Chris Frank, Eric Simonne, Bridget Behe, Robert Nelson, and Amy Simonne

Color and price, rather than vitamin C content, influence consumers' decisions when buying bell peppers, according to results of a recent AAES consumer preference study. The study also indicated that green bell peppers are easier to grow and are preferred by consumers, though colored bell peppers may provide more profit potential for Alabama producers.

Per capita consumption of bell peppers in the United States has increased from 2.5 pounds per year in 1973 to 7.1 pounds per year in 1996. The increasing popularity of bell peppers and the suitability of Alabama's climate for their production presents an excellent opportunity for Alabama producers and retailers. However, to take full advantage of this opportunity, producers and retailers need to understand consumer preferences for the different attributes of bell peppers in order to maximize consumer satisfaction, and increase consumer acceptance.

The common attribute used to differentiate bell peppers is color. Red, yellow, and orange are the most common alternatives to the traditional green bell pepper. Black, brown, purple, and ivory colors also are currently available. These nontraditional colors are viewed as a colorful enhancement in food preparation. While official statistics are not available for bell pepper consumption by color, conversations with produce buyers for large retail grocery chains in the Southeast indicate that approximately 80% of consumption is devoted to green, with the remainder divided primarily between red, yellow, and orange.

Besides color, another obvious factor influencing consumer preferences is price. Nontraditional colored bell peppers have a higher market value than green bell peppers and offer growers potentially higher income. Wholesale prices at the Atlanta market terminal in September 1997 ranged from $16 to $23.50 for a one-and-one-ninth bushel carton of large red, yellow, or orange bell peppers. In contrast, wholesale prices for large green bell peppers ranged from $8 to $10.25. There are two major factors that account for this wholesale price spread.

First, nontraditional colored peppers require an additional three to six days to develop full color. Thus, the longer growing season requires additional farm inputs that increase variable cost slightly. The second and most important factor is reduction in yield of nontraditional colored bell peppers during this extra three-to six-day period. Losses can reach 30% of yield, but the amount is strongly dependent on management practices. At the retail level, nontraditional colored bell peppers routinely cost two to five times more than green bell peppers. The additional cost at retail for nontraditional colors is normally attributed to a shorter shelf life and increased spoilage.

Another attribute that has potential use in differentiating bell peppers is vitamin C content, due to the widely publicized claims of health benefits from macro-dosages. Bell peppers are ranked fourth in vitamin C content among the 42 most common fruits and vegetables. Additionally, a previous AAES study found that colored bell peppers are higher in vitamin C content than green bell peppers. Concentrations of vitamin C (in mg per 100g) are: orange 108, red 100, brown 100, yellow 99, and green 98.

An experiment was conducted to aid producers and retailers in understanding consumer preferences for bell peppers. Different combinations of price, color, and vitamin C content were created by placing a bell pepper of the desired color on a plate, along with a card indicating the price per pound and the vitamin C content of one serving of that color bell pepper. The plates were placed on a table and presented to customers.

Price had four levels ranging from 69 cents per pound to $3.69 per pound in one dollar increments. Subsequently, 436 consumers from two stores of a large retail grocery chain in Auburn and Opelika evaluated the alternative product combinations based on their willingness to purchase. Consumer responses were analyzed to determine consumer preferences for the different attribute levels, and the extent to which consumers are willing to trade-off between attributes. For example, if consumers prefer higher vitamin C content, would they be willing to pay a higher price for that attribute?

Consumer preferences were sorted into segments with similar preferences to examine the possibility of niche markets. Six distinct preference segments were identified, and are reported in the table along with the overall sample. Larger values for the preference scores (referred to as "part-worths" in the table) of each level are preferred to smaller values. Relative importance is the percentage contribution of that attribute to the consumer's overall evaluation, and is interpretable as a measure of the relative willingness to trade-off between attributes.

