An Exploratory Study of the Effects of Unit Pricing and Nutritional Labeling Upon Supermarket Choice

Citation:

H. Lee Mathews, David T. Wilson, Chin Tiong Tan, and Timothy Sweeney (1974) ,"An Exploratory Study of the Effects of Unit Pricing and Nutritional Labeling Upon Supermarket Choice", in NA - Advances in Consumer Research Volume 01, eds. Scott Ward and Peter Wright, Ann Abor, MI : Association for Consumer Research, Pages: 17-28.

Advances in Consumer Research Volume 1, 1974    Pages 17-28

AN EXPLORATORY STUDY OF THE EFFECTS OF UNIT PRICING AND NUTRITIONAL LABELING UPON SUPERMARKET CHOICE

H. Lee Mathews, The Pennsylvania State University

David T. Wilson, The Pennsylvania State University

Chin Tiong Tan, The Pennsylvania State University

Timothy Sweeney, Saint Bonadventure University

[Lee Mathews is Professor of Marketing, David T. Wilson is Associate Professor of Marketing, and Chin Tiong Tan is a doctoral candidate, all at The Pennsylvania State University. Timothy Sweeney is Department Head at the Saint Bonadventure University.]

INTRODUCTION

The unit pricing concept became popular in the 1960's with the rise in concern for consumer interest in supermarket shopping. During this time, Congressional committees were conducting hearings concerning existing and proposed legislation on packaging and labeling, and little information about the effect of the unit pricing concept upon consumer behavior was available. Consumer advocates claimed that unit pricing would save money for housewives; while marketing executives asserted that unit pricing would be an expensive innovation, the full effects of which are exaggerated. A statement of the Grocery Manufacturers of American, Incorporated, illustrates the latter position:

"It would appear that unit pricing would provide very limited benefits and in some cases might actually cause confusion. The only clear instance in which unit pricing would be of benefit would be in making price comparisons among different sizes of an identical product. ... A possibility in unit pricing proposals is that consumers might be swerved from their present practice of value shopping and become conditioned to price buying at the expense of such variables as taste, quality, and nutrition. Price is important, but not the only, and not necessarily the most important variable."

On the other hand, labelings of the amount of proteins, calories, vitamins and other nutritional information on the package of food are not typically provided by manufacturers. However, with the publication of the "proposed criteria for food label information panel" of the Department of Health, Education, and Welfare in March, 1972, stricter policies on nutritional labeling are anticipated. For example, a few supermarkets have begun to provide nutritional labeling on some of their house lines.

The purpose of this paper is to report on an exploratory study of consumeristic attributes as influences in housewife's store choice. Unit pricing is featured as it has been more prominently featured than nutritional labeling. The first part of the paper reviews the unit pricing literature during the late 1960's and early 1970's. The second part discusses the findings of a survey of housewives conducted in Pittsburgh, Pennsylvania and Tampa, Florida during June, 1972.

LITERATURE REVIEW

Publicity for the unit pricing concept mushroomed when Bess Myerson Grant. Commissioner of Consumer Affairs in New York City, started public hearings on unit pricing in 1969 (Bess Myerson Grant, 1969). Unit pricing was defined as the pricing of meat, fish, cereals, bread, beer and other food and household items by the package. Theoretically, shoppers could make instant price comparisons of different sizes of the same product, and thereby save money.

The food industry was quite critical of this innovation, since pending legislation requires such a pricing policy. Store operators claimed that unit pricing would mean the end of specials and weekend sales, and increase costs to the point where smaller stores would be driven out of business. Josephen Grimes, Vice-President for Sales at Jewel Stores, asserted that unit pricing would cost Jewel $250,000 a year (Press Release, Jewel Food Stores, 1970). And Kroger Store executives claimed that unit pricing would consume 10% of net profits. The implication was that the cost of the unit pricing system would raise the price of food.

Because of the conflict of interests between consumer advocates and supermarket executives, some research to determine the impact of unit pricing on consumer behavior was undertaken by food store organizations, consumer advocate groups, and researchers interested in the consumer decision process. While the approaches to research are heterogeneous most have focused on either consumer awareness and use of unit pricing or the retailer costs of establishing and maintaining such a system.

