Food marketing
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Food marketing brings together the food producer and the consumer through a chain of marketing activities.[1] The marketing of even a single food product can be a complicated process involving many producers and companies. For example, fifty-six companies are involved in making one can of chicken noodle soup. These businesses include not only chicken and vegetable processors but also the companies that transport the ingredients and those who print labels and manufacture cans. The food marketing system is the largest direct and indirect nongovernment employer in the United States.
Contents
History
There are three historical phases of food marketing: the fragmentation phase (before 1870–1880), the unification phase (1880–1950), and the segmentation phase (1950 and later). 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. 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. In the segmentation phase (1950 and later) 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.[2]
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.[3] 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.
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 (such as chocolate strawberry) 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 (through advertising and other forms of promotion) 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 (NutraSweet) 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.
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.
Promotion
Promoting 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.
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 outlet (e.g., the end of an aisle; the top, bottom, or middle shelf; in a special display case, etc.).
The food marketing system in the United States is an amazingly 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.
See also
- Adolescents and food marketing
- Agricultural marketing
- Agricultural value chain
- Alcohol advertising
- Fish marketing
- Shrimp marketing
- Wholesale marketing of food
References
- ↑ "Food Marketing," in Oxford Encyclopedia of American Food and Drink, Brian Wansink, New York: Oxford University Press, 501-503.
- ↑ The Food Industry: Lifeline of America. 2nd ed. (1990) E. C. Hampe, E. C., and M. Wittenbery, New York: McGraw-Hill.
- ↑ Marketing Nutrition: Soy Functional Foods, Biotechnology, and Obesity, (2007), Brian Wansink, Champaign, IL: University of Illinois Press.
