Allan Baadsgaard

Market Orientation in Food and Agriculture

Part I: Introduction. 1: Market orientation, product development and competitive advantage. Part II: Generating market intelligence. 2: The systematic generation of market intelligence. 3: Analysing consumers at the aggregate level. 4: Analysing consumers at the individual level. 5: Analysing distributors at the aggregate level 6: Analysing distributors at the organisational level. 7: Case: The generation of market intelligence in a medium-sized food company. Part III: Developing market responsiveness and profitability. 8: A framework for understanding market responsiveness. 9: Short- and medium-term product and process development. 10: Long-term development of firm and industry. 11: Developing supplier and customer relations. Part IV: Conclusion. 12: Market orientation and agriculture: summary, implications and research perspectives. References. Index.

Analysing Consumers at the Individual Level

When analysing consumers at the individual level, we are usually interested in explaining preferences for specific products, including questions on how certain concrete product attributes affect consumers’ value perception and preferences. Put another way, we are interested in analysing consumers’ quality perception process.

Market Orientation, Product Development and Competitive Advantage

There is wide agreement that the food industry in western economies is entering a difficult period. The competitive pressure on food companies is the result of several tendencies which act on and reinforce one another: In affluent economies, what growth there is in the market for food products is taking place in terms of value rather than quantity. Most industrialised economies are characterised by an oversupply of agricultural products. A global tendency towards deregulation, decrease in government subsidies to the food and agricultural industry, and reduction of trade barriers removes many of the shields which have traditionally protected food companies from competition in the past. Consumer behaviour is becoming less predictable, as consumer demands become more fragmented and less consistent. Increasing concentration in the retail sector has resulted in powerful agents which not only exercise an important gatekeeper function, but also put added pressure on food manufacturers.

Analysing Distributors at the Organisational Level

“Trade is King” (Pommerening, 1979) is something most manufacturers can agree with. Likewise, many manufacturers also recognise that there has been a shift in roles within the supply chain (Pommerening, 1979). The extent to which the control of marketing variables has shifted from manufacturers to retailers varies between countries, product categories, and retail groups, of course, but in general, the scope and scale of variables controlled by retailers has increased remarkably over the last decades.

Developing Supplier and Customer Relations

This chapter focuses on the upstream and downstream relations of the food company to its different suppliers and direct customers (not final consumers). Suppliers can be slaughterhouses, suppliers of ingredients, flavourings and aromatics, production equipment manufacturers, research institutions, farmers, fishermen, etc. Direct customers can be other food processing companies, intermediaries, wholesalers, caterers, retailers, etc. All of these economic agents solve important tasks in the value chain from ‘soil to table’. Depending on the food company in question, some of these tasks may be crucial to its own competitive position in the market, and its relations to some of these suppliers and customers can therefore be strategically important.

Market Orientation in Food and Agriculture: Summary, Implications, and Research Perspectives

This book is about market orientation in food and agriculture. We have taken the viewpoint of the food company and asked how a higher degree of market orientation can improve its competitive position.

Analysing Consumers at the Aggregate Level

The existence of any company involved in the production and distribution of food products depends on consumers’ perception of the value of its products. If consumers lost interest in beef, for example, then cattle could only be used for milk production, and there would be no point in slaughtering, cutting, packaging and distributing meat. So even though most actors in the food chain never actually come into direct contact with consumers, their existence depends on consumers being willing to pay a price for the final product which covers the costs incurred by all actors in the food chain. If we set the price the consumer is willing to pay at 100, then this is what all the actors throughout the food chain have to divide among themselves (figure 3.1). As a rule, who gets what will be related to how much the various actors have contributed to the overall value creation process.

Case: The Generation of Market Intelligence in a Medium-Sized Food Company

In chapters 3 to 6 we discussed various methods for generating market intelligence about consumer and distributor characteristics. In this chapter, we look at the way in which some of these methods were used in a Danish food company, and show which conclusions could be drawn on the basis of the intelligence generated (the case is described in more detail in Baadsgaard, Bisp, Brunso, Grunert & Skytte, 1994).

Long-Term Development of Firm and Industry

In chapter 9, the food producer was studied as an independent decision-maker in the market. We examined how a food company can organise its product and process development in such a way as to ensure market responsiveness, and discussed the consequences of different ways of organising in the short and medium term. It was argued that most food producers (at least in Denmark) could probably gain a competitive advantage, and thus profitability, by being more market-oriented when developing new products or adapting existing products to new (often geographical) market segments.

Short- and Medium-Term Product and Process Development

In chapter 8, we developed a theoretical frame of reference for the development of market responsiveness. In this chapter, we focus on how a company can best undertake product development in the short or medium term, and discuss the various barriers to the improvement of product development practice.