Consumer Awareness and Use of Unit Pricing

Patrons of different supermarkets that have introduced unit pricing have revealed substantial differences in awareness of the concept. Kroger Company, for example, tested unit pricing for four months in ten stores. Approximately 48 percent of the shoppers that were interviewed at the end of the study indicated that they had noticed and understood unit price labels. Another study, conducted by King Soopers, in the Denver area revealed that 67.7 percent of the over 2,000 respondents and 82 percent of the regular King Soopers shoppers (n = 816) were aware of the unit pricing program that had been installed.

Several supermarkets in the Washington, D. C. area conducted a telephone survey of 500 grocery shoppers and reported that 64.5 percent of those who shopped in a unit pricing store were aware of this concept. A study in State College, Pennsylvania indicated that 61 percent (n = 90) of the shoppers in a it pricing store were aware of the concept.

The use of unit pricing information by consumers varied in a similar manner but was generally at a lower level. Only 7.4 percent of the customers interviewed in a Jewel Food Store study reported having used unit pricing. Stop and Shop estimated that 9 percent of the respondents had used unit pricing during a five-week experiment on unit pricing. Safeway Stores reported in a survey of shoppers in two stores that 17 percent of inner city and 11.5 percent of suburban shoppers had used unit pricing to compare costs of different brands.

The King Soopers study revealed that approximately 53 percent of the regular shoppers had used unit price information. This group constituted approximately 65 percent of the King Soopers shoppers that were aware of unit pricing. Forty-six percent of this group had used unit pricing to switch brands.

Similar usage studies in the Washington, D. C. area found that 47 percent of those who shopped in a unit price store had used unit pricing, and that approximately 38 percent had used the information on one-half or more of the products purchased. The State College, Pennsylvania study indicated that 44 percent of the respondents used unit pricing. An interesting aspect of this study is that only 22 percent of the respondents could explain the meaning of unit pricing. Approximately 30 percent of the shoppers who comprehended the meaning of unit pricing actually reported changing a buying decision because of unit pricing information.

Who Uses Unit Pricing

In the Jewel Tea, Stop and Shop, Krogers, and King Soopers studies, unit pricing information was used most often by the more educated, professional and higher income respondents. Results from the State College study indicate that the middle class housewives are significantly more conscious of economical buying than either the upper or lower classes, and therefore, more motivated to use unit pricing information. Other studies have suggested that the use of unit pricing information directly correlates with the size of the household and the suburban orientation of the shopper.

Effects of Unit Pricing on ShopPer Behavior

An analysis of warehouse withdrawS s during the first eight weeks of the unit pricing program of Jewel Tea Company showed no major shift to lower price products. Similarly, the Kroger study indicated no shift to lower price products; in fact, there was a slight tendency toward purchasing higher priced items. In addition no difference was reported between purchases of upscale income or education groups.

To an individual consumer unit pricing should affect price as a determining variable in the shopper's buying decisions. Mr. Charles C. Pitzmorris, Jr., President of the Benner Tea Company of Burlington, Iowa, asserted that the housewife could save 10 percent on her shopping bill with the aid of unit pricing (Fuller, Margaret, 1970). Two groups of twenty housewives were sent to two non-unit pricing stores and were asked to choose the cheapest size per ounce of eighteen specific products, resulting in an error rate of 52 percent. Twenty additional housewives were sent to a unit pricing store for the same purpose, the results of which showed an error rate of 24 percent. It would appear from this rather simple experiment that while unit pricing significantly reduces the error rate, it does not eliminate shopping errors entirely.

A 52 percent error rate without unit pricing seems typical. Mrs. Helen P. Nelson, Associate Director, Center for Consumer Affairs, University of Wisconsin, asserted: "Consumers are wrong almost as often as they are right when they make a serious effort to compare prices of common every day packaged items in the supermarket." Similar tests by Mrs. Nelson in California in 1961 and by Bess Myerson Grant in New York yielded similar error rates. The State College study showed that error rate may vary by social class. In a hypothetical buying decision middle class housewives had a 35 percent error rate while the upper and lower class groups both had about a 6 percent error rate.

