Consumer Behavior Study in Pork Meat Market Survey from Urban Area in Four China Cities

Transcription

1 Consumer Behavior Study in Pork Meat Market Survey from Urban Area in Four China Cities ZHAO Xing The Center of Research of Industry Cluster and Enterprise Development, Jiangxi University of Finance & Economics. China Abstract The aim of this article is to provide a clear view of consumer behaviour in the pork market in urban China; furthermore, to identify those factors that influence consumer purchasing decisions. Additionally, this article will provide some useful notes and background for future researches. As China is too big to do the investigation, a survey was conducted in four cities in China. The results show that consumer buying behaviour of pork in traditional markets is very different from that in supermarkets. Even though most of the respondents consume relatively small amounts of pork, traditional market respondents are more sensitive to price, and supermarket respondents are more sensitive to quality. Key words: pork ; consumer behaviour; informal channels 1 Introduction In late 1978, the Chinese leadership began to move the economy from an inefficient, Soviet-style centrally planned system to a more market-oriented one. The result has been a quadrupling of GDP since that date. The latest data released by International Monetary Fund (IMF) show that China s GDP is now ranked NO.4 worldwide. In the past, when supplies were scarce, ration coupons were required for purchasing daily necessities. At that time, consumption behaviour and pattern were basically identical because everyone had but little to spend, and there was not much to choose. With China s booming economy, people's consumption habits have undergone significant changes. From the middle of 1980 s, per capital income growth for urban households has increased at the rate of 18 per cent per year. The market for food retailers in China was worth 475 billion Yuan in Rising incomes are indeed clearly changing food consumption patterns. Demand for meat, fruits, vegetables and other high-value commodities are rising rapidly. In 2006, the quantity of pork was million tonnes across the world market. It included China, which produced million tonnes, 50.1% of the world market. From 1996 to 2006, the pork production increased by 22.4 million tonnes from 79.5 million tonnes, including an increase of nearly 17 million tonnes in China. China produces almost half of world pork, and this rate will continue increasing in the future as the rate of increase in China is higher than world average. There are 1.3 billion people live in China, and each Chinese consumes more than 39kg of pork per year. This is also higher than average world consumption of 15kg. For the Chinese, pork is a very important food. More than 65% of meat in the market is pork. In restaurants, most food items on the menu will contain pork. 2. Aims and Objectives With the development of the commodity economy, consumer goods are now available in ever increasing varieties and designs, while new products are constantly introduced into the market thus offering consumers more choices. It is creating a new challenge for those involved in marketing. Around the world, much research has been done into consumer behavior of meat products. However, such research has not been done in China. At the same time, consumption patterns differ between countries. Therefore, for the pork industry there is the requirement to do some research into consumer behavior, to respond to changing consumption pattern and face competitive pressure in China. The researches of Chinese consumer behaviour with pork are few in number. Most research about food has focused on price/income demand elasticity of whole meat product (e.g. Cai et al., 1998; Ma et 1362

