Recipient Organization
VIRGINIA POLYTECHNIC INSTITUTE
(N/A)
BLACKSBURG,VA 24061
Performing Department
Ag & Applied Economics
Non Technical Summary
The public health crisis created by the COVID-19 pandemic has led to the shutdown of many restaurants deemed nonessential, with an estimated 15% of U.S. restaurants closed permanently or likely to after just the first 3 weeks of shutdowns (National Restaurant Association, 2020). The magnitude of business closures and employee layoffs has resulted in an unparalleled shock to the U.S. economy. The combined effect of business closures and reduced discretionary spending of consumers are having strong negative economic effects, the length of which is unknown. Economic relief and stimulus packages are expected to ameliorate some degree of negative effects, but the length of time for consumer demand to fully rebound is also unknown. Key questions for U.S. aquaculture producers will be the extent of changes in consumer demand, how long those changes will last, and what marketing strategies will be most effective to restore sales. This project will make a singular scientific contribution by analyzing the evolution of changes in seafood consumer behavior throughout the economic recovery from the pandemic. External economic shocks and economic downturns have occurred previously, of course, but effects on consumer behaviors have not been well studied; we found no studies on seafood consumer behaviors during such times. Consumer behavior changes during times of economic recession (Latham and Braun 2010), but the types of change vary with geographic and demographic differences, by product, and the nature of the crisis. Food purchases during economic crises, for example, were less affected than purchases of nonessential goods (Ang et al. 2000). The rate of change in consumer spending also differs with consumers reducing spending quickly in some cases (Deleersnyder et al. 2004), but more slowly in others (Zurawicki and Braidot 2005). Valaškova and Klieštik (2015) suggested that spending behavior is related to length of the crisis and degree of change in disposable income. Fewer studies have followed consumer spending throughout the crisis and recovery; Deleersnyder et al. (2004) reported that the return to previous spending patterns occurred more slowly than the abrupt initial reductions.Consumer attitudes and preferences also change during economic crises. Consumers were found to emphasize value consciousness more in times of crisis with increased preference for sales and price discounts below premium, and wholesale markets (Shama 1978; Valaškova and Klieštik 2015;). During economic crises, consumers tended to become more thoughtful, thrifty, and economical, spending more time planning, making lists, comparing prices, and avoiding impulse purchases (Voinea and Filip 2011; Hampson and McGoldrick 2013; Valaškova and Klieštik 2015). Preferences moved towards simple, uncomplicated, but safe products, with less spending on "ethical" products (i.e., organic, fair trade) (Hampson and McGoldrick 2013). Consumers preferred smaller packages and more informative advertisements during economic crises (Ang et al. 2000).However, not all consumers change behaviors during economic crises (Shama 1978; Shipchandler 1982; Ang et al. 2000; Lamey et al. 2007). Only 50% of New York City shoppers changed habits during the 1970 oil crisis (Shama 1978). In the 1970s recession, 24% of consumers increased consumption of frozen/prepared foods, but 17% increased expenditures in expensive restaurants (Shipchandler 1982). Thus, it is important to understand reactions of different consumer segments to economic crises, and marketing strategies must be adapted to changing consumer attitudes, preferences, and behaviors during such times. Timely and accurate market information is essential during times of economic change.In the U.S., consumer preference studies have focused on attitudes and preferences for species and product form by region, irrespective of economic conditions. An early national marketing study on catfish, the largest sector of U.S. aquaculture, surveyed restaurants, supermarkets, and consumers, from which key geographic markets and consumer profiles were identified (Engle et al. 1990). Hanson et al. (1994) identified catfish consumer profiles by differentiating clusters by pricing preferences and ease of preparation. Nauman et al. (1995) identified "farm-raised" and "healthiness" as positive influencers of consumer decisions to purchase fresh hybrid striped bass, trout, and salmon. Consumer segments were identified for whole versus value-added trout (Foltz et al. 1999) and fresh versus frozen trout (Dasgupta et al. 2000). Key influencers of U.S. catfish consumption were availability and freshness (Kumar et al. 2008). Consumer preferences were later found to vary by city (Singh et al. 2014), even those located in close proximity. Other studies focused on consumer preferences