In another study 53 housewives were randomly assigned to three supermarkets including one unit pricing store. The other two used a combination of per item and multiple item prices. The subjects were sent to their respective stores to purchase items from a list of fourteen product classes.

Each subject was instructed to buy the most economical brand and size in each product class without regard to her personal preferences or beliefs concerning differences in quality between brands. The results suggest that the consumer is better able to determine the most economical item in a product class in stores with unit pricing than in non-unit pricing stores. In addition, when an item other than the minimum limit price item is chosen, the total dollar differences between the chosen items and the minimum unit price items is reduced significantly when unit pricing information is provided. Hence, unit price information aids in judging quality of products.

Granger and Billson (1972) conducted an experiment examining change in consumer preferences for different package sizes when price per unit information was explicitly provided. This study concluded that prices are of clear importance in determining selection of package size, but that many housewives do not have a clear idea of relative value measured in unit price terms. When unit price information was provided a significant change in the choice of distribution occurred. Granger and Billson predict that there will be a dramatic switch to larger sizes of laws that will require supermarkets to provide information on price per unit of measure.

Other pricing studies, not specifically concerned with unit pricing, are of interest in understanding the importance of the role of price as a purchase criterion for grocery products. Wells and LoScuito (1965) using a direct observation technique found that concern for price was exhibited by 13 percent, 17 percent, and 25 percent of shoppers purchasing cereal, candy, and detergent, respectively. If consumers are using other criteria in their purchase decisions the influence of unit pricing in consumer behavior may be very small. In the Safeway study, about 30 percent of the respondents who had noticed but not used unit price information indicated that they knew the brands and sizes they wanted and had no need to use the information. In the State College study housewives' responses to open-ended questions probing why they purchased certain sizes of a particular product even though they realized that size is not necessarily the cheapest per ounce, indicated that unit pricing is relatively insignificant in their buying decisions. More important criteria cited were portion control, conveniences, storage, sampling new brands, and cash on hand.

PURPOSE OF TEE STUDY

The present study sought to determine: (1) the importance of consumer oriented variables such as unit pricing and nutritional labeling to housewives in relation to other supermarket choice variables such as good selections, fresh produce, and cleanliness; (2) the housewives' use of unit pricing as a guide to brand and package size selection; and (3) the relationship of demographics of housewives' perception of the importance of unit pricing.

METHODOLOGY

In order to improve the reliability of results and to make some geographic comparisons, two regional samples of women shoppers were taken: Pittsburgh, Pennsylvania (n = 140) and Tampa? Florida (n = 120) Trained professional interviewers administered a questionnaire to women in various shopping centers where major supermarkets were located. The shopping centers were selected so as to ensure a socio-economic cross-section of shoppers. In addition to demographic data, respondents were asked to rate the relative importance of supermarket attributes and to provide information on how often and for what purpose unit pricing information was used.

An expectancy model was used to predict the supermarket choice process. Expectancy-value attitudinal models have been used extensively by market researchers to study consumer attitudes and to predict behavior. The various importance of supermarket attributes (VIi) such as cleanliness and convenient location etc., and their procession by the various supermarkets were measured on seven point Likert scales. A possession score for each attribute (Pi) was obtained for a number of supermarkets.

RESULTS

Table 1 presents the mean scores and rankings for the importance of the supermarket attributes. Overall, the attributes of unit pricing and nutritional labeling were respectively ranked 12 and 11 for Pittsburgh and 7 and 11 for the Tampa respondents. The Spearman Rank Order Correlations Coefficient between the two samples is 0.74. Interestingly, the attribute "low price" is ranked third in importance in both cases, while the attribute "gives stamps" is ranked 13 in both cases.

TABLE 1

OVERALL RANKINGS OF MEAN IMPORTANCE SCORES OF SUPERMARKET ATTRIBUTES IN FLORIDA AND PENNSYLVANIA

Each sample was then divided on the basis of a seven-point scale designed to obtain an importance rating of the unit pricing variable. Subjects responding 5, 6, or 7 were classified as a "high unit pricing importance" group (HUP) and those responding 3, 2, or 1 were called "moderate unit pricing importance" (MUP). Tables 2 and 3 present means, standard deviations and rankings of the attributes by region and unit price orientation. Nutritional labeling is ranked 8 by the Pittsburgh high unit pricing group and 11 by the Pittsburgh moderate unit pricing group. In the Florida sample, the same variable was ranked 11 and 10 for high and moderate unit pricing groups respectively. All of the rankings between groups appear to be highly correlated (R ranges from .73 to .92).

