Lecture 5: The Food Marketing Channel

question

Two major activities of the food marketing system:
answer

physical; economic
question

Physical activity of the food marketing system:
answer

handling, storage, processing; transportation of raw and finished goods from producers to consumers
question

Economic activity of the food marketing system:
answer

price setting and exchange
question

One of the largest US industries
answer

food and fiber sector
question

Marketing is ______: – starts on ____, finishes with ______ – producers provide ____ materials – marketing firms convert to _____ good
answer

complex – farm; consumers – raw – final
question

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)
answer

– perishable; quality – seasonal; geographically – sorted; stored – physical
question

Marketing margin also called the…
answer

marketing bill
question

Marketing margin represents…
answer

marketing costs
question

Marketing adds _____
answer

value
question

The product of marketing is _____
answer

utility
question

Time
answer

assists availability
question

Form
answer

the raw good into final product
question

Place
answer

transportation
question

Possession
answer

possession of products
question

Influences on food industry: – _______ – _______ – _______ – also government, ______, energy, other sectors
answer

– producers – consumers – marketers – media
question

Competing concerns: – consumers: highest ____ at lowest ____ – producers: highest ____ from sale of _____ – marketers: greatest possible _____ – marketing system tries to _____
answer

– value; price – return; commodities – profits – reconcile
question

Processing and manufacturing: – responsible for ____ _____ – processing of ____ products – turn bulky, _____ commodities to storable, ______, appealing food products – the primary purchasers of ___ products
answer

– form utility – raw – perishable; concentrated – ag
question

Structure of food processing: – large processors usually own _____ plants – with _______, _____ companies – most new plants are small _____, ____ products – concentration of ownership is ______
answer

– several – consolidation; fewer – startups; niche – increasing
question

Consolidation leads to greater ______
answer

efficiency
question

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 ______
answer

– plant; equipment – capacity; farm product – storage; supply – labor; machines
question

Buying operations: – processors have great market power at ____ _____ – buy from local suppliers but distribute _____/_____ – no ______ buyers – _______
answer

– farm level – regionally; nationally – competing – contracting
question

Globalization – increased access to foreign markets because of: ______, ______, ______, _____ agreements – rising ____ and ______ travel – consumer preferences more _____ diet
answer

– information; transportation; technology; trade – incomes; international – diverse
question

Global strategy – integrated approach: determine best _____; coordination of ______ across countries; differentiation from global ______ – fastest growing market channel for processors: – most strategies combine ___ with foreign ____ _____
answer

– location; activities; competitors – international trade – trade; direct investment
question

Foreign direct investment: – _____ plants located in foreign countries – advantages over _____ trade
answer

– processing – international
question

Foreign direct investment advantages over international trade: – lower _____ cost – better insight into local consumer ______ and _____ – get around _____ and _____ market restrictions
answer

– transport – preferences; policies – tariffs; domestic
question

Foreign direct investment: – US-owned _____ in foreign countries (sales _____ than exports since 2002) – foreign ______ own plants in the US (______ for US processors at home)
answer

– plants; greater – processors; competition
question

High value exports ____ than bulk exports since 1991
answer

greater
question

High value imports ____ than high value exports since 2002
answer

greater
question

Distribution strategies (sell to): – _____ stores – _____ – _____ – _____ – ___ to ___
answer

– grocery – restaurants – vending – catalog – door; door
question

Wholesalers
answer

link processors and retailers
question

Merchant wholesalers
answer

buy food from processors; resell to retailers
question

Manuf. Sales’ Branch Office (MSBO)
answer

wholesaler owned by processor
question

Broker
answer

hired by retailer to procure food
question

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-_____
answer

– shrinking; directly – vertically; independent; retail – distribute
question

Wholesaling: – _____ integration expected to continue – ______ expected – ____ negotiations leaving them out
answer

