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MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 1
FOOD CONSUMPTION, MANUFACTURING, AND MARKETING
Food consumption patterns
Demographics and trends
International comparisons
Issues in food markets
Food marketing choices
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 2
Food Consumption Patterns Increasing
consumption—so far… 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
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 3
Possible Effects of Adkins Diet
Increases: Beef Butter Cream Nuts
Declining Sweetener Frozen potato
product Fresh fruit,
vegetables
Low fat diets Increases
Chicken Fish Low fat dairy Fruit Vegetables
Decreases Beef, lamb Eggs Sweetened
products
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 4
Definition
Demographics: the description of a population in terms its size, distribution, and structure
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 5
Issues in Demographics
Population size: number of
individuals distribution
across a geographic region
rural, urban, or suburban
Structure age economic
stratification occupational
distribution status/social class
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 6
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 7
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 8
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
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 9
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 10
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 11
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 12
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 13
Comparative Food Spending Percentages, 1994
Philippines: 56% India: 51% Mexico: 25%
(modest incomes, relatively high prices)
South Africa: 28% Japan: 18% (very
expensive food but high incomes)
West Germany: 17%
Denmark: 15% (25% 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%
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 14
Some Common U.S. Food Outlets
Supermarkets Neighborhood food
stores Convenience stores Drug and discount
stores Gas stations Vending machines Food stands, street
vendors
Restaurants Cafeterias Specialty food stores Door-to-door sales Online and catalog
orders
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 15
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 16
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
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 17
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 18
Away-From-Home and Prepared Foods
48% of food expenditures on items eaten away from home (1999)
Large part of restaurant meals is for non-food costs Labor Ambiance Facilities
Increase in take-out foods from restaurants and stores
MKTG 442 FOOD CONSUMPTION, MANUFACTURING, AND MARKETING Lars Perner, Instructor 19
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 20
Some Food Marketing Issues
Branding Innovation
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 21
The Four Ps of Marketing Product
Differentiation from competitors
“Me too” products tend to be unsuccessful
Pricing Price positioning of
the brand Low Value High (prestige)
Consistency of pricing
Distribution Options available Intensive vs. selective
distribution Promotion
Advertising for brand building
Some other options: Samples Price promotion Coupons Trade promotion