From Shakespeare’s Romeo and Juliet:
JULIET:
‘Tis but thy name that is my enemy;
Thou art thyself, though not a Montague.
What’s Montague? It is nor hand, nor foot,
Nor arm, nor face, nor any other part
Belonging to a man. O, be some other name!
What’s in a name? That which we call a rose
By any other name would smell as sweet;
So Romeo would, were he not Romeo call’d,
Retain that dear perfection which he owes
Without that title. Romeo, doff thy name,
And for that name which is no part of thee
Take all myself.
Maybe Juliet was wrong. Perhaps a rose by any other name would, not, in fact, smell as sweet.
Shakespeare had to rely on intuition; we have research. Professor Rickard of Cornell University will be presenting at The New York Produce Show and Conference the results of recent research that indicates names matter. A lot.
Some years ago, David Marguleas, now Senior VP Sourcing, Licensing and R&D at Sun World, and the Pundit were asked to do some pro-bono work for the apple-breeding program at a major land grant institution. The issue was clear. With Federal law having changed as a result of the Bayh-Dole Act of 1980 giving universities the intellectual property rights for things such as university-developed varieties of apples and tree fruit, there was a substantial possibility to make money for the university. Yet, there was also a sense that as a land-grant institution, there was a significant responsibility to help all the farmers in the state.
Not surprisingly, we would say that money is winning out on that battle.
Yet the apple category is actually a fascinating one. It has shifted significantly to new varieties that combine higher margins with better flavor. It could be a model for much of the produce department.
But beyond the mere development of new varieties, how they are named and marketed and how production is controlled, both to keep volume in line and insure they are grown in optimal places for quality, can make a great deal of difference.
We asked Pundit Investigator and Special Projects Editor Mira Slott to see if she could get us a sneak preview of what will be presented in New York:
Brad Rickard
Assistant Professor
Charles H. Dyson School of
Applied Economics and Management
Cornell University
Ithaca, New York
Q: Your research on generic produce promotions generated much buzz at last year’s New York Produce Show. Attendees will be looking forward to hearing about your latest work. Could you provide the impetus and context for your study, “Does the Name Matter? Developing Markets for New Managed Apple Varieties”?
A: The overall goal was to think a little more carefully about the large number of managed or club apple varieties being developed and produced by plant-breeding stations and universities. Instead of selling root stock to whomever wants it, look at controlling the trees being sold, and effectively manage distribution.
Q: Who are the forces behind this effort?
A: There is a joint interest between plant-breeding programs and producers that have access to these new varieties, making a concerted effort to not over-plant and over-produce these new varieties.
Q: Is the concern supply-and-demand related, that the apple market could become saturated? Would so many varieties inundate and confuse consumers?
A: There are two drivers: the first is staving off too much production, but more important, the industry doesn’t want these new varieties grown in regions not best suited to their characteristics. Producing suboptimal fruit is dangerous. Bad fruit reflects poorly on the variety.
Q: How widespread is production of these managed varieties?
A: These new varieties are all very regional but have global implications. The breeding programs, while close to where they’re produced, are sold everywhere. The industry is not moving completely away from these public varieties.
Q: Could you clarify the different terminologies, and are some interchangeable?
A: People refer to them as managed or club varieties. Others call them patented varieties as quite often there is a fee to get the trees and a need to pay a royalty for any fruit sold over time.
This is a very interesting time in the apple industry, where there is a lot of activity in club or managed apple varieties. Many are in the research phase, several are on line and being sold in Europe or the U.S. and there are definitely more in the works than consumers can cope with.
Some examples are the Pinata, Cameo, Jazz, Ambrosia, Pacific Beauty. A really good example of a recent introduction, SweeTango, was developed at the University of Minnesota and licensed to a new-age grower cooperative. The cooperative is based in Minnesota but with growers in different states and provinces in Canada.
SweeTango is a patented variety that hit the marketplace last year and has had a major splash with consumers. These are relatively sweet and crunchy, having less consistency with color, often tending to be bi-colored, but are most popular for their high brix content and crispness, qualities a large percentage of consumers look for in apples.
Washington State University has some apples in the works. And Cornell University has two of these patented varieties that have just been released, NY1 and NY2. They currently don’t have a brand or name, but won’t be available commercially for a few more years, so they have time to think on that.
