and mixed fruit. Servings per 16-ounce jar and selling price of the servings are presented in Table 9. Based on servings per 16-ounce jar and selling price of servings, weighted average value of servings from a 16-ounce jar of commercial chilled peaches was $2.42 and from experimental chilled peaches $2.08. This weighted average value included cost of all ingredients in the serving, including the peaches. The higher weighted average value of servings from commercial chilled peaches was attributed to smaller slices. A case of experimental chilled peaches was used on the average in approximately 4.6 meals. Average use was 42 ounces per meal and an average of 352 customers were served per meal. The calculated usage rate would be 13 cans (number 10) per month to serve 30 meals. with the calculated usage rate was the average volume of canned peaches used per month, 27.9 number 10 cans, and the desired use per month of chilled peaches, 17.7 number 10 cans, Table 10. In taste comparisons made by restaurant managers, experimental chilled peaches were ranked higher than a commercial brand and ranked better than or equal to frozen peaches, Appendix Table 11. 'Comparable SUMMARY AND CONCLUSIONS In the analysis of test sales of pasteurized-refrigerated peaches, store size was the most important source of variation in aggregate 16 ALABAMA AGRICULTURAL EXPERIMENT STATION sales data for 30 weeks, followed by the interaction of store size and methods of advertising and promotion. Methods of advertising and promotion, however, were the most important source during the first 15 weeks of the study. Several comparisons that indicated significant effects from advertising and promotion in large stores during the first 15 weeks were not significant in the second period when methods were repeated. Best methods of advertising and/or promotion depended on size of stores in which they were used. More methods of advertising and promotion had significant effects on sales in the small and medium stores than in the large size stores. Direct-action forms of advertising and promotion had a greater effect on sales than indirect forms. Also, the ways in which directaction forms of advertising and promotion were combined resulted in significantly different effects. The most outstanding example was the combination of cents-off coupons and trading stamps. Use of 20 trading stamps had a greater effect on sales than an equivalent retail value of a 5-cents-off coupon, but either of these direct-action forms of promotion solicited more sales response separately than when combined. Apparently, an inferior image was projected by the larger reduction in price. When all forms of advertising and promotion (newspaper, posters and recipes, cents-off coupons, and trading stamps) were used together a significantly greater effect was obtained than from any form or combination of forms. However, additional costs of combining all forms of advertising and promotion were greater than additional returns. Sales response to posters and recipes, a means of indirect-action promotion, was found to be less than the average effect of other methods of advertising and promotion. Over a longer time than was observed in this study, however, a possible cumulative effect could accrue to posters and recipes. Economic evaluation of the methods of advertising and promotion indicated that one, and possibly two, of the eight methods used were justifiable during the study period. Newspaper advertising and 20 trading stamps on an item selling for 39 cents per 16 ounces did increase sales so that additional revenue was greater than additional cost. Net returns from newspaper advertising and a 5-cents-off coupon were also positive, but additional sales for this method may have been biased upward. The newspaper advertisement, announcing a price reduction at the beginning of the ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 17 second period, was observed to be effective in getting shelves stocked and warrants further study. Covariance analysis indicated that amount of shelf stock was a significant variable in explaining differences in retail