FOOD MARKETING & ADDING VALUE

What caused the development of society as we know it?

historically we had a food surplus, then realised that not everyone needed to be producing food so people developed their own specialisations which they exchanged for food

What doe it mean that food is an inferior industry?

satiety causes food to be an inferior industry because once people are full they don’t want to eat more so we have to add value to the calories we are selling

What are the 3 ways to sell food?

product-product competition: replacing something else already on the market, adding value: make a product more desirable without increasing its calories, exporting products however, this makes NZ vulnerable if something changes in the international market

What 2 innovations made a huge impact in food distribution systems?

the internal combustion engine allowing small amounts of food to be transported easier and the electric motor allowing for food to be refrigerated, resulted in a switch from weekly markets and need for food to reach consumers from producers fast to our current food distribution system

Where is value added to a product?

80% value added in the channel of distribution which are usually branched to make the most of the product

Why is it difficult to do bottom-top or pasture to plate marketing?

there are so many participants in the channel of distribution and participants are often unaware of other parts of the channel

What is the circular distribution between households and companies?

households provide capital and labour with what the company can do what they like and in return provide wages, dividends, good and services

What is the free-market economy and what does it have to do with companies?

support a framework of law that allows companies to exist as ‘virtual’ entities

What are companies?

allow humans who are naturally greedy/selfish, stupid and shortsighted to invest and act cooperatively toward a common goal

What is the structure of a company and why is this usually scucessful?

investors combine and appoint a board and a chair to lead the board, a CEO who employs everyone else to communicate with suppliers and customers, CEO answers to the board who answers to shareholders and prevents shareholders from destroying the company

How does money run in a company?

company will incur costs and gain revenue, some of this will go towards shareholders as dividends and the rest ‘retained earnings’ will be applied back to the company for growth which drives innovation

Why do households invest capital in companies?

if boards can convince them they will make more money and then shareholders may sacrifice extra dividends now for more capital gain later called the balance of greed

What does the balance of greed rely on?

ability to buy or sell shares at any time, equal values of shares, and no conflicts of interest e.g. being a shareholder and a supplier

What are producer cooperatives and the issue with them?

non-corporate food business structures meaning producers are also shareholders which doesn’t meet the balance of greed requirements so producer cooperatives often fail

What is consumer value?

the benefit a product provides by meeting a consumer need

What can processing a product do?

always adds cost and sometimes adds value if it can address consumer needs

What is the primary role of food marketers to ensure product success?

identify need/value opportunities, direct development of an offer that addresses needs and deliver offer to consumer

What proportion of innovations fail and why?

90% fail due to insufficient research

What is another reason apart from not addressing consumer need that products may fail?

how product will work within channel of distribution

What are the 10 factors food marketers must consider for products?

manufacture, storage, distribution e.g. packaging size vs shipping contain size, storage, display, sale e.g. effect of changing label, storage, preparation, consumption, disposal

What are the 4 big assumptions with any food innovation and how many of the 13 questions do they need to test?

there is a specific consumer need to be addressed by the product (3 questions), the need is big enough to generate the revenue we require (2 questions), our product is able to address the need (4 questions), the need i accessible to us via selected channels (3 questions).

What research methods should businesses begin with?

trade interviews and legal opinion, consumer focus groups and prototyping, consumer choice tests (tests willingness to pay)