Q: Who actually determines the brand names for NY1 and NY2?
A: There are 145 farmers in New York State that have purchased access to these two new varieties and a management team overseeing the marketing activity for these apples. And one of the big charges they have in their negotiations with those in the plant breeding program at Cornell is how to best market them. What grocery stores, the number of fruit, the size of fruit, and perhaps most important what brand name if they don’t go with NY1. That was the focus of our study, to help them in a general way about branding.
Q: As the marketplace brims with so many options, are the characteristics and flavor profiles between varieties that different?
A: There are several other patented varieties that are interesting and important that are European-based: Kanzi, Kiku, Junami, Red Prince, and more like this in the works, and there is only so much shelf space for apples that are nice tasting and look nice with properties consumers enjoy.
Q: What is the retailer’s take on this?
A: The sentiment among retailers is welcoming for some of these varieties on the shelf. These will sell for a premium. If traditional varieties sell from $1.30 to $1.60 per pound, club varieties usually bring in $2.00 to $3.50 per pound.
Q: Does that premium remain constant or fade over time? Wouldn’t the initial excitement of the new variety plateau over time, or a fresh introduction cloak a shadow over it?
A: Another arm of this research is thinking of new cycles of fruit. A breeding program can’t have just one apple with the hope royalties will flow in, rather the optimal path of varieties that come on line in three or four years time, and there will be a continuous flow. And if you’re one of 145 members of this coop, you’ll have access to these new varieties. A reason for being part of one of these coops from the beginning is to have access to new varieties.
Q: How does your study approach these issues?
A: With that backdrop, we were curious to understand the market for these managed varieties as it relates to the space limitations on retail shelves and the competitive dynamic with other products, what consumers think, and surrounding this is the branding question. If you’re planting now, you won’t have fruit until 2014, but you have to invest money to become part of this coop and assess what retailers will buy, at what price points, and ways to get consumers to try the fruit for the first time.
Q: Branding has never been as prominent in the produce department, particularly in commodities. Isn’t this due to the perishable nature of the business, where quality, freshness and other attributes often trump brands in purchasing decisions, albeit there are notable exceptions?
A: In the produce department, there is not that much branding relative to the rest of the store, although you’ll see it in items like packaged salads. With apples, consumers expect variety and ways to differentiate. Generally, they might seek red apples or green ones, while more educated consumers will recognize, seek out and be influenced by varietal names. So thinking about branding, we thought the name could be an important part of sales.
Q: Have you considered other variables that could influence the choice? For example, reasons for the willingness to pay premiums could be based on income level, a flavor profile to fill a recipe, or wanting to get a smaller size for their children’s school lunches? Perhaps, they only buy organic or want to support the local farmer, etc.
A: For the most part, this study took steps to account for these variables. To make things manageable, we kept all other possible variables constant. Instead of talking local, organic or price point, we just changed the brand names. We were very focused on answering the question, ‘Does the name of the product matter?’
We had our consumer study participants come to our apple experiment store. The only thing differentiated was the name of managed varieties that we had access to but were not available in a commercial setting for a few years. I do think our results reveal insight with regard to price and local preferences, but we didn’t test for these issues exclusively. We tried to control as many things as possible to look into branding specifically.
Q: How did the experiment work exactly?
A: We brought people into our simulated apple display, where we introduced five varieties: NY1, Empire, Honeycrisp, Fuji, and Piñata. The idea was to introduce them to Empire, which is a traditional apple; Fuji, which is newer but well known; Honeycrisp, which is exciting but still known by most of the people in the room; and Pinata, which was an example of another managed variety that wasn’t known by most consumers unless they were apple aficionados; and then NY1, which consumers didn’t know.
We provided information, fairly technical about the brix or sweetness, whether 20 or 15 brix as a measurement of sugar, and taught them about pressure. They had a pressure device to test firmness. We explained to people lab measures of firmer or crunchier apples and then told them suggested uses for baking, cooking or fresh eating, and how varieties might fit in more than one category. And we tried to replicate what apples look like in a display in the grocery store. We explicitly told them all were conventionally grown so they wouldn’t consider organic in their evaluation.
Different people came in on different days, and the only thing we changed was the name we gave NY1, and we didn’t say it was a new managed variety. On separate days, we gave three different fictitious names to secretly find out if the name influenced their valuation of that apple and others.