2 al., 2003). Equally, most research into Chinese consumer behaviour has focused on other products such as cars, houses, and computers. Accordingly, this research aims to investigate consumer behaviour in the pork market of China; furthermore, to identify those factors that influence consumer purchasing decisions. Additionally, this article will provide some useful notes and background for future researches. Hopefully, the conclusions can be used to help businesses dealing in pork to set out their market strategy, and adopted to increase their competitive ability, market share and profits. 3. Literature Review There have been few recent studies into Chinese pork consumption. Previous studies focused on either a broad group of commodities such as food, clothing and housing, or on whole food groups such as grain, oil and meats. Specific pork consumption and demand issues have been covered only marginally. Cai et al. (1998) researched income data and meat demand in urban China. First they identified three types of meat: ruminant-meat, pork, and poultry-meat. Then, they classify three levels of household income: the lowest 20 per cent of total households as the low-income group, the next 60 per cent as medium-income, and the highest 20 per cent as the high-income group. After analysing the effects of income level on household meat consumption behaviour, they found that all income/expenditure elasticity showed positive signs. The magnitudes of expenditure elasticity for pork are similar among the three groups, although they were relatively higher for high-income households compared with the low-income and medium-income consumers. Demand for pork of urban households in China is price inelastic. They concluded that pork is the dominant and traditional meat in the diet for most Chinese, and ruminant-meat is luxury good. Pork and poultry-meat are normal goods for urban Chinese households. A more recent study of Ma et al. (2003) estimates income and own-price elasticity for six (pork, beef, mutton, poultry, eggs and dairy products) livestock products in both urban and rural area in China. The paper shows that the food expenditure shares have sharply declined over the 20 years from At the same time, the share for livestock products consumption in total food expenditure has increased sharply, from 21% to 31% in urban areas and from 16% to 35% in rural areas. A large percentage of household livestock product expenditure is still on pork. However, the share of pork consumption among all six livestock product has gone down substantially. In 1980, pork s expenditure share was 65% in urban China, and 74% in rural China. However, the share has declined rapidly during the 1990s. By 2000 it had fallen to 53% in urban China, and 65% in rural China. The paper indicates that pork has become a necessary good for urban households, as the estimated expenditure elasticity for pork is less than one (0.66 in the 1990s). Meanwhile, the paper also estimates that own-price elasticity of pork in urban area is , and in rural area is These results suggest that Chinese consumers will continue to increase their consumption of livestock products, but the pork expenditure share will be gradually reduced as incomes grow. In general, the both papers refer the pork consumption in China, and indicate the pork consumption pattern has changed considerably from the 1980s. However, the both papers do not just focus on pork, and do not analyze the detail of consumer behavior with it. The reasons for doing research into food consumer behaviour are the need to know what the people buy, how they buy, and the underlying reasons for their selection. (D. Marshall, 2003) Consumer behaviour theories derived originally from economics, as consumers always seek to maximize utility. Price, income and quantity supply can influence the utility. Since 1950s, concepts taken from psychology and sociology have been used to develop consumer behaviour theories. Economic, psychological and sociological factors all clearly impact on food consumer behaviour. The major share of most households incomes is spent on purchase of food, and the amount and type of food bought very much depends on economic factors. In some economic theories the consumer is treated as a rational being, and a utility maximum (S, Tangermann, 1986). Income and price are two major factors that influence the demand of food. Consumer choices of food products, in theory, are the result of weighing up preference of multiple product attributes (such as price, quality level, brand name, 1363

3 taste etc), to obtain optimal combination. Numerous researches have examined what cause a food to be accepted or rejected. Most researchers found that it is difficult to separate food choice from psychological factors. Perception is the process through which individuals are exposed to information, attend to it and comprehend it. Product perception is based on recognition, categorization and evaluation. Whether a particular consumption item comes to mind when required depends in part on its availability from memory. Brand associations thus become practical tools for consumers, as they follow the process of choice. Becker and Murphy (1993) argue that advertisements are goods in utility functions if people are willing to pay for them, and conclude that advertising as one of the goods that can be treated as the fixed preferences of consumers. In a recent study (Connors et. al, 2001) of food choice criteria, five key types of value were identified, i.e., taste, health, cost, time and social relations. In each choice, several of these factors are commonly balanced against each other. The managing social relationships value describes the properties of a food choice behavior that influence how well it is accepted by other people with whom one shares eating (Connors et. al, 2001). As rapid industrialization and economic growth are dramatically changing the nature of China s economy, manufacturers and marketers from many countries have taken a keen interest in the consumer market in China. Consumer behaviour is the key to opening up the profitable market in China. However, the government researches normally are too general. And special researches usually focus on certain province (e.g. Chen et al., 2003) or special high price products (e.g. Cook, 2004). The relative research of pork is difficult to find. 4. Methodology As China is too big to do an investigation, and with time and financial budgets being limited, four cities has been chosen as four samples to do the research. A questionnaire that focuses on pork will be employed to elicit information on consumer s buying behaviour, requirements, and respondent characteristics. The purposed research targets are pork consumers in urban area, and the questionnaire are to be administered to 1200 such consumers in BeiJing, ShangHai, NanChang and XiAn city. The survey is divided into three parts. The first part is about consumer s buying behaviour with pork. The second part is about what influences consumers choice, and the importance of each factor. The third part is about consumers personal details, such as age, education, and income. Around 20 questions are included in the questionnaire. Two sorts of questions are used, closed and open questions. The questionnaire was tested on some NanChang pork consumers in July Aaker et al (1998) suggests that only small samples are necessary for this purpose and fifteen questionnaires are sufficient to produce a straightforward questionnaire. Therefore, fifteen consumers, who are regularly pork purchasers were asked to complete the questionnaires. Comments were sought from these consumers on aspects that they thought were ambiguous. Adjustments were made to the original questionnaire, based on their comments. There are many methods of data collection in social research. This investigation was been done by face-to-face interview. Face-to-face interviews give the advantage of minimizing the probability for misunderstanding as the interviewer can repeat the question or put it in a form that is understood by the responder (Kumar, 1999). Additionally, this method is the most appropriate for studying complex areas, and can be used with almost any type of population. Eight Chinese volunteers helped to do the interview. Due to the time and financial constraints, one traditional market and one supermarket in each city are chosen. The main reason for choosing traditional markets and supermarkets to do the research was they are the main places where consumers to purchase pork in rural area. In total, 1200 questionnaires were distributed (600 in traditional markets and 600 in supermarkets). These 1200 face-to-face interviews produced a 100% response rate. A non-random method was chosen for this research. Quota sampling is widely used in market research. It is quick to use, complications are kept to a minimum and, unlike random sampling, any 1364