TABLE 2

RANKED MEAN IMPORTANCE SCORES OF SUPERMARKET ATTRIBUTES IN FLORIDA: HIGH UNIT PRICING IMPORTANCE AND MODERATE UNIT PRICING IMPORTANCE GROUPS - FLORIDA SAMPLE (N = 99)

TABLE 3

RANKED MEAN IMPORTANCE SCORES OF SUPERMARKET ATTRIBUTES IN PENNSYLVANIA: HIGH UNIT PRICING IMPORTANCE AND MODERATE UNIT PRICING IMPORTANCE GROUPS - PENNSYLVANIA SAMPLE (N = 116)

Discriminant Analysis

A two-way step wise discriminant analysis of subjects from both the Florida and Pennsylvania samples was completed to classify and differentiate subjects who considered unit pricing highly important versus those who considered it moderately important. The independent variables were the subjects' ratings on the twelve supermarket attributes. Six variables (good meat, nutritional labeling, cleanliness, low prices, fresh produce and wise aisles) correctly classified 75 percent of both samples. The variables low price, fresh produce, and nutritional labeling were common to both samples.

A validation analysis was conducted to determine the proportion of correctly classified observations due to sampling error or search bias, and that portion due to the true differences between the variable means (10). This procedure involves splitting the original sample into an analysis sample and a validity sample. Using the discriminant coefficients estimated from the analysis samples, the subjects in the validity sample are classified into high unit pricing importance and moderate unit pricing importance groups. Four replications, each based on a different randomization procedure for splitting the original sample, were conducted. The results indicated that the equation was valid. Specific tables are available from the authors.

Refinement of Pennsylvania Sample

A further segmentation of the samples was done on the basis of importance rating of the nutritional labeling variable. The refinement of the sample yielded 64 subjects in the Pennsylvania sample who were categorized as "high unit pricing" and "high nutritional labeling" (HUP, HNL), or "moderate unit pricing" and "moderate nutritional labeling," (MUP, MNL). Unfortunately, the refined cell sizes in the Florida sample were not of sufficient size for further analysis.

Table 4 ranks the two groups mean importance ratings of supermarket attributes. The Spearman rank correlation for the two groups is 0.72. To determine how well the subjects were classified into "HUP, HNL" and "MUP, MNL" categories and how the two groups differed, a two-way discriminant analysis was done. The eleven importance attributes of supermarket excluding unit pricing and nutritional labeling were used as independent variables, and the initial six variables correctly classified 78% of the subjects. A validation analysis was conducted; the results were significant and are available from the authors.

Demographic Characteristics

Table 5 describes the life cycle stages of the "HUP, HNL" and "MUP, MNL" subjects. The difference are statistically significant at the 0.025 level. Subjects in the "MUP, MNL" segment were likely older consumers than the "HUP, HNL" group. In fact, 66% of the "MUP, MNL" subjects were married with children of ages six years and older. A high proportion of the "HUP, HNL" subjects were newly wed or single.

The average incomes of subjects in the two groups differ significantly as well. Table 6 presents the income data on the two. The "MUP, MNL" subjects appear to be more affluent as 67% have family incomes of more than $10,000. Since about 70% of the "HUP, HNL" shoppers were younger couples it is not unexpected that they have lower incomes as compared to the more established "MUP, MNL" shoppers.

TABLE 4

RANKED MEAN IMPORTANCE SCORES OF SUPERMARKET ATTRIBUTES: "HUP, HNL" AND "MUP, MNL"

TABLE 5

LIFE CYCLE STAGES OF SHOPPERS

TABLE 6

FAMILY INCOMES OF SHOPPERS

The "MUP, MNL" subjects also appear to spend more on grocery items each week. Their average spendings were $48 as compared to $32 of the "HUP, HNL" subjects. A breakdown of their spendings on specific grocery items did not yield any significant differences. There also is little difference in subjects occupations and educational levels.