sales. High income respondents purchased smaller amounts of peaches and bought more frequently than did respondents in the low income group. The average repurchase pattern was approximately 2.30 pounds every 3.93 weeks for the low income group and 1.22 pounds every 2.63 weeks for the high income group. Per capita consumption of experimental chilled peaches during the study period was approximately 1.94 pounds for the low income group and 0.99 pound for the high income group. Negative income elasticity indicated by the panel data for canned peaches and experimental chilled peaches is a prediction of declining demand for processed peaches as incomes increase. However, there was an apparent substitution of experimental chilled peaches for canned peaches with increasing income. Consequently, it was concluded that peach processors will need to change to a higher quality product if they are to take advantage of the diminishing market for processed peaches that develops with higher incomes. The institutional market was evaluated as a possible outlet for the experimental chilled peach product and a competing commercial chilled peach product. An attempt was made to determine uses of the products, volume of use, and preferences. The new products were used more in desserts, with special emphasis on those where the "like-fresh" taste of the product could be detected. The estimated volume of use per month of canned peaches and the desired use of experimental chilled peaches as a substitute indicated that chilled peaches could, if competitively priced, capture approximately half of the existing market for peaches in these institutions and possibly expand the total market. In addition, all of the institutional food managers who responded preferred experimental chilled peaches prepared by a pasteurizedrefrigerated process to the commercial chilled peach slice preserved with sodium benzoate. Chilled peaches led ambrosia, fruit salad, and unsweetened grapefruit sections in quantity ordered from the warehouse during the market test period. Peach orders included initial stocking, however, and reorders of peaches were similar in volume to chilled citrus orders. 18 ALABAMA AGRICULTURAL EXPERIMENT STATION LITERATURE CITED (1) BRANSON, ROBERT E., GORDON POWELL, AND CARL SHAFER. 1964. Analysis of a Promotion Test for South Texas Onions. Texas Agr. Exp. Sta. Prog. Rept. 2309. (2) CLEMENT, WENDELL E., PETER L. HENDERSON, AND CLEVELAND P. 1965. The Effect of Different Levels of Promotional Expenditures on Sales of Fluid Milk. U.S. Dept. of Agr., ERS, Rept. 259, Washington, D.C. (3) HENDERSON, PETER L. AND SIDNEY E. BROWN. 1961. Effectiveness of a Special Promotional Campaign for Frozen Concentrated Orange Juice. U.S. Dept. of Agr., Marketing Research Rept. 457, Washington, D.C. 1961. , AND JAMES F. HIND. ------------(4) Special Promotional Programs for Apples; Their Effects on Sales of Apples and Other Fruits. U.S. Dept. of Agr., Marketing Research Rept. 446, Washington, D.C. ELEY. (5) - AND ELTON M. THIGPEN. 1965. Evaluation of a Special Promotional Campaign for Frozen Concentrated Orange Juice. U.S. Dept. of Agr., Marketing Research Rept. 696, Washington, D.C. (6) MILLER, BILL R. AND HUBERT H. HARRIS. 1969. Market Testing of Chilco and Georgia Boy Pasteurized-Refrigerated Univ. (Ala.) Agr. Exp. Sta. Cir. 168. Peaches. Auburn (7) QUANDT, RICHARD E. 1964. Estimating the Effectiveness of Advertis- ing: Some Piffalls in Econometric Methods. J. of Marketing Research, Vol. 1, No. 2, pp. 51-60. ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 19 1 APPENDIX APPENDIX TABLE 1. LOCATION OF TEST STORES, BY METHOD OF ADVERTISING AND PROMOTION AND STORE SIZE, OCTOBER 19, 1967, TO MAY 15, 1968 Method of advertising and promotion Location of stores a, (small) a2 (medium) a (large) b4 -- - - - - - - - - - - b 5 --- - - - - - - -b 8 -- - - - - - - - - - b9 -- - - - - - - - - - - Elba, Ala. Luverne, Ala. East Brewton, Ala. West Point, Ga. Ft. Deposit, Ala. Brundidge, Ala. Prattville, Ala. Georgiana, Ala. Auburn, Ala. Prattville, Ala. Clanton, Ala. Millbrook, Ala. Montgomery, Ala. Montgomery, Ala. Tallassee, Ala. Montgomery, Ala. Montgomery, Ala. Montgomery, Ala. Montgomery, Ala. Tuskegee, Ala. Selma, Ala. Montgomery, Montgomery, Ala. Ala. Wetumpka, Ala. Montgomery, Ala. APPENDIX TABLE 2. AGGREGATE ANALYSIS OF VARIANCE OF SALES OF 16-OUNCE JARS OF CHILLED PEACHES, 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Source of variation Treatm ents-------------Replicates (weeks)-----A (store size)----------E rror (a).