Consumer Preferences and Demand for Livestock Products in Kano Metropolis, Nigeria
ABSTRACT
This study investigated consumer preferences and demand for livestock products in Kano Metropolis, Nigeria, specifically the demand and preference rankings for different attributes of milk and meat products. The survey was conducted among 384 consumer households from eight local government areas of Kano Metropolis. Factor analysis and cluster analysis were used to identify market segments based on consumer preferences, behaviour and lifestyles. Differences between segments were analyzed. Preference ranking for different brands of milk from the study showed that, other things being equal, the most preferred and regularly consumed milk was powdered full cream which was considered the most tasty and nutritious. The socio-economic characteristics of the consumers, such as, gender, marital status, education, occupation and ethnic background were statistically significant at less than 5% level in attributes of milk such as taste, nutritive value, health risk, shelf-life, handling convenience, and product hygiene. The ranking result for preferences of beef, chevon and mutton, according to selected criteria and indicators of quality, showed that local breed of cattle was most preferred (84.7%) by all the sex and age groups, matured bull was strongly preferred (32%) and meat from naturally fed animals was strongly preferred (85.6%) to meat from artificially fattened animal. In the case of chevon, meat from male animals fed naturally and with medium fat content was most preferred. The attributes of breed of animal, fat content, meat appearance, sex and age of animal and feeding system had significant effects on consumer willingness to pay for meat products. The demand for eggs, meat, fish, milk and fruit were highly price elastic. The demand for cereals, vegetables and legumes were inelastic with respect to their own price. The demands for meat, milk and fish were highly insensitive to change in prices of cereal- a one percent increase in the price of cereal, increased demand for fish by 0.36% and demand for milk by 0.48%. One percent increase in the price of cereals decreased demand for meat by 0.51%. In general, most of the other cross-price elasticities were less than unity with either negative or positive sign, indicating substitution and complementary relationship (respectively) between items concerned. Inadequate storage capacity and warehousing facilities (18 8%) have been identified as the major problem of livestock product preferences in the study area. The result of this study was able to link consumer’s socio-demographic, psychosocial and environmental factors with their preferences for taste, nutritive value, health risk, product hygiene, shelf-life, availability and price of livestock products. It was therefore recommended that producers and marketers should use these relationships among consumers to segment its market based on lifestyle and behaviours of their target consumers, and also, all stakeholders responsible for enforcement of standards should be provided with the necessary technical skills and regulatory support to enforce those standards.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Livestock production contributes significantly to economic growth and development of industrializing countries. It provides food, income, employment and valuable foreign exchange. Hence, it is a major component of agricultural economy of developing countries and goes beyond food production. In Nigeria, cattle are predominantly produced in the northern part, where the bulk of the population are pastoral, and extensively consumed in the southern part (Rim, 1992). The Nigerian livestock resources consist of 14 million cattle, 34 million goats, 22 million sheep, 100 million poultry, one million horses and donkeys as well as negligible number of camels (Umar, 2007).
Global meat production increased from 69 million tonnes in 1990 to about 105 million tonnes by the year 2003 while meat consumption increased from 5 – 6 percent per year (FAO, 2006). Accordingly, bovine meat output was projected at 69 million tonnes in 2007 due to large production in developing countries set to expand by 3.25 – 3.75 million tonnes. This shows that developing countries contributed almost half of the world’s meat production. The food industry does work in providing incentive and in allocating labour to its various users as herdsmen, retailers, butchers, cold room owners, slaughterers, and animal processors (Hansen, 2001).
Therefore, socio – economic growth and development cannot ignore development of meat industry and efficient meat marketing system in Nigeria. Moreover, the rapidly growing demand for milk and meat in the developing world present a great opportunity for millions of livestock holders. The international community seeks ways to meet the millennium development goals and to reduce levels of extreme poverty. Greater attention to this important sector and particularly to the significance of improved livestock services with improved access to productive breeds, veterinary care, tools, feeds, credit system, training, technologies and markets, must therefore be encouraged (Word Bank, 2004).