– vertical – consolidation – direct
question

Largest of all retail sectors
answer

food retailing
question

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 _____
answer

– 25% – expensive – 80% – consumer – supermarkets; restaurants
question

Traditional grocery stores
answer

supermarkets
question

Nontraditional food retailers
answer

supercenters; warehouse clubs; drugstores; dollar stores
question

Food service
answer

full service restaurants; fast food restaurants
question

Drugstores: – drugs are ____ business – food sales provide higher ____ _____ – offer small range of ____, _____ – customers use the _____ (food items are ______)
answer

– core – profit margin – food; beverages – pharmacy; convenience
question

Dollar stores: – appeal to _____ and ___-income shoppers – products priced at __-__ – groceries from ___-___ of sales – sales growth from new ____, adding _____
answer

– bargain; low – $1; $2 – 20%; 80% – stores; groceries
question

Warehouse clubs: – cater to ____ business, ____/____ income customers – _____ variety of products – groceries in ____ packages – ____ sales
answer

– small; middle; upper – limited – large – bulk
question

Fresh format stores: – specialty stores targeting _____ customer segment – perishables, _____, natural, ____ assortments
answer

– specific – organic; ethnic
question

United Natural Foods
answer

wholesaler of organic and natural foods
question

Supercenters: – offer ____ and non-____ items – prices ____ than ______
answer

– food; food – lower; supermarkets
question

Supercenters have made ______ a major player
answer

Walmart
question

Walmart: – innovative ____ _____ management – steady growth in _____ and _____ sales – opening “______ _____”
answer

– supply chain – grocery; tobacco – Neighborhood Markets
question

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)
answer

– logistics; data – consumer – inventory – cross
question

Walmart’s innovative management: – _____ ______ ________ (RFID) – ____ enhanced bar code
answer

– radio frequency identification – digitally
question

Food service: – full service ______, ____ ____ – slowly _____ share of food sales – strategy is to offer new _____, _____ – added ____-conscious menu items – added services for ____-paced customers
answer

– restaurants; fast food – increasing – products; services – health – fast
question

McDonald’s and apples: – employed advances in ___-___ produce technology – modified _____ packaging – _____ coatings – sub sliced apples for ____ in Happy Meals
answer

– fresh; cut – atmosphere – mineral – fries
question

______ and ______ show nutritional information
answer

Hardees; McDonald’s
question

Limited service chains: – cater to consumers’ preference for “______ ______” – offer ______ items – _____/_____ ingredients
answer

– casual indulgence – upscale – premium; gourmet
question

Traditional grocer response: – have to compete in ____ – understand consumer ______ (market segments) – expand product _____ – change store _____ – adopt new _____
answer

– costs – preference – offerings – layout – technology
question

Expanding product offerings: – ____ foods – _____ label products
answer

– organic – private
question

Private label products: – store’s own ____ – brand name created by _____ – private label sales growing faster than national ____ sales
answer

– name – retailer – brand
question

Partnerships with processors: – national brand processors make ____ brands (provide _____, excess ____ capacity) – _____ processors (owned by _____ brands; specialize in ____ label, _____ lines) – _____ processors make for specific markets
answer

– store; expertise; plant – small; national; store; product – regional
question

Expanding product offerings: – adding _____ sections – adding more _____ foods to compete with food service – adding ____ _____
answer

– dollar – prepared – fuel pumps
question

Store layout: – aim at _____ experience – rent space to ____ companies – safeway “_____” stores – _____ bought a _____ chain
answer

– upscale – outside – lifestyle – Kroger; supercenter
question

Innovative technology: – ___-_____ lanes – ______ technology (fingerprint releases payment; not yet widely adopted)
answer

– self checkout – biometric
question

Cost-lowering strategies: – trying to emulate ______ (inventory control; consumer tracking) – retailers initially ______ – wide adoption of _____ – looking into _____
answer

– Walmart – reluctant – UCCnet – RFID
question

Restructuring operations: – chains selling/closing ____ stores – focusing on _____ markets
answer

– older – core
question

Grocery store mergers: – number of stores ____, 1997-2002 – _____ sales growth – growing concentration of grocery ______ – concern for ______
answer

– decline – stagnant – retailers – processors

Get instant access to
all materials

Become a Member