WEST LAFAYETTE, Ind. -- Consumers aren't comparing per-ounce and per-unit prices when supermarket shopping, according to a new study from Purdue University researchers here. The study was presented at the American Agricultural Economics Association in Nashville, Tenn. recently.
Canned tuna fish was the focal point of the study and data was compiled from 54 supermarket regions throughout the United States. Purdue studied the 52-week period price average of three brands that shared roughly 90% of the tuna market at that time: Starkist, Bumble Bee and Chicken of the Sea.
Tuna sales, prices and consumer demographics were used to examine why consumers would purchase large sizes when unit prices are higher. Results indicated that purchases are made on the mistaken belief that large sizes are always cheaper, without ever examining the prices.
James Binkley, a professor of agricultural economics at Purdue, credits this consumer belief to surcharging--a practice where larger packages cost more per unit than smaller packages of the same product. With tuna, the study found that the larger the can, the more expensive it is, with a 6-ounce can of tuna priced at 89 cents; a 12-ounce can priced at $2.19; and two 6-ounce cans costing $1.78, or a 41-cent difference.
The study originated from a grocery product tracking firm called Selling Areas Marketing Inc., and the data consists of measures from large grocery marketing districts rather than data on individual consumers. Canned tuna was found to be universally surcharged.
However, Tim Hammonds, President and CEO of the Food Marketing Institute, Washington, disagrees with the findings. "The issue isn't 'quantity surcharging' at all, it's fast mover discounts," said Hammonds.
According to Hammonds, supermarkets tend to price their fast moving items in a category at the best value. "Grocers know that comparing different sizes is difficult. As a result, they provide a free service that removes all the guesswork. It's located right on the shelf and it's called unit pricing. If shoppers compare unit prices, they will always find the lowest price per ounce or price per pound," said Hammonds.