FAO (2007) maintained that 600 million small farmers and herders in rural areas around the world keep nearly one billion livestock. Livestock keeping can help alleviate poverty in many developing countries especially as the demand for animal products, such as milk and meat, continues to rise. Still, most livestock keepers in the world (about 95%) live well below the poverty line, and cannot even afford to buy their own livestock products (FAO, 2007) The world community has agreed to cut global poverty by half by 2015. An estimated 75% of the poor live in rural areas, these people practice cattle fattening and livestock keeping in general (FAO, 2009). The global livestock sector is undergoing rapid transformation. Growing urbanization and rising incomes are creating a dramatic increase in the demand for milk and meat in the developing world (FAO, 2004).
Report has shown that Nigeria is one of the four leading livestock producers in sub-Sahara Africa. In 1990, livestock population comprised about 14 million cattle, 23 million goats and 23 million sheep (Rim, 1992). However, these figures have since increased to 15.2 million cattle, 28 million goats and 23 million sheep (FAO, 2006), while live animal imports and milk/milk product imports rose from 100.9 metric tonnes to 739.1 metric tonnes in 2004.
Accurate statistics on livestock production and marketing are not available and therefore, detailed projections of supply and demand of the livestock sub sector cannot be realistically made (FAO, 2006). It is clear, however, that over the last decade the supply of meat, milk and eggs has failed to keep pace with the increasing population. Somehow, the price elasticity of dairy products has not effectively affected demand. The supply of animal products has been declining over the past two decades, while demand has been increasing, as a result of increases in population and urbanization. Consequently, Nigeria has remained a net importer of livestock and livestock products. Restrictions placed on imports of animal products and foodstuffs in the 1980s coupled with the introduction of the Structural Adjustment Programme (SAP), which saw a massive devaluation of the Nigerian currency, initially reduced the importation of meat and dairy products. Recent statistics on the importation of dairy products in Nigeria are not easy to come by. However, devaluation of the local currency has significantly reduced the importation of milk powder and butter oil on which the local dairy plants depended. The large number of closed dairy plants throughout the country provides evidence of this problem (CBN, 1999).
In addition to the supply of milk from the national herd, an insignificant quantity of milk is supplied by the commercial dairy farms. Several processed dairy products are imported into Nigeria. These include evaporated milk, powdered milk, butter, cheese and cream. Condensed milk and dry powdered milk have dominated the Nigerian milk import trade for a long time (FAO, 2006).
In market offering, a product is the key element that brings value to the customer. Products are more than just tangible objects but also inclusive of service features, design, performance quality, brand name and packaging. A product’s quality has a significant impact towards the product’s or service’s performance. Thus, it is linked to a customer’s value and satisfaction (Kotler and Armstrong, 2010). It is also vital for a marketer’s product positioning tools. Consumers today are demanding high quality goods that save time, energy and often calories.
Consumer preference for food products is constantly changing especially that of livestock products. Consumer demand for new products is also increasing in Nigeria due to urbanization and increases in per capita income. There are rudimentary indications that demand for improved food quality and safety has also been increasing and that consumers are willing to pay higher prices for such attributes of products( Hossain and Deb .2009). Therefore, there is the need to understand and deliver to the consumer the right quality, variety and safe product that the consumer requires, through effective marketing system (Verbeke, 2006).
The overall ruler and coordinator of marketing activities in any private enterprise is the consumer. The goal of the food system is to satisfy consumers. Food marketing firms serve as means to this ultimate goal. Failure to recognize the primacy of consumer preferences in the economic system has resulted in the downfall of many firms, and even entire industries (Grunert, 2005). The notion that all business and marketing activities are directed toward the satisfaction of consumers is called the doctrine of consumer sovereignty. The statement, “the consumer is king”, illustrates this doctrine. Consumers exercise their sovereignty over the food industry by their Naira voting, rewarding firms and activities that please them and withholding approval from others. The doctrine of consumer sovereignty is, simultaneously, a partial description and an economic prescription for the food industry. Consumer preferences and naira votes exert powerful influence on food producers and marketing firms (Kingsley 2001).
The rationale for placing the consumer at the centre of food industry decisions is that there is no other acceptable judge of these decisions. The phrase, de gustibus non est disputand um (what is pleasing is not disputable) applies here. Consumers are the only ones with insight into their own preferences and values. It is simply unacceptable for others – nutritionists, food scientist, farmers, or anyone else to decide what is pleasing to consumers. Of course, one can hope that consumers’ food choices are rational and in the public interest, and one might even attempt to educate the consumer to make “wise” buying decisions. But, when all is said and done, the final success of food production and marketing decisions hinges on consumer choices, no matter how rational, ill-founded, or unfortunate the decision of the consumer may be (Verbeke, 2000).
