“The Marketing Credo: Find Wants and Fill Them” Chapter 5 – Food Processing and Manufacturing

Food Marketing Management Strategies The Four “P’s”  P roduct Strategies  P ricing Strategies  Distribution Strategies (Place)  P romotional Strategies

Product Strategies “The goal of food processing is to transform and undifferentiated commodity into a differentiated, branded, high value-added profitable food product”

Product Strategies (continued)  “Branding is probably the most important product strategy of food processors.”  40% of U.S. Food products are branded.  Incorporate “built-in maid service” aspects.

Product Strategies (continued)  Innovations in Food Manufacturing New marketing methods and techniques that improve efficiency New products or services that add value New business organizations such as food cooperatives

Product Strategies (continued)  Product Life Cycle Substantial research and marketing costs Initial high profitability Attracts imitators Time for a new innovation Exceptions: Jello, Campbell’s Tomato Soup

Pricing Strategies  $1.99  2 for 1 sales  Higher price means higher quality?

Distribution Strategies  Conventional Grocery  Nonfood Stores (Menards)  Foodservice  Vending Machines

Distribution Strategies  Mail, Catalogs, & Internet  Home Delivery  Door-to-door fund raisers

Promotional Strategies  Goal: Remind, inform, or persuade.  Theme: Price, quality, etc.  Type: Advertisement, sale, etc.  Media: Print, broadcast, direct mail, point of purchase, etc.  Targeted to: User, buyer, influencer.

Promotional Strategies (continued)  Food manufactures’ are among the nations leading advertising spending 3% of their income on the advertising dollar.  Food processors provide consumers with choices of 230,000 different packaged products.

Mini Case 5 – Page 89 “Soymilk”

Food Manufacturing  Accounts for 1% of U.S employment  14,000 companies operating 21,000 plants  #1 – Beef and Pork Processing #2 – Soft Drinks #3 – Poultry #4 - Dairy

Food Manufacturing (continued)  Two Sectors Dominant Core (Nestle, Phillip Morris/Kraft) Competitive Fringe (Schawn’s)

Where to Locate?  Which is cheaper to transport, raw or processed product? Wheat vs. Bread  Which is more perishable, raw or processed Cheese vs. Milk

Food Science Impacts  Corn Sweeteners  Dehydration  Ultra Pasteurization  Meat Irradiation

Processor Management Problems  Keeping plants at full capacity Contracting  Investments in new plants and equipment Long term pay off  Labor problems Robotics

Discussion Questions  Why are many food companies buying non- food companies and vice-versa?  How does raw product transportation costs, final transport costs, and the economies of plant size affect the size, number, and location of food processing plants?  The law of market areas states that several competing firms would create a honeycomb structure, each with their own market area. Why is this not true in real life?