----------- ---B (method of advertising and promotion)---------E rror (b)------------ ---TOTAL------------ Degrees of freedom (ab-1= 23) r-1= =29 a-i= =2 (a-1)(r-1)_ =58 Sum of squares (8,359.24) 2,769.08 989.34 1,702.91 2,136.71 5,233.19 7,954.34 20,685.57 Mean square 95.49 494.67 29.36 305.24 373.80 12.90 F 3.252 16.852 b-i= 7 (a-i) (b-i) 14 a(r- 1)(b-1)= =609 abr-1=719 23.662 28.982 -- Significant at the .05 level. 2 Significant at the .01 level. 20 APPENDIX TABLE 3. AND ALABAMA AGRICULTURAL EXPERIMENT STATION ANALYSIS OF VARIANCE OF SIMPLE EFFECTS OF STORE SIZE OF ADVERTISING AND PROMOTION ON SALES OF METHODS PASTEURIZED-REFRIGERATED PEACHES, 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Treatment comparisons Among Among Among Among Among Among Among Among Among Among Among D fgreedom squamrf Mean r 39.94 967.42 45.49 8.94 21.44 2,736.48 74.64 21.24 141.38 .54 106.64 17.71 2.262 54.633 2.572 .50 1.21 154.523 4.21= 1.20 7.983 .03 6.02' 279.58 methods within a,.._____ 8-1=7 8-1=7 6,771.91 methods within a2 318.40 methods within a3________8-1-7 3--1=2 17.87 stores within bl 42.87 3-1= 2 stores within b2 5,472.95 3-1= 2 stores within b3 .......... 149.27 3-1=2 stores within b__________ 42.47 3--1=2 stores within b5 282.76 3-1= 2 stores within b6 1.09 3-1= 2 stores within b7 213.27 3-1-=2 stores within bsab(r-1)= 696 12,326.33 ERROR ------ 1 Key to treatments: store size ai (small), a2 (medium), a3 (large); method of advertising and promotion b1 (newspaper only, control); b2 (newspaper and posters and recipes); b3 (newspaper and cents-off coupons); b4 (newspaper and trading stamps); b5 (newspaper, posters and recipes, and cents-off coupons); bi (newspaper, posters and recipes, and trading stamps); b7 (newspaper, cents-off coupons, and trading stamps); bs (newspaper, posters and recipes, cents-off coupons, and trading stamps). 2 Significant at the .05 level. 3Significant at the .01 level. m z 0 0 APPENDIX TABLE 4. ORTHOGONAL COMPARISONS OF SALES OF PASTEURIZED-REFRIGERATED PEACHES IN EIGHT SMALL TEST STORES, BY METHOD OF ADVERTISING AND PROMOTION, OCTOBER 19, 1967, TO MAY 15, 1968 Comparison b1 100 - SaleS comparison by treatment (number of 16-ounce jars) ~ b2 63 b3 28 b4 126 b5 69 b 0 20 b 7 69 + + zI b8 59 + Q K 0 52.27 7.033 b2 vs. b3 vs. rest________ b 4 vs. rest -_______ b 5 vs. bvs. rest -------rest -------rest -------- + - - -112 8(80) + - - + - + - + + - + - ± - + + + ± + + 84 + 14 - 8(30) 8(30) 8(30) 8(30) 29.50 .82 126.15 60.00 3.962 .11 16.983 8.083 z I + - + - + - b 7 vs. rest_+ b 8 vs.rest + + - + + + - + + +174 -120 +48 ,+18 8(30) 8(30) 9.60 1.35 279.59 1.29 .18 0 TOTAL ---------1 The sum of squares However, the error sum 2 Significant at the .05 3Significant at the .01 for the orthogonal comparisons is equal to mean squares since there is one degree of freedom in each case. of squares has 232 degrees of freedom making the error mean square equal 7.3 (1,724.27= 232). level. c level. APPENDIX TABLE 5. ORTHOGONAL COMPARISONS OF SALES OF PASTEURIZED-REFRIGERATED PEACHES IN EIGHT MEDIUM TEST STORES, BY METHOD OF ADVERTISING AND PROMOTION, OCTOBER 19, 1967, TO MAY 15, 1968 Coprsn b2vs. restb3vs. rest b4vs. rest_ b5 vs. rest b;vs. CompaisonSales b, - comparison by treatment (number of 16-ounce 78 b2 110 b3 567 -- b 4 58 b:, 83 b.3 92 b7 72 - jars) b8 162 Q -328 +546 -454 -460 +576 -378 +572 Kr 8(30) 8(30) 8(30) 8(30) 8(30) 8(30) 8(30) SS' 448.27 1,242,15 858.82 881.67 1,382.40 595.35 1,363.27 6,771.93 F 22.723 62.963 43533 44.693 70.073 30.173 69.10' + - + + + + - ± - + + + ± ± + -+_ - + + - 0 rest- + + + - + - ± - + - b;vs. rest - - + '- + + b3vs. restTOTAL_. ± + - 'The sum of squares for the orthogonal comparisons is equal to mean squares since there is one degree of freedom in each case. 232). However, the error sum of squares has 232 degrees of freedom making the error mean square equal 19.73 (4,578.07 2 Significant at the .05 level. 