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Knowledge pays: study the general food industry and profit.

The growth of an increasingly complex marketing environment has made one thing perfectly clear. Life as food marketers once knew it has ceased to exist. Due to consumer resistance to price increases and an inclination to trade down, industry experts have been forced to reevaluate once successful strategies.

Whether you are a coffee roaster/retailer, a tea grower or a specialty buyer for a big gun supermarket chain, it's advantageous to pay attention to the general food market and its assorted ups and downs.

For instance, Advertising Age says, "Brand loyalty crumbles, marketers look for new answers." As consumers look for higher quality and the best value for their dollar the article suggests that in this value oriented climate, competitively priced, upscale private-label products have an opportunity to reap the benefits.

Another article notes, "Convention wisdom holds that private-label products fare well in tough economic times, when shoppers feel a need to trade down." As consumers "trade down" this time around, "they're finding that the quality of privatelabel products for Deloitte & Touch. When all is said and done, private labels will have gained long-term shares as a consequence of the recession.

What else? The erosion of brand loyalty is the biggest problem facing food marketers today, said Dr. A. Elizabeth Sloan, former editor-inchief of McCall's magazine and former director of the Good Housekeeping Institute.

"The 27,000 products on the shelves are not all that different from one another. Food marketers are watering down brand distinctions. What makes one brand more exciting than another? she says.

In the last 10 years, food companies have been relying on line extensions rather than developing new products new products. R&D has been cut back promotions and slotting fees, she notes.

Says Sloan, "When was the last time you saw real true technology and innovation in the food business?"

The brand loyalty crisis affects the basic framework of the food industry, She adds, "companies have spent hundreds of millions of dollars to get premium brands appreciated, and now they are losing their edge."

According to the Roper Organization surveys, 56% of consumers polled three years ago said they know what brand they want when they walk into a store, but the figure fell to 53% in April 1990 and to 46% since then.

Not only are bulk discount food stores profiting from the economic turndown, but store brands (both economy and upscale) and less expensive competitors also are reaping the rewards. Consumers trying so-called generic label or economy products are finding that the quality is not as bad as it used to be, according to Sloan. Consumers don't see the difference between premium and non-premium products anymore. This is a major problem for premium producers, she says.

Consumers are re-evaluating their priorities, and their buying habits will be different as they continue to come out of the recession. After sacrificing to a less expensive or non-premium brand to make ends meet, they may keep buying in this pattern, Sloan predicts.

According to Brian Sharoff, Private Label Manufacturing Association (PLMA) president, "Private Label is related to a decision by retailers to be aggressive marketers of products on their shelves and this predates the recession by five years. Consumers who were buying regular private label were doing so before the recession," he says. "Brand loyalty has been collapsing for the last 20 years and has simply reached a new low. It's not like when the recession is over, people are going to rush back and buy national brands. The problem with national brands is inherent to the national brands and has nothing to do with the recession of private label," he says.

Some argue that U.S. consumers have always sought alternatives to branded premium priced items. Americans have always been spoiled for choice, always wanting more.

"There are real differences between the brands, but they are not being spelled out. Everything is just me too, me too, me too." According to Sloan, you can keep rolling out new brands until hell freezes over, but if you don't point out the differences between one brand and another, you won't get the consumer to buy your brand.

"Who is going to want to pay the absolute premium to get a low-fat product if everyone is touting low fat? What does XYZ brand offer me that no one else does? Better taste? Flavor? Belgian chocolate? You have to spell those things out. Food marketers have to be more clever than they have ever been."

To reverse the trend, food companies should stop making parody products. They must differentiate themselves in advertising, promotion, and product development to get the edge on the market. Marketing people and R&D people need to understand the environment of the industry, Sloan says. "It really comes down to price and value. Although price is always important, consumers value products differently. Food marketers also need to study the census for insight into consumer outlook," she advises. "Anybody who goes just on demographics is in trouble. They need to meld demographics with emotional attitudes."
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:shift observed away from brand name products towards generic ones during economic downturn provides insight into marketplace for producers of food products
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1992
Previous Article:Herbal tea update in the U.S.
Next Article:Seattle: a city of coffee appreciation.

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