Download food consumption, manufacturing, and marketing

FOOD CONSUMPTION,
MANUFACTURING, AND MARKETING
 Food consumption
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MKTG 442
patterns
Demographics and
trends
International
comparisons
Issues in food markets
Food marketing choices
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Food Consumption Patterns
 Increasing
consumption—so far…
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MKTG 442
Pork
Chicken
Turkey
Fish
Cheese
Fresh fruit
Frozen vegetables
Flour and cereal
products
Soft drinks
 Declining—so far…
 Beef
 Eggs
 Whole milk
 Sugar
 Coffee
 No evident trend
 Ice cream
 Butter, margarine
 Fruit juices
 Lamb
 Fresh potatoes
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Possible Effects of
 Adkins Diet
 Increases:
 Beef
 Butter
 Cream
 Nuts
 Declining
 Sweetener
 Frozen potato
product
 Fresh fruit,
vegetables
MKTG 442
 Low fat diets
 Increases
 Chicken
 Fish
 Low fat dairy
 Fruit
 Vegetables
 Decreases
 Beef, lamb
 Eggs
 Sweetened products
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Definition
 Demographics: the
description of a
population in terms its
size, distribution, and
structure
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Issues in Demographics
 Population
 size: number of
individuals
 distribution
 across a geographic
region
 rural, urban, or
suburban
MKTG 442
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Structure
 age
 economic
stratification
 occupational
distribution
 status/social class
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Demographics helps
 Understand current
markets--demand for
products explained in
terms of personal
characteristics
 Predict future markets
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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U.S. demographic trends
 Population increasing (due to immigration)
 Increasing average age
 More small households
 Delay in marriage and children
 Fewer children per couple
 High rates of divorce
 Increasing levels of education
 Increasing ethnic diversity
 High rates of female workforce participation;
dependence on dual incomes
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Japanese Demographic and Social
Trends
Zero or negative population growth
Low levels of immigration
Graying population
More one child families
Significant delays in marriage and children
High incomes in nominal terms but lower purchasing power
Prolonged economic stagnation
Intense competition for jobs and colleges
Relatively even income distribution
Low regard for many foreign products, but also some desire for
“mystique.”
 Increasing rates of workforce participation among younger
women
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FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Chinese Population Trends
 Wide variations across geographic regions
 Population growth slowing in most regions
due to “one child policy”  children become
“little emperors”
 Highly cyclical economy with generally high
growth rates; increasing group of affluent
consumers
 Migration toward cities
 China’s entry into WTO may open the way for
agricultural imports
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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German Demographic and Social
Trends
 Shrinking population
 High tax rates put pressure on income
 Trend toward later marriages and fewer
children
 Distrust of immigration
 Imports from other EU countries preferred
 High female workforce participation; dual
income essential
 High levels of welfare and government
programs
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Demographic and Political Trends
in the Middle East
 High birth rates
 Economies heavily dependent on price of oil;
limited economic growth
 Large disparities in income in some areas
 Limited ability to grow food in desert
environments
 Food imports dependent on political
considerations
 Female workforce participation varies
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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U.S. Food Consumption and
Demand
 Typical family spends 9-11% of income on
food
 Decreasing percentage spent with increasing
income, but more absolute dollars spent
(income elasticity <1)
 Immigration has influenced both food
preferences and retail formats
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Comparative Food Spending
Percentages, 1994
 Philippines: 56%
 Denmark: 15% (25%
 India: 51%
 Mexico: 25% (modest
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incomes, relatively high
prices)
 South Africa: 28%
 Japan: 18% (very
expensive food but high
incomes)
 West Germany: 17%
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sales tax!)
France: 15%
Netherlands: 11%
U.K.: 11%
Canada: 10%
Percentages of total
expenditures—includes
non-consumer spending
such as government and
industry. U.S. figure: 7%
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Some Common U.S. Food Outlets
 Supermarkets
 Neighborhood food
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stores
Convenience stores
Drug and discount
stores
Gas stations
Vending machines
Food stands, street
vendors
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Restaurants
Cafeterias
Specialty food stores
Door-to-door sales
Online and catalog
orders
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Some International Characteristics
 Japan: Strong emphasis on neighborhood
stores, vending machines
 Europe: Large food stores are available,
some may deliver; government protection of
smaller retailers
 Developing countries: Food often bought at
open markets
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Some Food Demand Issues
 Income elasticity
 Price elasticity
Normal vs. “inferior”
goods
Cross-price elasticity
“Trading Up” within select
categories
Increased interest in
convenience foods
Conflict between demand
for healthier and “junk”
foods
Unplanned purchases and
consumption
“Functional” foods
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MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Some Functional Foods
 Fortified foods
 “Health” foods
 Cranberry juice
 Green tea
 Soy based foods
 Organic foods
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Away-From-Home and Prepared
Foods
 48% of food expenditures on items eaten
away from home (1999)
 Large part of restaurant meals is for nonfood costs
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Labor
Ambiance
Facilities
 Increase in take-out foods from restaurants
and stores
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Public Food Programs
 Food stamps were
created mostly to
promote demand for
farm products (thus
only American
products)
 Only a limited amount
of food stamp value
goes toward increased
consumption (cash is
diverted elsewhere)
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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Some Food Marketing Issues
 Branding
 Innovation
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Brand extensions and improvements to
existing product categories
New product categories
 Consumer brand loyalty: The ability to resist
promotional efforts of competitors—not
consistent choice of brand
 Multi-brand loyalty
MKTG 442
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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The Four Ps of Marketing
 Product
 Distribution
Differentiation from
competitors
 “Me too” products tend
to be unsuccessful
 Pricing
 Price positioning of the
brand
Options available
 Intensive vs. selective
distribution
 Promotion
 Advertising for brand
building
 Some other options:
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Low
Value
High (prestige)
Consistency of pricing
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Samples
Price promotion
Coupons
Trade promotion
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor
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