Download 1101Lecture 7 powerpoint

Note
Please use only your CBU emails when
communicating with me.
Please check your CBU emails frequently
including for messages from me.
•Suggestion box
•Student help –tutors- I am your best tutor
•Mobile poll
•Poll – email
•94/80 wc
•BMI calc
•ADHD drugs and wt loss/ appetite suppressionsome ADHD drugs cause wt loss and appetite
suppression –also females may be more
responsive in terms of weight loss and appetite
suppression- a mixed bag of results
CORPORATE ECONOMICS
OF NUTRITION
Remember
Food is huge business- over 7 billion customers
worldwide and something that people cannot go
without-in short a very good business to be in
Much of the food market is controlled by very
large corporations whose main interest is making
profits and keeping shareholders interested in the
firm
To keep maintain or increase market share
(penetration) of the market a firm needs:
a)
the products people need and want
b)
to get the marketing message out to
consumers about:
i) product price
ii) product benefits to the
consumer
iii) why their product is better
than competitors
To keep maintain or increase market share
(penetration) of the market a firm needs:
c) to get message out about why the firm is a good
investment:
i) good sustainable growth (double digit
annually)
ii) profits increase (double digit annually)
How is all this accomplished ?
Products people need and want
difference between need and want
People need simple food that will meet their
nutrient requirements obtained by following
Canada’s Food guide-
However, the corporate world has convinced us
that we need much more than the simplistic
approach which in any case would not satisfy
the needs of the corporation for sustainable
growth and profits. So the corporate world
spends billions on:
Getting the marketing message out to consumers
-price advertising- methodstelevision, radio,
print, internet, stores
-demonstrating good value for the dollar
Marketing-Research and Development
-marketing
-finding out what customers need, want or
what they will accept if they are told they
want it.
-finding out how to best let customers know
a firm has what the customer needs, wants
or to accept something if they are told they
want it (how to convince them they need
something-suggestions?).
Marketing-Research and Development
-product development –benefits to consumer
-GMO’S
-now genetically modified foods
-disease, insect, herbicide
and drought resistance advantages? For who?
- future-new foods for
marketing
-Easy prep foods-e.g.- t.v. dinners
-No prep foods-just open and munch
Getting the message out to consumers:
product advertising
-product benefits-methods as
with price advertising
-benefits-health, taste,
flavour, texture,
smell, appearance
-product advertising in store
includes food labelling
Getting the message out to consumers:
why their product is better than competitors
-science-determination of nutrient content
and health benefits (indeed the risks of their
competitors’ products)
-surveys- asking people what they like (and
advertising that) or don’t like about a product and
then using science in an attempt to fix the
problem.
c) Getting the message out to shareholders or
potential shareholders:
Money from shareholders needed to run the
operation –
Otherwise have to borrow from banks
and that costs the company in terms of interest
whether things go badly or well
Therefore shareholders are a better way to go:
No interest to pay if things go badly
If things go well, the dividends paid to
shareholders and increased share price
payouts are less than interest payments
Get shareholders by showing them that the
company has:
•Good sustainable growth(double digit)
•Profits (double digit) after inflation
Consequences of the almighty dollar
(corporations) running the food show:
World hunger-even during the Ethiopian famine
of the 1980’s they were exporting beans to
Europe
Some individuals decry the decline of the small
family farm and its replacement with the huge
corporate megafarm. Is this is a consequence
of economies of scale?
If the minimum efficient scale for agricultural
production is sufficiently high, small, family
farms simply cannot produce enough to be
competitive with large, corporate farms. To the
extent that the replacement of family farms with
corporate farms is a response to issues of scale
economies, then, economically speaking, it is a
good (read “efficient”) thing.
Efficiency means profitability and sustainable
growth- things the shareholder needs and wants
and remember the company needs and wants
shareholders
Thus large firms are capable of largely
controlling production, and hence
processing and hence shipping and
hence sale of food and their job is get
people to eat more not less
(consequences).
Private farmers are sometimes barely
making it-squeezed by the corporate
main players
Devastation of ecology, social and
economic structures:
Corporate farming takes economic control
away from local people (social structures
also suffer as they are tied to and affected
by poverty) and by its very nature does not
respect the environment (efficiency is the
name of the game here)
Control of prices- for example
demand surging ahead of supply-prices
soar –consequences?
Nutritionally- people are getting fatter
through advertising and fast food
(including vending machines)-current
suggestions of lawsuit in USA -issue of
physical activity