Generally with a suite of apples in the grocery store, consumer studies show most shoppers buy one variety, and a small percent of the time two varieties, but there are definitely choices going on when they get to the apple section.
Q: How influential is sizing in the equation?
A: That’s a really good question. Sizing can be important and for that reason we very carefully selected fruit. Although the varieties we selected did have slightly different shapes — for example, the Pinata is more of a long apple — we tried to keep sizing consistent at 88-count fruit. In addition to the display, we also highlighted three of these apples on a plate and described it as one pound of fruit. We made sure the fruit size was constant.
When it came off the tree, it was washed and a slight wax was put on the fruit and treated the same so everything was consistent; no bruises or stems missing or leaves, all fancy grade fruit.
Q: How does the type of consumer play into the results? Did you account for age, gender, income level, whether they were a large or small purchaser of apples and/or produce, etc.?
A: All those things do matter. Everyone told us their income level, age and ethnicity, even their weight and height and we calculated their BMI.
Q: I’m surprised people were so open to reveal such sensitive information like their income level and weight…
A: It was all done on a computer, with participants designated by number, and I made a big deal assuring them that the information would be kept anonymous. There’s a big trust factor.
Q: Were you able to get a viable, representative sample of participants to create meaningful results?
A: It was fairly representative of Tomkins County, New York, or New York State in general. A number of variables made it different than the population at large, but overall it was a good representation.
The average age was 43, and 81 percent were Caucasian, which is obviously higher than the national population demographic. They didn’t give us actual income numbers, but individual income brackets averaged between $30,000 and $40,000, although certainly there was a wide range of income levels. Education averaged between high school and two years of college, but again there was a wide distribution. Weight and height mirrored national averages.
Thirty-six percent of participants were in households with children under 18 and 72 percent were the primary shoppers in the household. On average, participants went to a restaurant 2.1 times per week, although restaurant was loosely defined as any time they had a meal outside of the home. So this could include cafeteria lunches at work. The average consumption of fruit was 1.8 servings per day. We have a lot more summary statistics in the larger study.
We asked questions regarding selection of apples… Are there too few? Too many or an appropriate number of varieties? Seventy-five percent said appropriate, 13 percent said too much choice, and 12 percent said not enough selection.
Q: Wouldn’t these answers change depending on where the consumer shops?
A: Fancy stores tend to have more varieties, while basic grocery stores have fewer, but in general the apple selections and number of choices at conventional supermarkets are not significantly different and evolve seasonally.
We asked participants, ‘What are some parameters running through your mind when buying apples?” and to rate them between one and five. The sweet taste or sugar content and crispness were the ones that were ranked highest. A lot of the new varieties are going after those attributes. Color and size were less important, as well as the region of production. Contrary to the attention about local, region wasn’t relatively important. It was ranked three out of five on a one-to-five scale.
Q: Could consumers be associating crispness with freshness as opposed to an overripe mealy apple?
A: Crispness could also be a storage issue as well.
Q: Does the perishable nature of produce change the brand equation, where other issues related to freshness and quality fluctuate in consistency?
A: People who study marketing have a whole branch devoted to branding of new products, cars, clothes and food as well. In the cereal row, brand is important. In milk less important. In ice cream, more so and with soda, even more important. I try to argue that in the produce area of the store, brands aren’t that important in general. People are looking for freshness, sweetness, and size.
However, I think apples are a mix. People know apple varieties and they become like a brand. The usual suspects are at play, but we find that if quality, appearance, and size are consistent, and the only thing that changes is the brand, there really is a difference in how they are perceived.
Q: Could you elaborate on how you determined this through your study?
A: We ran the same experiment with different groups on different days. There were five apple varieties everyone got exposed to, but when they got to NY1, one day we called it Williams, then another day we called it Burgundy Beauty, and on another day we called it Flavor Haven, and replicated this test three times.
Q: Were the particular names crucial to the experiment?
A: Yes. We put work into these names. In marketing literature, when people start thinking about brands for purses or jeans or cars, there is quite a lot of research done. A Stanford University study pioneered the concept that brands have personalities; that most brands can be roughly lumped into five camps, and people with certain personalities associate themselves with brands that reflects them. These five personalities are defined as competence, excitement, ruggedness, sincerity and sophistication.
