An improved method to determine the market potential for a new food product: a case study of papaya nectar

Field: Business, Management and Accounting (Social Sciences)

Recent rapid expansion of the fresh papaya industry in Hawaii has resulted in an increase in the availability of cull papaya far in excess of the quantity utilized for processing into puree. Papaya nectar appears to offer the best outlet for growth for the papaya processing industry. To estimate the U.S. market potential for papaya nectar, test marketing was conducted in three West Coast cities, Portland, Sacramento, and Phoenix. A survey of consumer preferences for the product was conducted in Portland. The main objectives of the study are to develop an improved method for determining the market potential, to determine the U.S. market potential for papaya nectar, to determine characteristics of consumer demand for papaya nectar, and to develop guidelines for market development. The degree of homogeneity in the three cities permitted the use of pooling techniques for estimating the market potential. Multiple regression was used as the method of analysis. Statistical analysis of data revealed that hot pack single strength papaya nectar (HPPN) and frozen papaya nectar base (FPNB) sales response functions were influenced significantly by own price, season, and media. Collectively, these variables accounted for about 97 percent of sales variations for each of the two forms of papaya nectar. The regression coefficients of hot pack apple juice and hot pack grape juice were found to be statistically significant and had positive signs confirming that both juices are competitive with HPPN at the consumer level. Only the price of frozen apple juice was found to be positively and statistically significant in explaining the sales of FPNB. The negative coefficients of FPNB sales and frozen orange juice, and of HPPN sales and hot pack grapefruit juice were contrary to what would be expected. This may have been due to the small quantities of the test products sold in relation to competing products. The seasonal variables indicated sales of FPNB and HPPN to be greater in autumn than in summer, less in winter than in summer, and more in spring than in summer. Store demonstration, television advertising, and newspaper advertising were statistically significant and positively related to sales of papaya nectar in that order. Television advertising and .store demonstrations with price specials were found to be costly per unit of sale. Newspaper advertising was found to be the least costly but still expensive in relation to the price of the product at the retail level. The U.S. market potential was projected from the mean of sales periods consisting of before, between, and after advertising. This amounted to 1.398 million cases of FPNB and 1.154 million cases of HPPN at a combined wholesale value of $16.826 million. This would require 28.227 million pounds of fresh papaya for a return to farmers of $847 thousand per year at a price of 3 cents per pound for cull fruit. The consumer survey indicated that of the respondents who shopped at stores where the test products were available, only 11. 4 percent had tried HPPN and only 5.8 percent had tried FPNB. Approximately 60 percent indicated that they liked papaya nectar. Of the 40 percent who did not like ~t, 48 percent didn't like the flavor and 21 percent thought it was too sweet. Purchases were infrequent and primarily restricted to small quantities. Almost 40 percent thought the test product was too expensive in relation to other juices. Travel to Hawaii, consumption of fresh papaya, and levels of income and education were positively associated with familiarity and purchase of the test product. The majority of the respondents who had drunk papaya nectar, 51 percent, consumed it as a between-meal cooler and 30 percent used it as a breakfast drink.