John L. Park

A Demand Systems Analysis of Food Commodities by U.S. Households Segmented by Income

Using the 1987–88 Nationwide Food Consumption Survey, twelve food commodity groups were analyzed according to household poverty status. Parameter estimates were used to obtain subsistence expenditures, own-price elasticities, expenditure elasticities, and income elasticities. Own-price elasticities were similar between the income groups for most commodities. However, income elasticities were consistently higher for the lower-income group. The use of average estimates of price and income elasticities for the population as a whole for the projection of individual commodity demands is not likely to be successful if notable changes are evident in income distribution. Copyright 1996, Oxford University Press.

Demand for Prepared Meals by U.S. Households

Using the 1987–88 NFCS, a Heckman two-stage procedure was used to estimate the demand for prepared meals by U.S. households. Prepared meals were defined as those ready to eat and those ready to cook. Households headed by younger, more educated, and time-constrained managers were more likely to purchase prepared meals. Income elasticities ranged from 0.07 to 0.13, while own-price elasticities ranged from −0.23 to −0.66. Evidence exists to indicate that prepared meals and food-away-from-home are substitutes. The presence of teenagers in a household is positively associated with expenditures of prepared meals. Copyright 1997, Oxford University Press.

SUPERMARKET PRODUCT SELECTION UNCOVERED: MANUFACTURER PROMOTIONS AND THE CHANNEL INTERMEDIARY

In 1998, food and packaged goods manufacturers presented 17,977 new items for evaluation by channel intermediaries (grocery buyers, merchandisers, and category managers). This product selection process is recognized as a time and labor intensive effort on the part of manufacturers and their retail counterparts. Ultimately, only one-third of these new product introductions may be accepted for distribution. Thus, manufacturers may benefit from increased insight to the channel intermediarys criteria for deciding which products to stock in their retail stores. It is suggested that this decision may be influenced by the presence of certain promotional and cash offerings, and this issue is examined in a logistic regression.

Food retailing and food service

The food retailing and food service sector is not only an important component of the food marketing channel but is also vital to the United States economy, accounting for more than 7% of the United States gross domestic product in 2001. The business of food retailing and food service is undergoing salient change. The authors argue that the singular force driving this change is the consumer. To understand the linkages in the food marketing channel, this article provides information on the farm-to-retail price spread and the economic forces that influence their magnitude. Examples are given of farm-to-retail price spreads for red meat and dairy industries. In addition, the economics behind the provision of retail services and the growth of the food service industry are discussed. Further, the authors demonstrate that the structure of the food market channel is consumer driven, and present three characteristics of convenience (preparation, delivery, and service) and identify four food distribution channels in terms of convenience (complete convenience, traditional food service, consumer direct, and traditional retail).

The Proposition of Fresh Prepared Foods: Retail Practices and Systemwide Implications

Recent years have been witness to changes in food consumption trends. Time-hungry consumers are shifting food preparation activities from the home to food-service providers. Meanwhile, supermarket operators face an intensely competitive business environment. In this report, I discuss the retail and consumer trends that have resulted in an increased demand for fresh prepared food. These trends have resulted in an increasing number of supermarket companies offering prepared items in their retail stores. Furthermore, through a survey of senior-level executives in the supermarket industry, the way that supermarket operators implement their fresh prepared food strategies is examined. Results show that supermarket operators find fresh prepared food an attractive response to competition from restaurants and mass merchandisers. In addition, they increasingly source prepared food items from outside the retail store. Implications for the manufacturing, retail, and consumer sectors of the food industry are drawn.

Retail logistics and merchandising in the USA: current status and requirements in the year 2000

This study present the results of a survey of senior level retail executives in the USA. Responses provide an indication of retail perceptions surrounding the order fulfilment process. As retailers look ahead towards 2000, technological readiness will drive virtually all retailer expectations of suppliers. The use of Electronic Data Interchange (EDI) will become an industry mandate; those vendors who want to be the number one or two partner in a category will be technologically sophisticated. This technological readiness will dramatically reduce order time while improving invoice accuracy ‐ an edict clearly voiced by retailers. Finally, as suppliers and retailers look ahead, the formation of mutually beneficial partnerships will dominate.

United Agricultural Cooperative: considering the sale of the agronomy division

This case study examines a common agricultural cooperative structure in the United States, namely that of a business which both sells farm supplies to its members and also markets, to others, the agricultural products of its members. The case concerns whether the United Agricultural Cooperative should sell the cooperative’s agronomy supply division. This division sells fertilizer, chemicals and seed. It also provides related services. The cooperative has received an acquisition inquiry from rapidly expanding agricultural retailer, Pinnacle Agricultural Holdings, LLC. The case allows readers to examine both detailed financial information as well as the cooperative’s political environment. The case ends with readers being asked to recommend a decision; namely should the cooperative sell the agronomy division or should it be kept? Professors can read the authors’ teaching note to learn recommended classroom teaching strategies and also to learn the actual decision which was made by this cooperative.