Unit Pricing Usage

A study of the usage of unit pricing between regions showed that over half of the subjects from both regions considered unit pricing to be an important attribute of a supermarket. The rate of usage of unit pricing, and the use of unit pricing to switch sizes and brands does not seem to vary by region.

However, as one would expect, subjects in the "HUP, HNL" and "MUP, MNL" segments seem to exhibit differences in their usage of unit pricing. Results on Table 7 shows that 42% of the "HUP, HNL" subjects use unit pricing frequently as compared to 22% of the "MUP, MNL" subjects. A chi-sq. test shows that the difference is significant at a 0.10 level. A study of the use of unit pricing to switch sizes and brands did not yield any statistically significant result.

TABLE 7

USAGE OF UNIT PRICING WHILE SHOPPING

It appears that the "HUP, HNL" and the "MUP, MNL" groups are two different segments of shoppers. The "HUP, HNL" subjects may be more consumeristic oriented shoppers. They also differ from the "MUP, MNL" shoppers in certain social-demographic characteristics and shopping behaviors.

Store Choice

To analyze shoppers' store choice process, a disaggregated model was employed. Subjects VIiPi scores were not summed, instead they were used as independent variables for regression analysis to predict behavior intention, a surrogate for store choice. A stepwise regression program was used, and the total Pennsylvania sample was analyzed. The unit pricing variable entered at step 5 and 6 for two stores. Both unit pricing and nutritional labeling variables were generally entered into the regression equations at later steps for the other stores. It appears that the unit pricing and nutritional labeling variables are less important in the shopper's store choice decision than more traditional variables.

Regression analysis was conducted for the "HUP, HNL" and "MUP, MNL" groups. Examination of the results suggests that there is little difference between the two groups in the selection of a supermarket. However, the segmentation of total sample into two groups improved the index of determination.

DISCUSSION OF THE RESULTS AND IMPLICATIONS

The importance attributes of unit pricing and nutritional labeling do not appear to be the most important aspects of housewife choice of a supermarket. Other traditional supermarket choice variables such as cleanliness and convenient location appear to influence choice more than the consumeristic variables.

There seems to be a high degree of consistency as evidenced by the rank correlation coefficients between the ranking of the variables by the Florida and Pennsylvania samples. Both samples exhibited little difference in the use of unit pricing either to switch sizes or brands. The majority of the respondents make moderate to low use of unit pricing, and the Florida subjects appear to value unit Pricing more highly than the Pennsylvania subjects.

Segmentation of the Pennsylvania sample into the "HUP, HNL" and "MUP, MNL" groups yielded differences on demographics and differences in unit pricing usage. However there was no difference between the two groups in store choice behavior.

The discriminant analysis was quite successful in categorizing subjects who considered unit pricing of either high or moderate importance. The average validation correct classification for the Florida samples was 68.9 percent which is about 6 percentage points less than the complete model. This 68.9 percent is not significantly above the Cmax value (67 percent). Nevertheless, for marketing purposes Cpro is more likely a better estimates especially if there is a cost of misclassification in a segmentation strategy. In this case, Cpro of the Florida sample is 56.0 percent; the average classification of 68.9 percent is significantly greater than Cpro (0.50) and Cmax (0.535). Similarly, the classification of the "HUP, HNL" and "MUP, MNL" (0.78) is significantly greater than Cpro (0.56) and Cmax (0.67).

This study supports the position that unit pricing is not necessarily the determinant attribute in the consumer's choice of supermarkets. Nevertheless, attributes such as unit pricing and nutritional labeling may be important parts of a package of attributes that could appeal to a segment of the market. These consumeristic attributes may reinforce the consumer's positive image of a store.

The results of this study also support previous findings in that only a modest proportion of housewives use unit pricing. Despite all of the rhetoric on the part of businessmen and consumer advocates unit pricing does not appear to be an upsetting force in the market place. In fact, supermarkets may gain more than the consumers as unit pricing improves self discipline.

Housewives of both the high and low consumeristic orientations seem to have fairly similar outlooks regarding their selection of supermarket. Regardless of the increasing awareness of consumerism, the consumeristic variables such as unit pricing and nutritional labeling still remain as less important variables in the shoppers store choice decision.

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