3 Significant at the .01 level. m M z z m aI APPENDIX TABLE 6. ORTHOGONAL COMPARISONS OF SALES OF PASTEURIZED-REFRIGERATED PEACHES IN EIGHT LARGE TEST STORES, BY METHOD OF ADVERTISING AND PROMOTION, OCTOBER 19, 1967, TO MAY 15, 1968 Sales comparison by treatment (number of 16-ounce jars) 0 Q K S Comparison i1 68 - b2 70 + - b3 129 - b4 149 - b5 118 b2 vs. rest.---------b3 vs. rest---- ------ - + - bvs. rest--------- + + ± - b 6 150 + - b; 77 - Z 0 .70 b 8 151 b5 vs. rest.--------±bs vs. rest-------- - - b8 vs rest.--------1 bvs. rest---------- + + - - + + TOTAL----------318.41 + + + - + - + + - + + - + + ± + + + +38 66 8(30) 8(30) 8(30) 18.15 6.02 .23 3.24 z m a +142 84.02 + 60 + 84 -180 + 86 8(30) 8(30) 8(30) 8(30) 15.00 29.40 135.00 30.82 .58 1.13 5.202 1.19 + + + ± However, the error sum of squares has 232 degrees of freedom making the error mean square equal 25.97 (6,024.00 2 Significant at the .05 level. sSignificant at the .01 level. The sum of squares for the orthogonal comparisons is equal to mean squares since there is one degree of freedom in each case. 232). C A -~1 N 24 ALABAMA AGRICULTURAL EXPERIMENT. STATION 24 ALABAMA AGRICULTURA XEIEN TTO APPENDIX TABLE 7. ANALYSIS OF VARIANCE OF THE MAIN EFFECTS OF THE TREATMENTS OR METHODS OF ADVERTISING AND PROMOTION ON SALES OF PASTEURIZED-REFRIGERATED PEACHES, 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Source of variation' Degrees of freedom 'Sum of squares Mean square F 10.97' 19.61' 6.96' 4.012 (2,136.71) (b-1=7) TOTAL ---------------------------194.27 1 194.27 Treatment b2_____________________ 347.22 347.22 1 Treatment b_ -________-_______ 123.34 1 123.34 Treatment b 4_____________-_______ 70.94 1 70.94 Treatment b5_____________________ 405.00 1 405.00 Treatment b _____________________ 0 361.25 361.25 1 Treatment b7_____________-______ 634.69 634.69 1 Treatment b8_____________________ 17.71 ab(r-1)=696 ERROR____________________________ 12,326.33 22.87' 20.403 35.84' 'Key to method of advertising and promotion: b2 (newspaper and posters and recipes); b3 (newspaper and cents-off coupons); b4 (newspaper and trading stamps); b5 (newspaper, posters and recipes, and cents-off coupons); b (newspaper, posters 6 and recipes, and trading stamps); b 7 (newspaper, cents-off coupons, and trading stamps); b8 (newspaper, posters and recipes, cents-off coupons, and trading stamps). 2 Significant at the .05 level. 3 Significant at the .01 level. APPENDIX TABLE 8. DUNCAN'S NEW MULTIPLE RANGE TEST ON AVERAGE SALES OF CHILLED PEACHES, BY METHODS OF ADVERTISING AND PROMOTION IN 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Measurement tested Average sales 2 (16-ounce jars per 30-week period) Result, by treatment' b7 b2 b1 b6 b2 b4 b8 b3 -------- 73 81 82 87 90 111 124 241 ' Treatments are arranged in order of increasing mean sales : b7 (newspaper, cents-off coupons, and trading stamps) ; b2 (newspaper and posters and recipes) ; b1 (newspaper only, control) ; b8 (newspaper, posters and recipes, and trading stamps) ; b5 (newspaper, posters and recipes, and cents-off coupons) ; b4 (newspaper and trading stamps) ; b8 (newspaper, posters and recipes, cents-off coupons, and trading stamps) ; b3 (newspaper and cents-off coupons). ' Treatment averages that are not significantly different are joined by a continuous line. ADVERTISING, PROMOTION OF NEW PEACH PRODUCT 25 2 APPENDIX TABLE 9. ESTIMATED USE OF 5-CENTS-OFF COUPONS AN] 20 TRADING STAMP COUPONS IN THE PROMOTION OF PASTEURIZED-REFRIGERATED PEACHES IN 18 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Method of advertising 1 and promotion Estimated use 5-cents-off couponls 20 trading stamp coupons and store size' ai b3 method a2--- Number ------ 27 180 48 Dollars 1.35 Number Dollars a3 - -- - -- - - ---------- 9.00 2.40 61 24 36 3.05 1.20 1.80 b4 method a3------------a, ----- ------a 2 method- - - - b, - ---- - 24 a2 -------- a3--------- 42 1.20 1.20 2.10 24 24 42 1.20 1.20 2.10 1.95 