Food marketing
Food marketing is the marketing of food products. It brings together the food producer and the consumer through a chain of marketing activities.
Background
Pomeranz & Adler, 2015, defines food marketing as a chain of marketing activities that takes place within the food system between a food organisation and the consumer. This has the potential to be a complicated procedure, as there are many processes that are used prior to the sale the food product. These include food processing, wholesaling, retailing, food service and transport. Due to these many processes, a multitude of organisations have to be involved in the sale of one food product. For example, there are approximately fifty-six organisations are involved in the making of one can of chicken noodle soup. These organisations not only include the processors who make the ingredients for the product, but also involve the companies who manufacture the cans, print the labels and transport the product. Therefore, on a global scale, the food marketing industry is one of the largest direct and indirect employers.For Schaffner & Schroder, 1998, food marketing is the act of communicating to the consumer through a range of marketing techniques in order to add value to a food product and persuade the consumer to purchase. This includes all activities that occur in between the completion of a product through to the purchasing process of consumers. Food marketing systems differ worldwide due to the level of development in the particular country, economically and technologically. Understanding and interpreting a particular countries food marketing techniques also requires taking into account the socio-economic, cultural, legal-political and technological environment of that country.
History
There are three historical phases of food marketing: the fragmentation phase, the unification phase, and the segmentation phase.United States
Fragmentation phase (pre-1870–1880)
In the fragmentation phase, the United States was divided into numerous geographic fragments because transporting food was expensive, leaving most production, distribution, and selling locally based.Unification phase (1880–1950)
In the unification phase, distribution was made possible by railroads, coordination of sales forces was made possible by the telegraph and telephone, and product consistency was made possible by advances in manufacturing. This new distribution system was led by meat processors such as Armour and Swift in midwestern cities and by companies such as Heinz, Quaker Oats, Campbell Soup, and Coca-Cola, which sold their brands nationally. Advertising in print media and direct marketing through demonstrations at stores and public venues were among the prime marketing tools. The initial Crisco campaign, in 1911, was an example.Segmentation phase (1950 to current)
In the segmentation phase radio, television and internet advertising made it possible for a wider range of competing products to focus on different benefits and images and thus appeal to different demographic and psychographic markets. Distribution via the new national road system strengthened national brands.Marketing mix
The four components of food marketing are often called the "four Ps" of the marketing mix because they relate to product, price, promotion, and place. One reason food manufacturers receive the largest percentage of the retail food dollar is that they provide the most differentiating, value-added service. The money that manufacturers invest in developing, pricing, promotion, and placing their products helps differentiate a food product on the basis of both quality and brand-name recognition. Overall, the marketing mix can add value to a food organisation's product.Product
In deciding what type of new food products a consumer would most prefer, a manufacturer can either try to develop a new food product or try to modify or extend an existing food. For example, a sweet, flavored yogurt drink would be a new product, but milk in a new flavor would be an extension of an existing product. There are three steps to both developing and extending: generate ideas, screen ideas for feasibility, and test ideas for appeal. Only after these steps will a food product make it to national market. Of one hundred new food product ideas that are considered, only six make it to a supermarket shelf.The food industry faces numerous marketing decisions. Money can be invested in brand building to increase either quantity demanded or the price consumers are willing to pay for a product. Coca-Cola, for example, spends a great deal of money both on perfecting its formula and on promoting the brand. This allows Coke to charge more for its product than can makers of regional and smaller brands.
Manufacturers may be able to leverage their existing brand names by developing new product lines. For example, Heinz started out as a brand for pickles but branched out into ketchup. Some brand extensions may involve a risk of damage to the original brand if the quality is not good enough. Coca-Cola, for example, refused to apply the Coke name to a diet drink back when artificial sweeteners had a significantly less attractive taste. Coke created Tab Cola, but only when aspartame was approved for use in soft drinks did Coca-Cola come out with a Diet Coke.
Manufacturers that have invested a great deal of money in brands may have developed a certain level of consumer brand loyalty—that is, a tendency for consumers to continue to buy a preferred brand even when an attractive offer is made by competitors. For loyalty to be present, it is not enough to merely observe that the consumer buys the same brand consistently. The consumer, to be brand loyal, must be able to actively resist promotional efforts by competitors. A brand loyal consumer will continue to buy the preferred brand even if a competing product is improved, offers a price promotion or premium, or receives preferred display space. Some consumers have multi-brand loyalty. Here, a consumer switches between a few preferred brands. The consumer may either alternate for variety or may, as a rule of thumb, buy whichever one of the preferred brands is on sale. This consumer, however, would not switch to other brands on sale. Brand loyalty is, of course, a matter of degree. Some consumers will not switch for a moderate discount, but would switch for a large one or will occasionally buy another brand for convenience or variety.
The product of the marketing mix refers to the goods and/or services that the organisation will offer to the consumer. An organisation can achieve this by either creating a new food product, or by modifying or improving an existing food product. For example, an organic almond yoghurt drink would be considered a new product, whereas a chocolate flavoured milk drink would be an extension of an existing product. The three steps to develop and extend a food product include generating ideas, analysing the ideas for feasibility and testing ideas for demand. Once these steps have successfully been completed, the food product can then be manufactured to the food market.
Price
In profitably pricing the food, the manufacturer must keep in mind that the retailer adds approximately 50 percent to the price of a wholesale product. For example, a frozen food sold in a retail store for $4.50 generates an income of $3.00 for the manufacturer. This money has to pay for the cost of producing, packaging, shipping, storing, and selling the product.Price encompasses the amount of money paid by the consumer in order to purchase the food product. When pricing the food products, the manufacturer must bear in mind that the retailer will add a particular percentage to the price on the wholesale product. This percentage amount differs globally. The percentage is used to pay for the cost of producing, packaging, shipping, storing and selling the food product. For example, the purchasing of a food product in a supermarket selling for $3.50 generates an income of $2.20 for the manufacturer.
Promotion
a food to consumers is done out of store, in store, and on package. Advertisements on television and in magazines are attempts to persuade consumers to think favorably about a product, so that they go to the store to purchase the product. In addition to advertising, promotions can also include Sunday newspaper ads that offer coupons such as cents-off and buy-one-get-one-free offers.In the 1950s, entrepreneur Frieda Rapoport Caplan revolutionized the fresh produce industry by introducing packaging and labeling of fresh fruits and vegetables.
Place
Place refers to the distribution and warehousing efforts necessary to move a food from the manufacturer to a location where a consumer can buy it. It can also refer to where the product is located in a retail outletThe food marketing system in the United States is a flexible one. Consumer focus helps marketers anticipate the demands of consumers, and production focus helps them respond to changes in the market. The result is a system that meets and influences the ever-changing demands of consumers.
Place refers to the activities that organisations go about in order to make its food product available to its consumers. This encompasses the distribution necessary to move a food product from the manufacturer to a location where it can be purchased by the consumer. Product location in a store is also a definition of place in the marketing mix. For example, a particular place in an aisle, a shelf or a display in a supermarket.