Studies that have looked at this idea in food markets generally think of food personalities that include excitement, sincerity or sophistication. Nearly any apple variety name can loosely fit into one of these personalities.
If you examine the names of apples, there is a reference to appearance, an exciting one relates to sensory properties, and a sincere one relates to honesty or name sake. Honeycrisp is an example of an exciting brand. Empire or Cortland or Fuji is really a namesake, and Ambrosia or Red Delicious are sophisticated with sensory attributes.
Pink Lady refers to color and Lady is more of a namesake. With Ginger Gold, ginger is sensory and the gold is color, so it’s a cross between personalities.
If introducing a new patented, club or managed apple variety, the question becomes, where should you position it?
The apple Piñata is on its third name, even in the middle of the season it went from Pinova to Senata to Pinata. I think SweeTango is the third name they used; it was Minnesota 14 for awhile. Now they’ve decided to go with SweeTango, and a lot of work went into that name and it was a secretive process.
Q: Based on your research of top consumer preferences, Sweet Crisp would be the ideal name…
A: The word crisp is being used a lot lately, and farmers joke about it. For our study, we went through old apple names, as well as names for pears, peaches, and nectarines. And we pilot tested real and fictitious names with graduate students that study this topic at Cornell. Flavor Haven was borrowed from peach varieties that had an association with an exciting personality. Burgundy Beauty was combined from old apple and pear varieties.
Williams clearly matched the sophistication category, and was a good example of an honest, traditional, sincere personality.
Q: How did your study participants react to the different names?
A: No one called us on these names as fictitious. Sometimes a consumer would think they had already experienced the new variety, which, of course, was not possible since it hasn’t been commercially produced yet. For example, one participant reacted at seeing Burgundy Beauty, ‘Oh, that’s my favorite,’ but they could have been confused with a pear variety of a similar name. We went through this exercise, collecting data from 200 people.
Even though we had different ages and incomes, our statistical model could remove the variation and isolate the statistical impact from the brand name that we used.
Q: What insight could you draw from your data?
A: The good news is if we put all the new variety brands together, the valuation of NY1 in general had the highest valuation of all the apples in our study, or a 25 percent premium over the other four varieties. That’s promising for this new variety, a result the breeding program at Cornell would be interested in. That approximates the premium that managed varieties are looking for in a commercial market. That’s what a farmer needs to justify production and make a go of things.
There are additional costs for farmers to produce these apples. I’ve done rough calculations and you need to see at least a 12 percent retail premium to make sense for growers.
Q: So participants embraced the NY1 under all three names? Could that indicate their willingness to pay a premium was based more on NY1’s characteristics and/or newness than on the names?
A: In part because it was new and because they liked it, since even taking the name away they liked the look and taste of it. It shows that it has some of these characteristics consumers are drawn to. It had the highest brix of all the apples in the mix, and had the second highest pressure out of the mix.
Q: How did the individual NY1 brand names compare? Did consumers gravitate to one name over another?
A: Burgundy Beauty had a higher valuation than Williams, and Flavor Haven had a higher valuation than Burgundy Beauty. So the exciting personality won out. Participants paid a 10 percent premium for Williams, about a 25 percent premium when NY1 was called Burgundy Beauty, and a 40 percent to 42 percent premium for Flavor Haven. All valuations were higher than for the other apples in the study, but for statistically minded people, these numbers were significant. We had almost 70 people in each of these groups.
And the third, perhaps most interesting finding was that the name we gave didn’t change the valuation of the three conventional varieties, Fuji, Honeycrisp and Empire. But the valuation of Piñata, the other club variety, did change depending on what name you gave to NY1. If the name was Flavor Haven, then it decreased the valuation of Pinata. But if the name was Burgundy Beauty, it increased the valuation of Piñata.
Q: Why do you think that occurred?
A: What we argued was that statistics revealed consumers looked at the three conventional varieties with firm price valuations. Then Piñata and NY1 were unknown and interesting. No matter what branding we did, it didn’t impact the conventional.
Q: Going into this study, did you have certain expectations? What surprised you?
