Lecture 5: The Food Marketing Channel – Flashcards
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Two major activities of the food marketing system:
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physical; economic
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Physical activity of the food marketing system:
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handling, storage, processing; transportation of raw and finished goods from producers to consumers
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Economic activity of the food marketing system:
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price setting and exchange
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One of the largest US industries
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food and fiber sector
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Marketing is ______: - starts on ____, finishes with ______ - producers provide ____ materials - marketing firms convert to _____ good
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complex - farm; consumers - raw - final
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Why do producers need marketing services? - farm products are _____ and vary in ______ - production is ______ and _______ concentrated - farm products have to be collected, _____, delivered quickly or _____ - _____ activities help accomplish that (processing, storage, transportation)
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- perishable; quality - seasonal; geographically - sorted; stored - physical
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Marketing margin also called the...
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marketing bill
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Marketing margin represents...
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marketing costs
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Marketing adds _____
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value
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The product of marketing is _____
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utility
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Time
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assists availability
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Form
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the raw good into final product
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Place
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transportation
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Possession
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possession of products
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Influences on food industry: - _______ - _______ - _______ - also government, ______, energy, other sectors
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- producers - consumers - marketers - media
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Competing concerns: - consumers: highest ____ at lowest ____ - producers: highest ____ from sale of _____ - marketers: greatest possible _____ - marketing system tries to _____
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- value; price - return; commodities - profits - reconcile
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Processing and manufacturing: - responsible for ____ _____ - processing of ____ products - turn bulky, _____ commodities to storable, ______, appealing food products - the primary purchasers of ___ products
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- form utility - raw - perishable; concentrated - ag
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Structure of food processing: - large processors usually own _____ plants - with _______, _____ companies - most new plants are small _____, ____ products - concentration of ownership is ______
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- several - consolidation; fewer - startups; niche - increasing
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Consolidation leads to greater ______
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efficiency
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Processing operations: - huge investments in ____ and _____ - need to run full-_____, year-round (difficult with wide variation in ____ ______ supply) - possible solutions: expanded _____; contracts that coordinate ______ - increasing ____ costs: switch from people to ______
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- plant; equipment - capacity; farm product - storage; supply - labor; machines
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Buying operations: - processors have great market power at ____ _____ - buy from local suppliers but distribute _____/_____ - no ______ buyers - _______
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- farm level - regionally; nationally - competing - contracting
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Globalization - increased access to foreign markets because of: ______, ______, ______, _____ agreements - rising ____ and ______ travel - consumer preferences more _____ diet
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- information; transportation; technology; trade - incomes; international - diverse
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Global strategy - integrated approach: determine best _____; coordination of ______ across countries; differentiation from global ______ - fastest growing market channel for processors: - most strategies combine ___ with foreign ____ _____
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- location; activities; competitors - international trade - trade; direct investment
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Foreign direct investment: - _____ plants located in foreign countries - advantages over _____ trade
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- processing - international
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Foreign direct investment advantages over international trade: - lower _____ cost - better insight into local consumer ______ and _____ - get around _____ and _____ market restrictions
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- transport - preferences; policies - tariffs; domestic
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Foreign direct investment: - US-owned _____ in foreign countries (sales _____ than exports since 2002) - foreign ______ own plants in the US (______ for US processors at home)
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- plants; greater - processors; competition
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High value exports ____ than bulk exports since 1991
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greater
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High value imports ____ than high value exports since 2002
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greater
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Distribution strategies (sell to): - _____ stores - _____ - _____ - _____ - ___ to ___
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- grocery - restaurants - vending - catalog - door; door
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Wholesalers
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link processors and retailers
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Merchant wholesalers
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buy food from processors; resell to retailers
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Manuf. Sales' Branch Office (MSBO)
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wholesaler owned by processor
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Broker
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hired by retailer to procure food
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Wholesaling trends: - traditional wholesalers face _____ market influence (processors and retailers _____ negotiating) - sector is _____ integrating (concerned that their _____ customers can't compete with big retail; buying ____ stores) - some retailers self-_____
