FOOD MARKETING

Consumer Psychologist Facebook Forum

Lars Perner, Ph.D.
Assistant Professor of Clinical Marketing
Department of Marketing
Marshall School of Business
University of Southern California
Los Angeles, CA 90089-0443, USA
(213) 740-7127

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Food Market Development

Background . Market development involves creating or expanding a market for new or existing products and/or increasing the value of these products. Few consumers today are aware of the prickly pear, however, but farmers who grow this cactus plant would like to market it as a way to decrease “bad,” low-density cholesterol without reducing “good,” high density cholesterol levels.

Strategies, objectives, and the hierarchy of effects . The promotional activities needed for a given product will depend on factors such as its current stage in the product life cycle. For prickly pear growers, simply getting more people to know that their product exists will be a challenge. Once more people know, a significant challenge is going to get more people to actually try the product. This may be difficult to accomplish because of the high cost of the product and the vast number of choices of other products that consumers can consume. There is simply not enough time or money to try all. If a product category catches on, emphasis may then need to switch to brand differentiation and the firm may need to work on getting consumers to hold favorable beliefs about their brand. In later stages of the product life cycle, where most consumers’ opinions have largely been set, temporary sales increases, usually through price promotions, may be the only realistic objective.

The strategic planning process . In order to make good investment decisions with respect to how much to spend on marketing and how to allocate this spending among opportunities available (e.g., advertising and price promotions), it is useful to go through a strategic planning process. This process involves several steps, but these steps are not rigidly separated and it may be necessary to return to previous stages as new considerations come up.

Setting marketing objectives. The first step involves setting the most appropriate marketing objectives. These objectives need to be reasonably specific and manageable; thus, merely saying that the goal is to maximize profit is not enough. How will this be done? It is also important to make priorities. A firm might like to reduce costs, improve quality, increase distribution channels, increase awareness, and improve consumer percpetion of the product at the same time. However, some of these objectives, such as reducing cost and improving quality at the same time, may not be compatible. The firm may also not have the resources to pursue all the other objectives at the same time. Therefore, the firm must focus on where resources will be used most effectively. Generically, some objectives may be:

Setting strategy. Once objectives have been set, a strategy for formulating these objectives can be made. Improving quality, for example, might be achieved either by increased research and development, the use of higher quality materials, or by investing in new manufacturing technology. The most appropriate choice will depend on factors such as cost and effectiveness, but may also depend on risk. There may be a new technology that, if it can be perfected, would represent a large breakthrough but also carries a risk that it will not work. A larger firm may be able to shoulder such a s risk but for a smaller firm, the risk may be prohibitive. Note that as a strategy is considered and potential complicatons arise, it may be necessary to reassess appropriate objectives.

Several criteria may be useful in evaluating a strategy. Some strategies may seem brilliant may, under stricter analysis, may be recognized as unrealistic. Strategies that take advantage of a firm’s special abilities (e.g., patents, technology, or human resources) and are consistent with consumer perception of the brand are also more likely to be successful.

A number of promotional tools are available—e.g., advertising, premiums, public relations, or distribution enhancement. For a review of this topic, see http://www.consumerpsychologist.com/Introduction.html .

Tactics and implementation. Once a plan for the strategy has been made, decisions must be made on implementation. If a decision as been made to position a product as a premium brand through advertising, specific ads must be developed and tested and appropriate media and advertising schedules should be resolved. When implementation begins, results need to be monitored. Some problems may be addressed with fine-tuning, but if the campaign does not seem to produce expected results, the strategy may need to be reconsidered.

In the longter term, consumer response—such as purchase rates and beliefs held about the brand—can be assessed in more detail. The next test is then whether this consumer response—such as improved attitudes—actually results in increased market share or higher profits. Even a successful strategy must be frequently re-evaluated to address changing market conditions such as change in competitor strategies, costs of materials, or changes in consumer tastes.

Consumer adoption of new food products. Some food products have great potential for sales growth through expansion of the customer base. One way to spread new foods is through massive advertising. This strategy appears to have been used in marketing the Hot Pockets® convenience products.

Many foods also spread as some groups of consumers “imitate” others they see consuming them, and some are encouraged to try new foods based on word-of-mouth communication. For a discussion of the diffusion of innovation, see http://www.consumerpsychologist.com/cb_Diffusion_of_Innovation.html ).

Levels of market development . Development efforts may center at several different levels. Producers of a commodity—e.g., Florida orange growers—may want to promote their food, hoping that preference will be developed relative to other food categories (e.g., apple juice or sodas) or to similar products from other regions. Alternatively, development efforts can focus on a branded product (e.g., Diet Coke ®), a brand (e.g., all Coca Cola ® branded products), or all brands owned by the same company (e.g., all beverages owned by the Coca Cola ® Company). More targeted development efforts may provide more specific results for a given product.