for frozen seafood purchased in supermarkets (Dey et al. 2014, 2017; Surathkal et al. 2017). Preferences for oysters varied between first-time and regular oyster consumers, with experienced consumers preferring farm-raised oysters (Kecinski et al. 2017). Higher-income consumers who valued size and specific harvest locations were found to be likelier to pay more than older consumers (Li et al. 2017). For U.S. aquaculture producers during the current public health and economic crisis, the growing interest in local foods (Darby et al. 2008) may offer opportunities. Several studies have shown preferences for locally raised oysters (Petrolia et al. 2014; Chen 2017; and Brayden et al. 2018). Increased accessibility of online information and sales may provide new market opportunities particularly during the current crisis (A.C. Nielsen 2020). Not all digital marketing strategies, however, are equally effective, even to demographic groups that rely heavily on online sales. For example, Smith (2012) found that successful online strategies involved competitive pricing, discount coupons, and good shipping rates. Email updates, rewards, and gifts were positive incentives, whereas pop-up ads were strongly disliked. Millennials responded positively to a personal touch and well-designed graphics on web sites. YouTube video advertising was still effective, but decreasingly so. Online review options were popular and offer opportunities for extended promotion through word-of-mouth advertising that has become more important given social media engagement (Allsop et al. 2007; Keller 2007; and eMarketer 2010).The research literature on consumer behaviors during economic crises and the lack of studies on seafood consumers underscore the need to measure on-going changes in attitudes, preferences, and behaviors of U.S. consumers during the outbreak and the recovery period. Not all consumers react in the same way, and reactions are affected by various factors. The current situation is unique in the combination of a major external shock, economic shutdown, social distancing, and extraordinary economic relief and stimulus packages. No one knows when the COVID-19 outbreaks will be contained sufficiently for economic activities to resume, nor how effective the stimulus packages will be. Thus, U.S. aquaculture businesses must prepare for an extended period of market uncertainty. The key to navigate such uncertainty is through access to accurate consumer market information that provides insights into those consumer segments and markets likeliest to seek their products and under what conditions (i.e., delivery methods, prices, product form, volumes) for both prepared meals away-from-home and at-home as well as groceries for at-home preparation.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Goals / Objectives
Long-term goals & objectivesThe long-term goal of this project is to improve profitability of U.S. aquaculture through consumer market research that will provide science-based information to guide U.S. aquaculture businesses as they attempt to recover in the aftermath of the coronavirus disease (COVID-19) pandemic public health emergency. The pandemic and subsequent shelter-at-home orders and shutdown of restaurants and other major markets have resulted in an unprecedented external shock to some of the most important markets for U.S. aquaculture products. The suddenness and severity of the loss of markets and revenue have threatened the survival of many aquaculture businesses across the country. This project will also provide unique scientific insights into seafood consumer behavior during recovery from a rare, severe economic shock. The goal is to identify emerging market opportunities for U.S. aquaculture businesses based on changes in how, when, and where consumers purchase seafood throughout the economic recovery from the COVID-19 pandemic public health emergency. Specific objectives of this project include:1. Design and implement five consumer surveys over the next two years to measure evolving changes in consumer preferences, attitudes, and purchasing behaviors (prepared meals and at-home preparation) in U.S. geographic markets as the economy recovers from the COVID-19 pandemic.2. Determine (for prepared meals, at-home preparation, and away-from-home consumption) which alternative food delivery, packaging, and advertising options are most effective in various geographic markets in each quarter as the economy recovers.3. Track the evolution of consumer expectations of changes in price and demand for U.S. aquaculture products and evaluate whether those expectations can be used to project subsequent price and demand changes in various geographic markets.4. Define groups of consumers in various geographic markets (consumer segmentation analysis) that are most advantageous for U.S. aquaculture producers to target over the next two years as the economy recovers from the COVID-19 public health emergency.