A: I wasn’t surprised people were willing to pay a premium for NY1, but I was surprised that brands mattered that much. I was thinking Burgundy Beauty fit the personality of a premium apple like NY1 and would bring a higher premium, and that Flavor Haven would generate the least value. But looking back, the results actually made sense. This was a very red, sweet, crunchy apple, all exciting personality traits. The name might have had a different valuation for a different-tasting or looking apple.
Q: What light can you shed on brand marketing that could help those interested in pursuing a branding strategy? How can produce executives utilize the information gleaned from your study?
A: The biggest take-home message, even if you think the apple category is different from grapes and bananas, within the apple category, there is a subcategory of managed or club varieties. When you use these branding strategies, it doesn’t impact conventional, traditional varieties, but it does impact those managed or club varieties.
My original hypothesis was that what you name the new variety would impact all varieties in the display. Yet consumers do this segmented marketing in their minds. In the real world, consumers view the apple department as two separate shopping experiences, and won’t be thinking should I buy an Empire or a Pinata, but perhaps both.
It is a fascinating study. Who would have thought that in the age of everything local and regional, the region of production would be well down the list of attributes that consumers seek?
It is also intriguing to see the power of a name. One wonders, though, if what is really being measured isn’t something like the impact of a name on consumer propensity for trial. Once the trial happens, perhaps the name will become less important.
There is often a trade-off in naming. Some names have a kind of function embedded in them – Burger King or Pizza Hut – that immediately attracts business but that also serves as a limitation on the brand. In contrast, other names, say Kodak, mean nothing and so provide a blank canvas for marketers to create their own meaning.
This can be done with marketing, of course, but branding in produce typically flounders on the shoals of product quality. Most manufactured products, including food, have a consistent quality standard. If a batch of Coca-Cola comes out wrong, they dump it and make the right stuff.
In produce, if conditions are bad and so quality is bad, most brand marketers are unwilling to simply dump the crop or even rebrand and give up the hard-fought shelf space and warehouse slots. So they switch to a relative quality standard.
The Pundit used to export lots of Goldens to Europe — mostly Fancys. Our customers enjoyed them for years. One year, the phone started ringing. Everyone said there was something wrong with the apples.
When the whole investigation was done, the apples were fine and were in grade. The problem was that after several really good quality crop years, the market had gotten used to Fancy Goldens that were at the very top end of the Fancy grade, but that particular year, they were at the bottom.
In this way, brands are often destroyed in the industry.
Indeed one of the real questions is how fiercely those organizing these networks will refuse to allow the variety to be grown in places where it can’t grow optimally.
Long term this seems the best way to build a brand, but short term it can be hard to turn down money. Plus retailers may push for year-round availability and that may include sub-optimal growing locations.
Our focus groups over the years have shown more consumer preference for brands in the produce industry than Professor Rickard suspects. Although individual brands are mostly weak, with exceptions, the consumer still sees in brands in general a certain assurance of quality and safety. Obviously this is not enough to overwhelm a poor quality product presentation but it is a real dynamic. Of course, with the growth of local and the rise of social media, there are opportunities for people to have brands who never had them before.
The other issue is whether consumer reaction to names is all that good a predictor of success. After all, in the produce industry, new products have to get past the gatekeeper of the buyer and merchandising plan. Then, how they are marketed and merchandised in store is crucial for getting this name out.
One suspects that with thin industry marketing budgets, many great names have never even made it to the stores for consumers to see.
Perhaps the researchers should repeat the study with commercial produce buyers. Wouldn’t it be interesting if their reaction to the names was significantly different than the consumer reaction?
Professor Rickard is one of a generation of truly brilliant young scholars, along with people such as his fellow Cornell faculty member, also presenting at the show, Miguel I. Gomez. Both professors do incredible, thoughtful work by applying new research tools to traditional concerns.
We are so pleased to showcase this work at The New York Produce Show and Conference.
Come and see Professor Rickard’s full presentation, learn from the rest of the conference, walk the trade show, see the produce-specific cooking demos, meet the press and food-specific bloggers, and attend the Perishable Pundit’s “Thought Leaders” Retail Panel, network at the many receptions and meal functions, attend the Global Trade Symposium and the Ideation Fresh Foodservice Forum or go on a tour of retail and wholesale facilities in the Northeast, you can register right here.
Hotel rooms are available at this link.
You can see travel discounts we have negotiated right here.
We look forward to learning from Professor Rickard, the other presenters and from each other.