4 member of the sample can be replaced by another member with the same characteristics. This is the method generally used in street interview surveys, commonly carried out in shopping centers. This study collects and analyzes quantitative data. The methodology used is descriptive statistical analysis. The tools of descriptive statistics are usually the first ones encountered in any data analysis that allow us to summarize the data and describe the sample (Pelosi and Sandifer, 2000). 5. Results and Analysis 5.1 Sample Profile The total number of respondents was % of the consumers interviewed were female and 27.75% were male. The ratios show that, in China, woman take main responsibility for food shopping. The questionnaire also showed 5% of the consumers interviewed were under 20, 21% were between 20 to 29, 49.5% were between 30 to 49, 14.5% were between 50 to 64, and 10% were older than 65. The income (per month) of most consumers interviewed were between 1000 Yuan to 5000 Yuan (63%), and 31% interviewed consumers were between 5000 Yuan to Yuan. Furthermore, there were 31% interviewed consumers have a degree level (or above). 5.2 Buying Behavior Traditional market and supermarket are two main places where urban consumers buy pork. In this research, the respondents (53.5%) seem most like to buy pork in traditional market. The main reasons why the respondents chooses traditional market is that the price of pork there is cheap (23.75%), pork is fresher than in supermarket (14%), and there is a traditional market close to where they live (35.5%). The reasons why the respondents choose supermarkets are that supermarkets close very late (21%), the environment is better than in traditional market (25%), and pork from supermarket is cleaner, fresher, and more reliable (32.5%). This shows that the price, quality, environment, and convenience play very important roles in the pork market % Chinese consumer interviewed buy pork everyday, 35.25% buy pork 2 to 3 times per week, and 6.5% buy it 4 to 6 times per week. The research also shows that 78% respondents in traditional markets buy pork every day, while 57% supermarket respondents buy pork 2 to 3 times per week. 2% of interviewed consumers buy less than 1kg pork per week, 81% buy 1 to 3kg per week, 14% buy 3 to 5kg per week, and 3% buy more than 5kg per week % of respondents would change their buying behavior in the winter. 70.5% of supermarket respondents would change their buying behavior in the winter. The reasons are: they would like to eat more pork to get more energy (45.5%), they would reduce the times on which to buy pork (37%) as sunset time earlier than summer, and they would choose a traditional market to buy pork in the winter (10.5%) because in the summer, the supermarket s environment is better than the traditional market. (Pork will quickly and easily decay in the summer.) Around 47% of traditional market respondents said they would not change their habit in the winter. 42.5% of traditional market respondents said in the winter, they would buy more pork. 25% of the traditional market respondents said they would reduce the times on which they bought pork. 17.5% of interviewed consumers buy pork for themselves, more than 75% interviewed consumers buy pork for their family, and 5% buy pork for their employer as they cooking for their employer s family. A further 2% of the interviewed consumers buy pork for someone else. The research indicates that respondents who buy in traditional markets or supermarkets are consumers of pork in small amount. The questionnaire shows that most women are concerned with the shopping for their families. 4.75% of interviewed consumers said that their grandfathers always buy pork for their families. 16.5% of interviewed consumers said their grandmothers always buy pork for their families. 17% of interviewed consumers said their fathers (husbands) always buy pork for their families % of interviewed consumers said their mothers (wives) always buy pork for their families. 2% of interviewed consumers said their daughters always buy pork for their families, and 7.5% of interviewed consumers said 1365

