A recent consumer shopper insight study conducted by the Hass Avocado Board, reported that product display, quality/ripeness and price are three key purchase motivators, officials for the organization say. The Hass Avocado Board is now releasing a second recent study Understanding Retail Price to Drive Hass Avocado Sales – Avocado Price & Volume Insights, which indicates that retailers can run promotions on one size avocado without significantly compromising volume of the alternate size. Using IRI/FreshLook Marketing data from approximately 330 individual grocery retail account geographies, the study presents insights and practical considerations for the trade on retail price and price-volume relationships.
“The Hass Avocado Board conducts in-depth research to help the industry understand the category and drive retail sales growth,” says Emiliano Escobedo, executive director of the Hass Avocado Board. “Our two recently published studies researched the factors that influence consumers’ purchasing behaviors, pricing dynamics, and the impact it has on retailers’ business.”
Retailers have the flexibility to use pricing to drive incremental sales and protect margins. The study reveals that large avocados display greater sensitivity to everyday price changes than small avocados. This may be due to larger avocados often being priced higher so the price change is more obvious to consumers. For example, as discounts deepen for large avocados, units increase significantly—more than doubling at a 45% discount. However, total dollar sales increase at a much slower rate and level off around a discount of 30%, delivering diminishing returns as the discount rises. Under the same scenario, total dollars grow only slightly for small avocados, and flatten or reverse at discounts over 30%. Additionally, changes in base price produce only minimal interaction between large and small avocados. This low level of interaction means retailers can run promotions on one size avocado without significantly compromising volume of the alternate size.
Retailers can also maximize the consumer response to price reductions by using promotional messaging. Promotional discounts drive greater volume lifts than equivalent declines in base price. A promotional discount signals a special, limited-time value to the consumer and encourages “buy now” purchases. Avocado volume is sensitive to increases and decreases in everyday price, but avocados display greater responsiveness to decreases in everyday price than to increases. This is good news for the category because consumers increase their purchase of avocados when retailers reduce prices, but they do not reduce purchases to the same extent when prices increase.
“While every retailer is unique, the Hass Avocado price-volume information in this study helps retailers build demand, improve category performance, and increase category market share,” suggests Escobedo.
To learn the impact on volume across different promotional levels and how it various across regions, visit hassavocadoboard.com/retail to read the full report.