C.K. Halbrendt, F.F. Wirth, G.F. Vaughn (Delaware Agricultural Experiment Station, Department of Food and Resource Economics, College of Agricultural Sciences, University of Delaware, Newark)
Southern Journal of Agricultural Economics, July 1991
Objectives
- Examine buyer preferences toward farm-raised hybrid striped bass at wholesale, retail and restaurant levels
- Analyze purchase preference of mid-Atlantic seafood buyers when purchasing farm-raised hybrid striped bass
* utility values for different levels of four hybrid striped bass product attributes for wholesale, retail and restaurant
* relative importance of various hybrid striped bass product attribute (calculated from estimated attribute utility values
* measure buyer preferences for different product configurations to match preference of particular market levels
Methods/Approach
- conjoint measurement
* multivariate market research technique that finds relative importance of product's multidimensional attributes (Green and Wind)
* any decompositional method that estimates structure of buyers' preferences given buyers' overall evaluations of a set of alternative prespecified products in terms of levels of different attributes
* this study uses full profile approach: respondents rate a set of "total" hypothetical products
* to cut down on number of product profiles fractional factorial design can be used without losing information to effectively test effects of attributes on buyers
_ most common is orthogonal arrays
^ product profiles select so that independent contributions of all main effects are balanced, assuming negligible interactions (Green and Wind)
^ Desirable properties: 1) allow one to gather data on large number of product profiles using relatively small number of product profiles
^ most efficient statistically
* conjoint design
_ Step 1: Find Attributes and Levels
^ Attributes reflect key product characteristics or dimensions, should include most relevant to potential buyers (Cattin and Wittink)
^ Attribute levels should cover entire range of representative levels
^ (for this study) based on a priori knowledge of seafood marketing, review of past fish marketing studies and discussions with several large-volume fish buyers in mid-Atlantic
_ Step 2: Combine attributes and levels into hypothetical farm-raised hybrid striped bass products so preference ratings can be assigned
* conjoint administration
_ respondents rated each profile on scale from 0 (least preferred) to 10 (most preferred)
_ respondents were informed that a single 10-oz portion fillet can be obtained from a 1.5 lb hyrbid striped bass fish and 2 8-oz fillets can be obtained from a 2.5 lb fish (given for ease of respondent conversion)
_ list of 2,485 wholesales, retailers and restaurants from mid-Atlantic region was obtained from Dun's Marketing
_ 12% response rate of 296 firms (91 wholesalers, 84 retailers and 121 restaurants), original was 24% but firms that only sold shellfish were eliminated
_ not all surveys were complete, only 1,790 usable observations (preference ratings) out of 2,664
* Model specifications
_ functional form for each attribute is specified
^ a priori notions can be used to determine shape of attribute's functional form, verified by scatter plots of buyer's utility rating with various levels of quantitative attributes and significance levels of estimated coefficient when subjected either to linear or quadratic forms
^ fish size: quadratic, purchase price: linear, product form and seasonal availability: 'part-worth' or dummy variable specification (uses "mean deviation coding" = coefficient for the base level is easily calculated as negative sum of (k-1) level coefficients, intercept becomes mean preference rating, and dummy variable coefficients measure deviation from the mean rating)
_ functional forms for each attribute are combined into conjoint preference model for estimation
^ Rating = f(Size, Form, Season, Price)
* market-levels are aggregated to provide information on statistical significance of inter-market levels using dummy variables for each market level
^ reveal how base preference level (represented by intercept term) varies between market levels by indicating how slopes change between market levels for different attribute variables
* conjoint preference model estimated using Ordinary Least Squares (OLS)
Results and Conclusions
- Low price and round form were found to be important in product preference rating for wholesale and retail markets and fillet form in restaurants
- All markets preferred larger size fish
* highest utility for wholesalers and retailers is between 2.0 and 2.5 lbs
* for restaurants the highest utility occurs between 2.5 and 3.0
- Fish-attribute variables
* Fish size: there is an ideal-point for fish size and fish size preference decreases as fish size changes from the ideal-point (positive sign for linear and curvilinear quadratic functional form)