5 someone else always buy pork for their families. It shows that in at least 70.75% of families, the person who regularly buys the food is female. 5.3 The factors that influence consumers choice of pork The results of the survey show that 73% of interviewed consumers do not worry about the quality of pork. Their reasons are different. The survey indicates the main reasons to be that the government-certified slaughterhouses always check the quality of pork before it is sent to the market, the quality of pork in supermarket should be fine, while some respondents believe that they are able to access the quality for themselves. The interviewed consumer worries about the quality of pork because pork sometimes poisoned in the preparation process, pork will quickly and easily decay in the summer, and because the government has pointed out the quality problems of pork in TV programmes or newspapers. In the supermarket, 41% of respondents worried about the quality of pork, compared with 13% in the traditional market. An interesting thing is, even though 84.5% of interviewed consumers were aware of the government s report concerning the problem of pork, from TV programmes or newspapers, more than half of them believe that pork with government-certified slaughterhouses sign is high quality pork. The results also show that 20% of respondents believed the quality of pork in supermarket is better than in traditional markets, while 63% respondents think the quality of pork in supermarket to be the same as in traditional markets. Almost all of respondents did not know the origin of the pork that they regularly bought. The research also finds that more than 95% respondents did not want to know about its origin, as they do not think it is important. In fact, in China, less than half of pork is produced by commercial or specialized farm, and the rest is produced in millions of back yards with different feed, genetic and sanitation standards. Normally, the quality of pork that from commercial or specialized farm is more reliable than from individual farmer. Most big supermarkets have their fixed source of pork which from commercial or specialized farms. Specially, the Beijing city council set up a plan to help certain supermarkets to set up their own big farms, to guarantee the quantity and quality of pork in the Beijing market. In term of factors that influence the respondents choice of pork, the results show that the price and government assurance are the most important factors % of interviewed consumers said the government assurance sign was the most important factor to influence their choice. More than 85% of interviewed consumers said that if the sign did not appear on the pork, they would not buy it. 31.5% of interviewed consumers said the price was the most important thing when they choose pork. 14% of interviewed consumers said the shopping environment had the smallest influence on their choice % of interviewed consumers said the packaging had the smallest influence in their buying process. Smell, color and service are other important things that influence interviewed consumers choice. 37% of interviewed consumers said that they always smell the pork when they buy it. 78.5% of interviewed consumers said that they paid special attention to the color of pork. 34% of interviewed consumers said that they were concerned with service quality, for example the reputation of butcher (or brand). The results show that the government has great power to influence respondents choice of pork, and the government assurance sign is the most important factor for respondents to ensure the quality of pork. In the pork buying process, smell and color are two aspects that respondents always check to help ensure the quality. Price also plays a very important role in the buying process. The reputation of butcher or brand influences consumers choice as well. The shopping environment and packaging of pork are not very important for most respondents. 86% of respondents said that their choice is influenced by advertising, other media promotions, and friends advice. More than 43% of respondents said that their choice was influenced by their friends advice. It implies that informal channels of communication are important in urban pork market. 27% of respondents said they are influenced by TV and Newspaper, and 35.5% respondents said they were influenced by promotions. The remaining 14% of the respondents said they were not influenced by other things, and always make decision by themselves. 1366

6 The research also found that 27.5% of the respondents had seen advertising about pork most recently % of the respondents had seen TV advertising most recently, compared with 12% of respondents who had seen newspaper advertising and 11% who had seen advertising on the street or in supermarket. The results show that TV is the most powerful medium, even though most respondents are influenced by their friends advice. And the same time, the results also show that pork companies do not put enough money into advertising and building their brands. So, it may partly explain why brand is not an important factor that influences respondents choice of pork. In terms of the other factors that influence respondents choice, 43% of respondents said that the price of other meat would influence their choice of pork. If the price of pork increased steeply, they would change to buying other meat products. In last 12 months, the price of pork has increased by almost 100% % of respondents still preferred to pay the extra to ensure quality % of respondents preferred to pay less than 1 Yuan, which means less than 5% of price. 8.5% of respondents preferred to pay 1 to 2 Yuan. 5% respondents preferred to pay more than 2 Yuan. There were 65.25% respondents did not want to pay any extra to ensure the quality of pork. There were three main reasons. 40% of respondents said that they believed government assurance sign that meant good quality. 26% respondents said even though supermarket price of pork is higher than in traditional market, the quality was the same. Therefore, there was no reason to pay extra to ensure the quality. 23% of respondents said the price of pork was not cheap. So, they would not pay any extra to ensure the quality. The research also found that 76.5% of traditional market respondents would not pay any extra to ensure quality, compared with 54% of supermarket respondents. However, as the price of pork has increased steeply, the result should take account of this factor. If the price goes down again, there should be more respondents who are willing to pay extra to ensure quality. 5.4 The Detail of Interviewed Consumers 49.5% of the interviewed consumers were between 30 to 49 years old. 5% were under 20, 21% between 20 to 29 years old, 14.5% between 50 and 64, and 10% more than 65 years old. The age distribution of traditional market and supermarket are different. The average age of supermarket consumers was younger than traditional market consumers. 4% of interviewed consumers live alone. 27.5% of interviewed consumers live with another person. 49% of interviewed consumers said there were 3 persons live in their flat (house). 19.5% of interviewed consumers said there were more than 3 persons live in their flat (house). This result is close to the government research that the average urban families consist of 3.1 persons. The education level of interviewed consumers is that 31% of them have a degree (or above). 39% of supermarket respondents have degree level (or above), and 23% traditional market respondents have a degree (or above). This shows that the supermarket respondents have a higher education level than the traditional market respondents. Given this, the reason why supermarket respondents worry more about the quality of pork, and prefer to pay more money than traditional market respondents to ensure its quality, may be partly explained. Only 2% of the interviewed consumers monthly family income is less than 1000 Yuan. 63% of interviewed consumers have a monthly family income between 1000 to 5000 Yuan. 31% is between 5000 to Yuan, and for 4% is more than Yuan. However, the income distributions in traditional markets and supermarkets show some differences. The average income of supermarket respondents is higher than that of respondents in the traditional market. 79% of traditional market respondents have income between 1000 to 5000 Yuan, compare with 49% of supermarket consumers have income between 5000 to Yuan. 6 Conclusion and limitation 6.1 Conclusions Traditional market and supermarket are two very different places. At first, the open time is different. Normally, traditional markets open at 5 o clock in the morning and supermarkets at 9 o clock. However, 1367