Today there is an increasing demand for healthy and nutritious products in Nigeria as consequence of consumers being better educated and more demanding, which leads to a need for new products and a more differentiated food product assortment (Lineman, Meerdink, Meulenberg, and Jongen, 1999). A product’s quality has a significant impact towards the product’s or service performance. Thus is linked to customer’s value and satisfaction (Kotler and Armstrong, 2010). In fact, consumers want high quality products that also deliver specific benefits in terms of health, safety and environmental quality (Verbeke, 2000).
1.2 Statement of the Problem
Demand for animal products has been increasing rapidly in Nigeria as in other developing countries, propelled by income and population growth and urbanization (Grunert, 2005) Although nearly 67.98% of the population live below the poverty line, reasonable good economic growth during the past few years has also created an expanding middle and high income population, especially in urban areas where dietary patterns have been changing rapidly toward higher levels of consumption of high value products like milk, meat, eggs, fish, fruits and vegetables (Adejobi, 2004). Also, demand for reliable quality, food safety and scale of delivery has also been increasing in the urban areas and that consumers were willing to pay higher prices for such attributes of products (Hossain et al., 2009). However, there is little empirical evidence on the criteria and indicators used in their buying decisions, or that suppliers use in differentiating products to promote sales, or the extent to which consumers are willing to pay for such attributes. This is more so in the case of products in the informal market (International Livestock Research Institute [ILRI], 2010).
One of the primary objectives of any company marketing activities is to influence customers to select its product or service instead of other merchandise when they enter into the market place, but the challenge that marketers face today is lack of understanding of the reasons that underscore the behaviour of buyer so that they can do better job of planning, developing, pricing promoting and distributing products to consumers (Aromolaran, 2004). Despite the importance attached to understanding of the role of the consumers in the development of effective marketing policy, it is somewhat surprising that so little is known about his behaviour (Blaylock, Smallwood, Kassel, Variyam, & Aldrich, 1999). Communication between producers and consumers has become strained in many cases. Livestock producers have spent decades aiming to increase efficiencies, yet overtime are often challenged, and even criticized, by consumers who are increasingly unfamiliar with realities of modern – day livestock products (Casewell & Mojduszka, 1996). This breach in communication between the marketers and the consumers, which is attributed to the complexity of understanding the complex attitude of the consumers relating to his physiological, socio-psychological and economic value of food has hindered market development.
Uniform food quality grades and standards can potentially, contribute to both operational and pricing efficiency in food industry. In Nigeria there are no official standards for traditional dairy products and for meat or live animals in traditional or informal markets (Edmeades, 2006). In the absence of adequate officially defined grades, standards and quality characteristics and in the absence of mechanisms for assuring those standards in the country, local standards are appearing in some situations both in formal and informal markets. However, an understanding of the nature of products and their quality and safety attributes that consumers prefer and are willing to pay for is essential for market actors and producers to respond to those preferences. According to Edmeades (2006), the attributes of goods traded in the markets are integral parts of market price determination. He cited Lancaster (1966) and Ladd and Survanaunt (1976), who postulated that the attributes of goods rather than the goods themselves were what characterize firms’ production behaviour. This, in essence, is the Lancaster’s model of consumption theory which regards the properties of a good and not the good itself as the objects of utility of consumers and producers of differentiated products (Rosen, 1974). Today producers and marketers are faced with the problem of identifying which livestock product’s properties most appeal to consumers. Consumer’s sovereignty and efficient utility conflicts are at the heart of consumers concerns with the modern food industry (Hussain, 2009). The food marketing sector is increasingly merchandise oriented, as can be seen in the emphasis on new products, packaging and advertising agencies. Consumers are searching for the appropriate environment for providing the necessary freedom and incentive to develop new products and market programme, and for the regulatory climate necessary to insure that these efforts are in the public interests (International Livestock Research Institute [ILRI], 2002).
The satisfaction of social and psychological consumers’ needs is increasingly driving the products development process, owing mainly to changes in consumption patterns of the population and the optimization of physiological needs (Aromolara, 2004). In high income countries, a complete set of factors has changed consumer buying patterns (Trudeau, Kristal, and Patterson 1998). Changes in demographic and socio cultural variables, consumer attitudes and the development of new lifestyles define the consumer preference for food. Added to these, in recent years consumer have lost confidence in relation to quality of food products, as a result of numerous scandals and crises which have affected the food industry (ILRI, 2002).
