The Avocado Case

From Quantative Methods in Management: Text and Cases, Vatter, Bradley, et al., Richard D. Irwin, New York.

The Avocado Case

In the late 50s, the Israel Agriculture Export Company (Agrexco) began the gradual introduction of an essentially unknown fruit, the avocado, into the European marketplace. France was the first target area and limited distribution was begun in 1957. Shipments that year amounted to 18 tons. Avocados slowly spread to other countries and by 1972 the Agrexco avocado shipments to Europe had grown to 6,100 tons. Of this total, 3,038 tons were to France, 1,266 to England, and 533 to Germany.

Early in 1972, Germany was selected as a major target market and a wide promotional campaign was proposed. In order to design and direct such an effort effectively, Agrexco began to collect detailed data on the current market penetration of avocados and the potential customers for avocados. Specifically, a consumer research study was undertaken with the objectives of identifying (1) the level of penetration of the avocado in the market and the target groups for the promotion, (2) the stages of the customer’s decision-making process in eating and purchasing foreign fruits and vegetables, and (3) the most effective channels of communication and the appropriate messages to influence the target groups. The preliminary results of this project had just become available and Agrexco began to evaluate their significance for the German promotion.

The consumer research study

It was felt within Agrexco that the avocado was viewed by the public as an “innovative” and unfamiliar fruit and, due to its high price, it was also considered a luxury product. As a result, it was more likely to be consumed by the high-income, high-education groups within the population. These judgments and a relatively small budget for research led Agrexco to target its German study on the high-income, high-education group and to limit the effort to a small geographical area.

The study was designed to take a sample of 300 Munich housewives of the upper and upper-middle classes, between the ages of 20 and 50. The respondents were chosen by means of quota sampling in which the selection criteria were age, social grouping, size of household, and whether or not the respondent left the house to work. The interviews, conducted in all parts of Munich from April 4 to April 21, 1972, were based on a structured questionnaire designed by the Institüt für Verbrauchs-Und Einkaufsforschung EmbH, Hamburg. The questionnaire sought responses in the three principal areas of recognition and usage of the avocado, attitude toward the avocado, and factors contributing to the purchase of fruits and vegetables. The specific questions in each of these areas were the following:

Recognition and usage

a) Which are your favorite vegetables and fruits? (Open-ended question.)

b) Which of the following foreign vegetables and fruits (a list of names) do you know, have you eaten, or have you purchased?

c) How many times have you purchased avocado in the last six months?

Attitude

a) How strong is your intention to buy oranges, bananas, eggplants, avocado? (Each indicated on a scale of 1 to 7.)

b) How much do you think you and your family will enjoy eating oranges, bananas, egg plants, avocado? (Each indicated on a scale of 1 to 7.)

Purchasing Factors

a) How important in making your purchasing decision are the following 12 attributes of fruits and vegetables? (Each indicated on a scale of 1 to 7.) The list included criteria such as “always fresh in the shop,” “has high vitamin content,” “obtainable everywhere and always,” and “can be served to guests with high standards.”

Preliminary survey results

Shortly after the interviews were conducted, Agrexco received tabulations and preliminary analyses of the responses to the three questions dealing with recognition and usage. The data is presented in Exhibits 1, 2, and 3. Agrexco was particularly eager to review this information, for it would offer an indication of the current level of penetration of the avocado in the German marketplace and would form the basis for their future discussions.

It was suggested by the market research consultants that the data supported the following conclusions:

1. Avocado is conceived to be a vegetable rather than a fruit.
2. In an unaided, open-end question avocado has a low preference, as compared to other vegetables and fruits.
3. Among foreign (imported) vegetables and fruits, the relative level of awareness and usage of avocado is medium, but the absolute level is quite high for a new product (known – 84 percent; eaten – 62 percent; bought – 48 percent).
4. There is a gap between knowing and using avocado, since only 73 percent of those who know about avocado have eaten it, and less than 50 percent have bought it in the last six months.

It was proposed that the significance of the gap between knowledge and use of the avocado could be better evaluated by comparing the avocado to the other fruits and vegetables in the study. Based on all the fruits and vegetables, relationships could be established between the percent of the respondents who had eaten (or, alternatively, bought) the product and the percent of the respondents who were aware of the product. This would give norms against which the avocado’s actual “performance” could be judged. Regression analysis was used in conjunction with the data of Exhibit 2 to calibrate these relationships with the following results:

(Percent who have eaten) = -15.4 + 1.06 * (Percent who are aware)

R2 = 0.92, SEE = 10.3

(Percent who have bought) = -21.1 - 1.04 * (Percent who are aware)

R2 = 0.82, SEE = 15.6

The market research analysts suggested that these relationships demonstrate that “the potential of the examined segment of the population is not fully exploited.” They based their conclusion on the observation that the first equation predicts that 73.6 percent[1] of the sample population should have eaten avocado but in fact only 62 percent had. Likewise, the second equation predicts that 66.2 percent of the population should have bought avocado, but only 48 percent actually had. The poor performance of the avocado relative to other fruits and vegetables in the study meant that there was indeed substantial potential for improvement.

These conclusions were encouraging and Agrexco eagerly awaited the tabulations of the other questions, for they would give more specific information on how to tap the potential of this market.

[1] Since 84 percent of the population were aware of avocado, the equation predicts that –15.4 – (1.06 * 84 ) = 73.6 percent of the population would have eaten avocado.