Consumer Acceptance of a New Experience Good: A Case Study of Vacuum Packed Fresh Beef

Declining red meat consumption has prompted widespread analyses of the beef industry from the farm level through retail demand. The competitive nature of food retailing, coupled with the wide variety of substitutes, point to consumer demand having played a pivotal role in the decline. Among the causes are changes in relative prices, diet/health concerns, composition of the population, and the introduction of new foods more in line with emerging lifestyles. One of the criticisms of the beef industry is that it has not provided new products comparable to those of poultry (Allen and Pierson 1989; Linsen 1988; Marion and Walker 1978; Menkhaus, St. Clair, and Hallingbye 1985). However, a new form of fresh beef packaging, vacuum packed (V), has recently been offered to food shoppers as an alternative to tray packed (T) fresh beef, which has been available for an extended period of time. V fresh beef is cut into retail portions at the packing plant and wrapped in air-tight vacuum packages. Several advantages for both suppliers and consumers stem from the V process vis-a-vis T. Those affecting the supply side are the ease of handling, lower labor costs at the retail level, less opportunity for spoilage and contamination in shipping, and a longer shelf-life. These cost savings can be passed on to consumers as lower prices to the extent that food retailing, especially through supermarkets, is contestable. Advantages accrue directly to consumers as well. There is no need to rewrap the product at home. V can be stored in the refrigerator with a shelf-life comparable to frozen T, although not having to thaw the package has only a very small effect on the consumer's time cost of preparing a meal. Another advantage is that both sides of the V product are visible to the food shopper. The major problem with V fresh beef is the color, which is a brownish red (Hoffman et al. 1990; Lynch, Kastner, and Kropf 1986; Pelzer et al. 1990). It is due to the air-tight seal. Once the seal is broken, V fresh beef turns to the familiar bright red color which traditionally has indicated freshness and quality. Consequently, there is an information gap between consumers' knowledge of V beef and its appearance in the supermarket. This gap is problematic because fresh beef, like all foods, possesses experience properties (Eastwood 1985). That is, the product must be consumed in order for the person to determine quality. There is no information gap with V poultry and pork because the color of these products is the same as when T is used. Consequently, an important issue for fresh beef demand is whether consumers will learn on their own about V fresh beef and begin to purchase it. Consumer acceptance of V fresh beef has been examined via two controlled experiments reported in the literature. One centered on auctions of identical T and V ribeye steaks (Hoffman et al. 1990). Participants were provided different amounts of information about V. Informed participants offered significantly higher bids for V cuts. Furthermore, simply opening a V product did not significantly raise the bid value. The second experiment focused on participants' rankings of one steak and one roast in T and V (Pelzer et al. 1990). Participant background information was also gathered. An ordered probit regression for the ranking as a function of the demographics was estimated. Color was found to be a significant factor with bright red reflecting quality. A major drawback of these studies is they did not use data that reflected actual marketplace behavior on the part of food shoppers. EXPERIMENTAL DESIGN Actual marketplace behavior is the focal point of this study. Consumer purchases of selected cuts of T and V fresh beef as functions of prices, advertising, lagged sales, and season are compared. Interest centers on determining whether there are different retail demand relationships for the matched pairs of V and T cuts of steak. Relevant background information includes the following. …