Consumer movements have also affected the food industry in many ways. Information programmes such as unit pricing, truth-in-packaging, nutritional labeling, open code dating and the like, illustrate the activist role consumers are assuming in the market place. Similarly, in the area of food safety, nutrition grades and standards, and wholesomeness. Consumers are also becoming involved in farm policies such as import – export policy, price and income supports, and rural development (Grunert, 2005).
In recent decades, measuring consumer preference for goods and services has been a significant challenge for both academic and practitioners in public and private context. People often want to know what other people think. Marketing departments want to know consumer preferences and the general public wants to know what others think about political, social, health and safety issues (Islam, Khan, & Rehman, 2009). With increase in consumer purchasing power, supported by multiple and flexible financial schemes in Nigeria, consumers find themselves surrounded with many options to choose. Changes in the competitive environment and increasing consumers’ expectations regarding product quality and safety are driving livestock products producers to place a greater emphasis on understanding customers’ attitude and behaviour in order to maintain and grow market share and profitability. However, quantitative evidence on the nature and extent of demand for specific quality and safety attributes are scarce. This is more so in the case of products in the informal markets (Jabba, 2010). Analyzing customers’ preferences for livestock products in Nigeria may be a good pointer to realize these enterprise objectives and thus increase the demand for livestock products and also, provide a better avenue to develop a better understanding of consumer preferences for livestock products in Nigeria.
1.3 Objectives of the Study
The broad objective of the study was to analyze consumer preferences and demand for livestock products in Kano Metropolis. The specific objectives were to:
- identify market segment based on consumers preferences, behaviour, attitudes, and lifestyle in the study area;
- analyze the nature of preferences for livestock products in relation to quality criteria among household consumer;
- determine the effects of livestock products attributes on consumer preferences and price;
- assess the nature of demand for different livestock products within the household budget; and
- describe the general problems militating against livestock products Preferences.
1.4 Hypotheses of the Study
The following null hypotheses guided the study:
Ho1 Lifestyle, belief and attitudes have no influence on consumer preference for livestock products
Ho2 Socio-economic factors (gender, age, educational status and family size) have no influence on livestock products consumption; and
Ho3 There is no relationship between the quality and safety attributes of livestock products and consumer preference and price.
1.5 Justification of the Study
The study of consumer preference is not only justified, but was of immense significance in providing information that will permit the implementation of an efficient and effective strategic marketing plan for traditional food products. The study would provide useful and dependable information to marketing managers and practitioners to plan and modify demand by altering product characteristics, advertising appeals, and other aspects of marketing strategy.
Result of this study will also provide a meaningful guide to government and other marketing agencies that are responsible for developing agribusiness entrepreneurship capacity through livestock farming and marketing for sustainable income generation and enterprise development. Findings will also be important in refining official standards on quality and safety for regulatory purposes based on local empirical information rather those hypothetical western norms which are sometimes used but cannot be enforced and have no relevance for the country. Finally to researchers and students alike, this study will serve as reference material and a basis for further studies especially in the area of consumer behaviour.
1.6 Limitations of the Study
The researcher experienced a negative attitude from respondents with regards to the completion of the questionnaires, especially where personal and confidential information had to be given. A lack of interest was also a problem in certain parts of the questionnaire that took long to complete. Respondent struggled at first to complete the questions, and needed a lot of help and explanation because they did not have a lot of experience in completing questionnaires. Language problems were also experienced, as most of the respondent did not always have the necessary understanding of the English language and were afraid of making mistakes.
Again, access to information generally is problematic in public and private establishments in the country. They regard information relating to their personal life and establishments as sacrosanct. Records if kept were either incomplete or not kept in a systematic way, often publications do not come on regular basis sometimes in two or more years arrears and this affect the currency of research findings. There was observed apathy and general indifference of the public to questionnaire and interview in terms of objectivity and sincerity which most often jeopardize the result of research, but these limitations were overcome by the use of trained enumerators in collecting data on household characteristics, preference ranking for various dairy and meat products according to alternative use of the product as well as attributes of the products in the study area.
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