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- shrinking; directly - vertically; independent; retail - distribute
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Wholesaling: - _____ integration expected to continue - ______ expected - ____ negotiations leaving them out
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- vertical - consolidation - direct
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Largest of all retail sectors
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food retailing
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Food retailing: - food expenditures are ___ of all retail sales - most _____ part of food marketing system - employs ___ of food marketing workers - directly serves the final _____ - includes _____ and _____
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- 25% - expensive - 80% - consumer - supermarkets; restaurants
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Traditional grocery stores
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supermarkets
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Nontraditional food retailers
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supercenters; warehouse clubs; drugstores; dollar stores
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Food service
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full service restaurants; fast food restaurants
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Drugstores: - drugs are ____ business - food sales provide higher ____ _____ - offer small range of ____, _____ - customers use the _____ (food items are ______)
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- core - profit margin - food; beverages - pharmacy; convenience
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Dollar stores: - appeal to _____ and ___-income shoppers - products priced at __-__ - groceries from ___-___ of sales - sales growth from new ____, adding _____
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- bargain; low - $1; $2 - 20%; 80% - stores; groceries
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Warehouse clubs: - cater to ____ business, ____/____ income customers - _____ variety of products - groceries in ____ packages - ____ sales
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- small; middle; upper - limited - large - bulk
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Fresh format stores: - specialty stores targeting _____ customer segment - perishables, _____, natural, ____ assortments
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- specific - organic; ethnic
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United Natural Foods
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wholesaler of organic and natural foods
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Supercenters: - offer ____ and non-____ items - prices ____ than ______
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- food; food - lower; supermarkets
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Supercenters have made ______ a major player
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Walmart
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Walmart: - innovative ____ _____ management - steady growth in _____ and _____ sales - opening "______ _____"
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- supply chain - grocery; tobacco - Neighborhood Markets
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Walmart's innovative management: - _____ and ____ sharing with suppliers - can tailor products to local _____ preferences - suppliers must manage store ______ - ____-docking (don't store products at own warehouse; products go from supplier truck to delivery truck)
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- logistics; data - consumer - inventory - cross
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Walmart's innovative management: - _____ ______ ________ (RFID) - ____ enhanced bar code
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- radio frequency identification - digitally
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Food service: - full service ______, ____ ____ - slowly _____ share of food sales - strategy is to offer new _____, _____ - added ____-conscious menu items - added services for ____-paced customers
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- restaurants; fast food - increasing - products; services - health - fast
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McDonald's and apples: - employed advances in ___-___ produce technology - modified _____ packaging - _____ coatings - sub sliced apples for ____ in Happy Meals
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- fresh; cut - atmosphere - mineral - fries
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______ and ______ show nutritional information
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Hardees; McDonald's
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Limited service chains: - cater to consumers' preference for "______ ______" - offer ______ items - _____/_____ ingredients
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- casual indulgence - upscale - premium; gourmet
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Traditional grocer response: - have to compete in ____ - understand consumer ______ (market segments) - expand product _____ - change store _____ - adopt new _____
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- costs - preference - offerings - layout - technology
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Expanding product offerings: - ____ foods - _____ label products
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- organic - private
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Private label products: - store's own ____ - brand name created by _____ - private label sales growing faster than national ____ sales
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- name - retailer - brand
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Partnerships with processors: - national brand processors make ____ brands (provide _____, excess ____ capacity) - _____ processors (owned by _____ brands; specialize in ____ label, _____ lines) - _____ processors make for specific markets
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- store; expertise; plant - small; national; store; product - regional
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Expanding product offerings: - adding _____ sections - adding more _____ foods to compete with food service - adding ____ _____
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- dollar - prepared - fuel pumps
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Store layout: - aim at _____ experience - rent space to ____ companies - safeway "_____" stores - _____ bought a _____ chain
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- upscale - outside - lifestyle - Kroger; supercenter
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Innovative technology: - ___-_____ lanes - ______ technology (fingerprint releases payment; not yet widely adopted)
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- self checkout - biometric
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Cost-lowering strategies: - trying to emulate ______ (inventory control; consumer tracking) - retailers initially ______ - wide adoption of _____ - looking into _____
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- Walmart - reluctant - UCCnet - RFID
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Restructuring operations: - chains selling/closing ____ stores - focusing on _____ markets
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- older - core
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Grocery store mergers: - number of stores ____, 1997-2002 - _____ sales growth - growing concentration of grocery ______ - concern for ______
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- decline - stagnant - retailers - processors