Project Methods
Standard methods and due diligence will be followed in survey development and administration (Fowler 2009; Groves et al. 2009; and Dillman et al. 2014). Questionnaires will draw upon wording and question formats that have worked well in previous surveys to maximize data quality. Reliability of participant responses will be determined using the split-half reliability method. Construct and face validity will be assessed through review by project team members and industry cooperators to ensure that questions are understandable, use appropriate terms and units of measure, and are likely to capture the desired data. The questionnaire will be reviewed by the Industry Advisory and Extension Committees and other experts, and will be revised as necessary.The questionnaire developed will elicit information from respondents on attitudes, preferences, and consumption patterns. Attitudes typically drive and often explain preferences that lead to purchases and consumption if desired products are available when and where consumers desire them. Attitudes towards attributes of top U.S. aquaculture species (i.e., catfish, trout, oysters) such as flavor, product origin, quality, freshness, ease of preparation, nutritional value, price, appearance/packaging, availability, and quality-to-price value will be measured with 5-point rating scales. Preferences will be explored by asking respondents to rank their top three preferred species of seafood. Those who report consumption of U.S. aquaculture species will be asked to rank that species against similar types of seafood. The questionnaire will further elicit patterns of seafood consumption at-home and away-from-home, with an emphasis on U.S. aquaculture species (i.e., catfish, oysters, trout). For at-home consumption, purchases by product form (i.e., fresh, frozen, prepared, shelf-stable), quantities purchased per shopping trip, prices paid, and package size, among others, will be explored. For away-from-home consumption, frequency, form of preparation, species consumed, and menu price points will be elicited. Socio-demographic information will be collected, based on characteristics that likely influence consumer preferences and behavior (i.e., geographic location, age, gender, income, level of education, ethnicity) for use in cross tabulations, as explanatory variables, and as factors for consumer segmentation analysis. Finally, questionnaires will seek information on challenges faced by consumers (i.e., finding affordable seafood; time to prepare meals at home). Understanding how seafood consumer attitudes/preferences and consumption patterns have changed is the first step towards identifying the most effective marketing strategies and new market opportunities for U.S. aquaculture in the wake of an extreme economic downturn.During the shelter-at-home orders, consumers have increased both delivery of prepared meals and at-home food preparation. Data collected will include the relative proportions of seafood expenditures at home and away-from-home and how those proportions evolve change over time. With the shelter-at-home orders, options for consumers to acquire groceries have proliferated and include direct delivery to homes of consumers (via Instacart and others), pickup at store locations of pre-ordered groceries (Walmart, Kroger, and others), and online sales (Aldi, Amazon Fresh, Blue Apron, and others). Options for delivery of prepared meals include take-out options from restaurants, pizza delivery, and home delivery services for prepared meals (i.e., GrubHub, Uber Eats, and others). Other than online sales, there has been little research on such delivery options. Thus, the questionnaire will delve into alternative food delivery methods used by consumers to either pick up food or to have it delivered to their homes. Questions will explore and compare frequency of use, purchase volumes, packaging, and relative prices for: a) pre-ordered grocery pickup; b) groceries delivered at home; c) restaurant take-out; and d) home delivery options of prepared meals. The degree of satisfaction with each delivery method will be measured using a 5-point scale and preferences for delivery method using a rank-ordered question format. More importantly, the extent to which use of these alternative delivery methods continues as COVID-19 wanes or re-appears with new spikes in viral infections will be monitored over the project period.Consumer expectations of changes in price and demand for seafood products can affect prices in subsequent months. The questionnaire will elicit information on consumer expectations of changes in price and demand for seafood. The quarterly surveys will ask consumers if they expect the price of food items generally and seafood prices specifically to fall or rise in the following months, and to what extent. Similarly, consumers will be asked if they expect to spend more in coming months for consumption at home and eating at restaurants, and by how much.To effectively meet changing demand during economic shocks, U.S. aquaculture producers need to know what adjustments to their marketing strategies will best reach those consumers most willing to purchase their products, and to identify new market opportunities. Thus, following each quarterly survey, a consumer segmentation analysis will be conducted that will develop profiles of those consumers most likely to purchase U.S. aquaculture products and under what conditions (i.e. price, at-home or away-from-home, delivery options, product form). The overall analysis will be followed by species-specific analyses of those species for which sufficient data are obtained (catfish, oysters, trout, etc.) so that recommendations specific to preferences and demand for specific products can be provided to various U.S. aquaculture species groups.The initial step in the consumer segmentation analysis will be an exploratory analysis of survey results. Scatter plots of data on preferences/attitudes, purchasing behavior, and demographics will be developed to search for patterns that suggest potential relationships among variables. Given that the combined effects of the COVID-19 outbreak, economic shutdowns, and stimulus packages have not been observed previously, time spent initially to seek patterns in the data is expected to provide deeper insights that will inform subsequent selection of variables for further quantitative analysis. Insights from the exploratory analysis and review of literature on consumer behavior during economic downturns will be used to identify a set of key factors that likely influence groupings of consumers. Principal component analysis will then be used following Ding and He (2004) to identify groups of variables that contribute in a similar fashion to variability in the overall dataset, followed by cluster analysis. Cluster analysis is commonly used to identify groups of consumers that are similar to each other but different from those in other groups (Prein et al. 1993; Hair 1995; Johnson and Wichern 2007) and is particularly useful when there is little information on the population (Pielou 1984). In aquaculture, cluster analysis has been used recently to identify aquaculture producers with similar farm management strategies (Johnson et al. 2014; Kumar and Engle 2017; and Engle et al. 2017b). K-means is preferable for cluster analysis with large datasets within which cluster sizes are unlikely to be even. Given that Hampton and McGoldrick (2013) found uneven sizes of consumer groups during recessions (small groups that prospered, but larger groups that experienced substantial negative effects), the K-means clustering technique is more appropriate. Following Hanson et al. (1994), K-means clustering runs of 2 to 20 clusters will be used to ensure accurate identification of groupings. This analysis should reveal groups of consumers who may represent new market opportunities for U.S. aquaculture producers.