* Purchase price: buyer utility decreases as price increases (negative coefficient)
* Form: fillet form had greatest effect on preference rating, then gutted, then round
* Availability: Year-round preferred over availability from April-October
- Market-Level Variables
* restaurant has greatest effect on intercept indicating a higher preference than wholesale or retail markets
* preference by market not significantly different from overall mean preference level (all dummy variables for markets were NOT significant)
- Attribute-Market Interaction
* market-level difference in fish size and purchase price between retail and restaurant (price-market interaction differed significantly from mean level)
* coefficients for interaction between filleted product form and restaurants and wholesale significantly different from mean preference level (fillet more important to restaurants than wholesalers or retailers)
- Attribute Utility Values
* intercept coefficient added to each market-level coefficient to compute separate market intercept parameter, then attribute coefficient added to different attribute market interaction to arrive at attribute parameter for each attribute
* for quantitative values (price and size) parameters are marginal utility values, for qualitative variables (form and season availability) can be interpreted as strictly utility values
- Calculation of Utility Values
* fillet has the highest utility for all markets
* wholesale and retail prefer round over gutted while restaurants prefer gutted over round
* year-round availability has higher buyer utility than Apr-Oct
* buyer utility for purchase price decreases as purchase price increases, highest purchase price utility at $2/lb
^ retail markets have lowest utility at all price levels, suggesting more importance on price than other markets
- Relative Importance of Attributes
* 1) for each attribute, determine highest and lowest utility values for the attribute, difference is attribute utility range; 2) take sum of ranges over all attributes: RI = (100 x range)/sum of ranges
* wholesale and retail markets very similar, relative importance weights almost identical
^ purchase price most important attribute in preference rating, contributing over 50 percent to the rating
^ product form and fish size were similar for both markets accounting for 18 to 21 percent of preference rating
* product form most important attribute for restaurants (42.8% of preference rating) then purchase price (38.1%)
- Market Simulations
* Utility = Base Level Utility + Sum of Attribute Level Utilities
* Analyst chooses product configurations (for this study: based on current mid-Atlantic market conditions on sea trout, a close substitute to hybrid striped bass)
Errors in experimental design, statistical analyses or analytical approaches?
- "mean deviation coding" which is equivalent to traditional dummy variable coding from a mathematical point of view no citation
- "mean deviation coding" which is equivalent to traditional dummy variable coding from a mathematical point of view no citation
- Made attribute-market interaction conclusions even though market variables were not significant
Assumptions
- Wholesale, Retail and Restaurant differ in requirements; supplier must know which attributes influence purchasing decision in order to penetrate market
- products are multidimensional, the buyer must make overall judgment about relative value of attributes (Green and Wind)
Opinion
According to Google Scholar this article has been cited 72 times. Many of the citations are seafood related or food. In addition to the Cattin and Wittink article and updates since 1982 I have found many helpful resources. This article in particular is useful because of the use of rank of profiles. I would like to investigate the difference between full-profile approach and fractional factorial design using orthogonal arrays.
Overall this paper met its objectives. Purchase preferences at the wholesale, retail and restaurant level are known for the hybrid striped bass. For our purposes we need to know more about purchase preference for local vs. foreign or mainland import and aquaculture vs. wild which can differ per species. Appropriate species will have to be chosen and assumptions and information will have to be given to the respondents. The importance of other purchase factors such as taste and appearance may or may not need to be included. The role of price also needs to be determined.
Useful References
Cattin, P. and D.R. Wittink. "Commercial Use of Conjoint Analysis." J. Marketing, 46(1982): 44-53.
Green, P.E. and V. Rao. "Conjoint Analysis in Consumer Research: Issues and Outlook.: J. Consumer Res., 5(1978):103-123.
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