MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 1 Standardization and Grading Standards, grades, and regulations Indications of food quality Content and labeling requirements Grading

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 2 Indicators of Food Quality GOVERNMENT REGULATIONS BRANDING INGREDIENT LIST PERCEIVED PRODUCT QUALITY RETAILER ENDORSEMENT GOVERNMENT FOOD NAMING CRITERIA PACKAGING FEDERAL, STATE, REGIONAL, OR TRADE GRADING

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 3 Food Standards Regulations (e.g., additives) Sanitation standards Labeling Product qualification requirements: criteria that products must meet in order to use a food term—e.g., –Pizza –Mayonnaise Specifications for Government purchases

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 4 Some Labeling Examples Fat content –Framing: “80% lean” sounds leaner than “20% fat” –Possible new category of “trans fatty acids” Calorie content Carbohydrate –“Net” or “impact” carbs Fortification (e.g., Vitamin C)

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 5 Some Content Standards Examples Beef stew Chili con carne Hamburger, ground beef Pizza with sausage Chicken soup

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 6 Grading Dividing disparate products within a product category into uniform sub-categories—e.g., –Butter: AA, A, B C –Eggs: AA, A, B –Beef: USDA Prime, USDA Choice, USDA Select, USDA Standard –Potatoes: U.S. Extra No. 1, U.S. No. 1 Benefits –Consumer information –Clear commercial transactions –Futures contracts –Poolability of products in shipments 235 Federal grades

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 7 Milk Grades Source:

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 8 Types of Standards Mandatory –Interstate vs. intrastate transactions Permissive (recommendations) Tentative

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 9 Grading: Requirements and Standards Use of Federal grading is usually not required –Tradition –Cost (under some circumstances) –Redundancy with other grading standards –Possible inhibition of innovation Criteria: –Importance of characteristics to consumers –Accurate and uniform measurement –Meaningful terminology that clearly describes –Meaningful distribution of product between grades –Reasonable cost

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 10 Problems and Implementation Harvest years may yield varying proportions of different grades Perishabililty and its impact on grades Inspection requirements may not be incorporated into grading Conflicting interests of retail chain and meat packers Lack of consumer awareness of grades and criteria

MKTG 442 STANDARDIZATION AND GRADING Lars Perner, Instructor 11 Limitations on Claims that Can Be Made “Light:” –Fewer than 50% of calories from fat –50% reduction in sodium content if applicable –Calories reduced by at least 1/3 “Fat free:” >0.5 grams of fat per reference unit “Low Fat”