1.80 2.40 1.95 3.00 2.85 24.50 S meto a 2---_----a3-------- -------- 39 - 36 48 1.95 1.80 2.40 1.95 39 36 48 39 39 - 60 57 3.00 2.85 31.20 60 57 490 624 'Key to method of advertising and promotion: b3 (newspaper and cents-off coupons); b4 (newspaper and trading stamps); b (newspaper, posters and recipes, 5 and cents-off coupons); b6 (newspaper, posters and recipes, and trading stamps); b7 (newspaper, cents-off coupons, and trading stamps); b3 (newspaper, posters and recipes, cents-off coupons, and trading stamps). ai (small), a2 (medium), a3 (large). - Key to store size: 26 ALABAMA AGRICULTURAL EXPERIMENT STATION APPENDIX TABLE 10. COST OF EACH METHOD OF ADVERTISING AND PROMOTION OF PASTEUBIZED-REFRIGERATED PEACHES, BY STORE SIZE, 24 TEST STORES, OCTOBER 19, 1967, TO MAY 15, 1968 Method of advertising and promotion 1 a1 (small) Cost, by store size a2 (medium) a3 (large) Total Dollars b3-------------------------------------b4--------------------------------------2.55 4.25 Dollars 10.20 2.40 12.32 12.32 4.80 17.12 Dollars 3.60 3.00 Dollars 3.60 33.36 1.20 1.20 1.20 -----------b ---------------------------11.12 11.12 11.12 b2 -------------------------------------12.32 b 5 -------------------12.32 b0 .--- ---------------------------------5.10 b7 ------------------- 15.02 b 13.22 13.22 6.00 16.82 16.35 9.65 37.86 37.86 15.90 48.96203.54 to method of advertising and promotion: b1 (newspaper only, control); recipes); b3 (newspaper and cents-off coupons); b2 (newspaper and posters b4 (newspaper and trading stamps); b5 (newspaper, posters and recipes, and centsoff coupons); b6 (newspaper. posters and recipes, and trading stamps); b7 (newspaper, cents-off coupons, and trading stamps); b8 (newspaper, posters and recipes, cents-off coupons, and trading stamps). 'Key TOTAL -------------- 63.88 71.48 68.18 and '-I m z 0 O 0 APPENDIX TABLE 11. RESPONSE TO SELECTED COMPARISONS AMONG CANNED, FROZEN, KRAFT CHILLED, AND WHITFIELD CHILLED PEACHES, BY TYPE OF INSTITUTION, MONTGOMERY, ALABAMA, JANUARY, 1968 0 0 z Type of institution Club Y-Club Motel Motel Hospital-.......-... Nursing Home ..... Hotel __better 1 No response. Commercial to canned better about same not as good better not as good better Commercial to fresh about same about same not as good not as good not as good not as good not as good Response to selected comparisons Experimental Experimental Commercial to frozen to canned to fresh about same about same about same NR 1 not as good NR NR better better better better about same better better about about not as about not as better not as same same good same good good Experimental to frozen about same better better NR better NR NR Experimental to commercial better better better NR better better better no m -I c 0 AGRICULTURAL EXPERIMENT STATION SYSTEM OF ALABAMA'S LAND-GRANT UNIVERSITY With an agricultural research unit in every major soil area, Auburn 1University serves the a needs of field crop, livestock, forestry, and horticultural producers in each region in Alabama. Every citizen of the State has a stake in this research program, since any advantage from new and more economical ways of producing and handling farm products directly benefits the consuming 0 public. Research Unit Identification * 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Main Agricultural Experiment Station, Auburn Tennessee Valley Substation, Belle Mina. Sand Mountain Substation, Crossville. North Alabama Horticulture Substation, Cullman. Upper Coastal Plain Substation, Winfield. Forestry Unit, Fayette County. Thorsby Foundation Seed Stocks Farm, Thorsby. Chilton Area Horticulture Substation, Clanton. Forestry Unit, Coosa County. Piedmont Substation, Camp Hill. Plant Breeding Unit, Tallassee. Forestry Unit, Autauga County. Prattville Experiment Field, Prattville. Black Belt Substation, Marion Junction. Tuskegee Experiment Field, Tuskegee. Lower Coastal Plain Substation, Camden. Forestry Unit, Barbour County. Monroeville Experiment Field, Monroeville. Wiregrass Substation, Headland. Brewton Experiment Field, Brewton. Ornamental Horticulture Field Station, Spring Hill. Gulf Coast Substation, Fairhope.