7 traditional markets close very early, normally, at 6 o clock in the afternoon, supermarkets close at 9 or 10 o clock in the evening. In terms of the shopping environment, supermarkets are better than traditional markets. As there are many differences between supermarkets and traditional markets, the consumer buying behavior for pork in traditional markets is very different from that in supermarkets. According to this research, in traditional markets, 56% of the respondents are between 20 to 49 years old, 50% of them live with other two persons, 24% of them have a degree (or above), and 79% of them income are less than 5000 Yuan. Most of respondents buy pork every day. Normally, the respondents buy 1 to 5kg of pork each week. They mostly buy this meat for themselves or their families, and the person who regularly does the food shopping for the family is female. In winter, more than half respondents will change their behavior to buy more pork, and decrease the times on which they do so. The most of traditional market respondents do not worry about the quality of pork, as they believe that government-certified slaughterhouses always check the quality of pork before it is sent to the market. Almost all of traditional market respondents do not care about the origin of their pork. The government assurance sign and price are the most important factors that influence the traditional market respondents choice of pork. In traditional market, almost half of the respondents said that their choice was influenced by friends advices. Only 23.5% of them would pay extra to ensure the quality of their pork. As for the supermarket respondents, 85% of respondents are between 20 to 49 years old. 48% of them live with other two persons. 39% of them have a degree (or above). For 47% of them, family income is between 1000 to 5000 Yuan. 49% of the respondents have a family income between 5000 to Yuan. 57% of them buy pork 2 to 3 times per week. Normally, they buy 1 to 5kg pork every week. They mostly buy pork for themselves or their families, and the person who regularly who regularly does the food shopping for the family is female. In winter, 53% of supermarket respondents will change their behavior. Some of them will increase the quantity that they buy, some of them will reduce the frequency to buy pork, and some of them will go to traditional market. 59% of supermarket respondents do not worry about the quality of pork. Some of them believe that government-certified slaughterhouses always check the quality of pork before it is sent to the market, and some of them believe the quality of pork in supermarket to be better than in traditional market. The reasons why the rest, 41% of them, worry about the quality of pork are: the pork sometimes polluted in the preparation process, pork will decay easily in the summer, and the government has publicized the quality problems of pork in TV programme or newspapers. More than 95% of respondents do not care of the origin of pork. They do not know why they would need to know that. Government assurance sign, price, environment and brand are the most important factors that influence the supermarket respondents choice when buying pork. 35.5% of supermarket respondents said that their choice was influenced by friends advice, 32% of them said they were influenced by TV and Newspapers, and 30% of them said they were impacted by promotion. 46% of them would pay extra money to ensure the quality of pork. 6.2 Limitations and proposal for future research This research had tried to avoid negative aspects that could influence the result and lead to any misleading conclusions. However, no research can be carried out under ideal conditions, and time and financial constraints have inevitably caused some limitation and drawbacks. First of all, as those constraints would not allow for a survey involving a wider area, the size of the sample was limited to 1200 respondents, which only four tradition markets and four supermarkets were selected to do the research. The survey needs to be replicated over a wider area, so that a better picture can be obtained. The survey adopted a face-to-face interview with a preplanned questionnaire. This method has its own weaknesses. For example, the interviewer could influence the respondents answers by leading them to answer that were different from their real opinions. Also, there is some possible bias in the selection process, with the interviewer selecting those easiest to question, perhaps those who look more cooperative. Thus, there is a danger of skewed results. 1368

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