Part-worths and Relative Importance for Clusters Based on Preferences
for Bell Pepper Attributes

Attributes and levels	Segment 1 (10%)	Segment 2 (25%)	Segment 3 (12%)	Segment 4 (28%)	Segment 5 (18%)	Segment 6 (8%)	Overall1 (101%)
	Part- worth	Part- worth	Part- worth	Part- worth	Part- worth	Part- worth	Part- worth
Color:
Green	-0.15	0.50	1.27	2.01	0.90	-0.83	0.91
Brown	-0.29	-0.93	-1.54	-1.30	-0.55	0.67	-0.85
Red	-0.12	0.17	0.01	-0.22	0.25	0.23	0.03
Yellow	0.37	0.08	-0.07	-0.30	-0.30	0.15	-0.08
Orange	0.19	0.19	0.34	-0.18	-0.29	-0.22	-0.01
Relative importance	29.5%	59.8%	69.6%	93.2%	45.0%	52.8%	74.6%
Price:
$0.69	-0.17	-0.18	0.01	-0.04	-0.18	-0.23	-0.12
$1.69	-0.43	-0.44	0.03	-0.11	-0.45	-0.57	-0.30
$2.69	-0.68	-0.71	0.04	-0.17	-0.72	-0.91	-0.48
$3.69	-0.93	-0.97	0.06	-0.23	-0.99	-1.24	-0.66
Relative importance	33.9%	33.1%	1.2%	5.4%	25.2%	35.6%	22.9%
Vitamin C:
75%	-0.42	0.09	-0.54	-0.03	0.52	0.15	0.01
100%	0.03	-0.08	-0.10	0.02	-0.07	0.04	-0.03
125%	0.40	-0.01	0.64	0.01	-0.44	-0.18	0.03
Relative importance	36.6%	7.1%	29.2%	1.4%	29.8%	11.6%	2.5%
1 Overall (101%) is due to rounding error.

Color is overwhelmingly the most important attribute in the overall sample, with almost 75% of the decision to purchase based on color alone. A strong preference for green is indicated, while consumers are strongly disinclined towards brown relative to the other colors included in this study. Red, yellow, and orange are intermediate between these two extremes and relatively indistinguishable among themselves.

For this range of prices the price attribute has relatively little effect on the decision to purchase compared to the color attribute. The relative importance of color to the average consumer's decision to purchase is more than three times as great as price. Results for vitamin C content indicate essentially no contribution to the overall purchase decision.

The overall sample yields two conclusions. First, the strong consumer disinclination towards brown argues against its production and introduction into the market. Second, the negligible impact of vitamin C content implies that it is an ineffective attribute upon which to differentiate the product.

However, results for the six segments indicate preferences significantly different from the overall sample. For color, segments three and four (40% of the sample respondents) demonstrate a much stronger degree of preference for green relative to the other colors, and could be referred to as the "green lover" segments. Red, yellow, and orange perform relatively well across segments and appear to have a moderate level of consumer acceptance. Interestingly, brown possesses a small niche in the market, which may make it profitable to produce in limited quantities.

Results for vitamin C content are intriguing. While the overall sample indicates almost complete indifference to this health-related attribute, results from different segments indicate a widely varied consumer perception toward this attribute. Segments one and three prefer more vitamin C to less, but segments five and six prefer less vitamin C to more. These four segments consider vitamin C a significant contributor to their overall purchase decision. Only segments two and four consider vitamin C to be a negligible factor in their decision to purchase. These mixed results may be due to factors such as different levels of knowledge of the health-related benefits of increased vitamin C, and different levels of health consciousness.

Segmentation of the market also provides additional information for the price attribute. The percentage contribution of price to the overall sample's decision to purchase is relatively small compared to the color attribute. However, the overall sample seriously overstates the contribution of price in the purchase decision for a large segment of the market. Notably, the "green lovers" (segments three and four) are relatively indifferent to the range of prices included in the study. It is obvious from all these examples that analysis of the overall market alone does not reveal the richness of opportunity present in niche markets.

The results of this study indicate that the current structure of the market has green peppers accounting for 80% of retail sales and the remaining 20% divided between alternative colors. This situation will likely persist into the foreseeable future because of the predominance of color relative to price in shaping consumer purchase decisions. In effect, market share for colored peppers would probably not dramatically increase even with price discounts. As a result of this and previous AAES research, it appears that a profitable opportunity exists for Alabama growers to produce colored peppers. If the yield loss in colored peppers in the last week of cultivation can be minimized with better management, then Alabama growers could reap the benefits of the higher market prices for these colored peppers. Whole-salers and retailers also require a reliable and consistent supply of quality peppers. A cooperative venture may be necessary to coordinate a reliable and consistent supply schedule.