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Information
1. Consumer market
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1. What is the consumer market?
The consumer market refers to a
group of people or organizations
that are interested in, or are in
need of, a product and have the
resources to purchase the product.
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What is marketing?
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Saturated markets and segmentation
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Segmentation in the food market
Consumers differ widely in their particular needs,
motivations or preferences and buying capacity.
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Segmentation in the food market
Currently three growth trends include health, convenience and
indulgence. Consumers will often buy products which meet all three
needs during a shopping occasion.
Other growth trends include
Health Convenience in consumer ethics (some becoming
mainstream):
modifications to response to
Fair Trade
nutrition content changing lifestyles
Animal Welfare
Sustainability
Provenance
Quality schemes, e.g. Red Tractor
Food Assurance
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Examples of market segmentation
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Reasons for new product development
The purpose for developing new red meat products could be due to:
A gap in the market, e.g. organic farmed food products
New consumer pressures, e.g. economic crisis
Drop in customer loyalty or loss of market share
New ideas or technology
An emerging consumer demand, e.g. convenience, health or
indulgence.
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Niche market
Some product lines are not sold in large quantities, but are considered
financially viable as they fill a special gap or niche in the market.
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Niche market
A recent trend where consumers are developing a greater interest in
the way products and packaging are made, has led to many
manufacturers responding by producing organic or farm assured
ranges of food products.
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Consumer decision to buy
Research suggests consumers proceed through five stages when making a
purchase. Food manufacturers need to consider the buying process, rather
than the purchase alone. The stages include:
1. Need recognition or problem awareness, e.g. an empty carton of milk.
2. Information search passive or active research which could include:
a) internal search, e.g. past experiences
b) personal sources (friends or family), public sources (public
rating reports)
c) marketing sources (advertising).
3. Evaluation of alternatives
4. Purchase decision
5. Post purchase evaluation, e.g. a consumer could decide that an
alternative product would have been preferable and may choose to select
an alternative manufacturers product when the need arises again.
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Increasing market share
Food companies compete with one
another to sell their products,
influencing the consumer decision to
buy and increase their market share.
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Increasing market share
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Market research
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Market research
Market research can be focused on a wide variety of aspects including
the product, sales, buyer behaviour, promotion, distribution, pricing,
packaging.
Different types of quantitative surveys include:
Focus group discussions can also be used to gain insight into
consumer attitudes, preferences, buying behaviour
Consumer surveys Omnibus market research
1000+ adults
Diary data: continuous research
e.g. Family Expenditure Survey. HM Government
Panel data: large-scale sample
e.g. Kantar World panel researches 25,000 households who
scan bar codes of food products. This data can be extrapolated
to represent the whole UK population.
Expenditure and Food Survey (DEFRA) which provides
information on trends in food consumption.
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Tiering system
Consumers will often shop across the tiers rather than in just one.
Adding value to food products is one example of product differentiation.
Retailer 1 2 3
Best Finest Taste The Difference Extra Special
Better Standard Standard Standard
Good Value Basics Smart Price
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The marketing mix
The marketing mix explains a combination of marketing activities or
tools to ensure customer satisfaction and profits for the food company.
It is often referred to as the 4 Ps.
1.Product - the product specification including packaging, branding,
quality and identifying the target consumer market.
2.Price - this must reflect the cost of production and marketing and
target profit margins. Pricing mix includes competition, cost, mark-
ups, discounts and geography.
3.Place - this includes where the product is sold including online
purchasing (type of retailers, shelf location), market exposure
(increasing the consumer awareness about the product),
transportation, distribution, coverage and location.
4.Promotion - how to promote the product in-store and out-of-store
including advertising, publicity, selling and the message conveyed.
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The marketing mix
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2. New product development Develop concept ideas
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Develop concept ideas
Concept ideas can arise from a variety of different sources.
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Small scale testing and organoleptic analysis
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Small scale testing and organoleptic analysis
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Pilot plant and consumer testing
Concepts that are successful in the test kitchen will proceed to the pilot
plant to be produced with small scale manufacturing equipment.
Although the product would be produced on a small scale, the same
technical processes would be applied as would happened in large
scale production.
This allows companies to test the technical viability of the product and
to conduct market research and sensory evaluation on a larger batch.
Consumers sharing particular traits will be selected if the new product
is targeted at a segment of the market, alternatively consumers with
different characteristics will be selected to conduct sensory evaluation
tests on the product.
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Product specification
After testing and modifying the product in small batches on the pilot
plant, a final product is created and approved for large scale
production.
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Consumer testing
A variety of methods are used to
conduct consumer testing.
Part 1 Part 2
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Launch
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Some products do not pass the NPD process
Many products may fail at different stages of the NPD process and may
never be launched. Products which are launched may only be on sale
for a short period of time, before a new product replaces it.
Although many products may fail, the NPD process remains a crucial
part of any successful food company to ensure it remains competitive
against other companies.
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The lifecycle of a product includes its time in
3. Product life cycle development and the time it is available for sale in the
market.
Volume of sales (how many are sold)
Sales decline
Sales grow
Development
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Sales boosting strategies
To boost sales and prevent a decline in a product life cycle, food
companies implement marketing strategies such as:
advertising, e.g. television, billboard, online
price reduction, e.g. vouchers or buy-one-get-one-free
adding value new features, e.g. limited edition varieties, new
pack sizes
exploring new markets, e.g. international markets
new packaging subtle changes or completely new design
consumer competitions.
Sales grow
New product is launched
0
Time (months/years)
Development
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Question 1
Select the term which best represents a group of people or
organizations that are interested or are in need of a product and have
the resources to purchase the product.
1. Consumer market
2. Retailers
3. Marketing
4. Segmentation
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Question 1
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Question 1
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Question 2
Which term describes when the consumer market is
divided into groups of consumers with similar traits or
characteristics?
1. Value adding
3. Market segmentation
4. Market channels
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Question 2
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Question 2
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Question 3
True or false? Sales boosting strategies are used to extend the life
cycle of a product.
1. True
2. False
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Question 3
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Question 3
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Question 4
Which of the following is not an increasing product trend?
1. Health
2. Convenience
3. Luxury/Indulgence
4. Frozen foods
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Question 4
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Question 4
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Question 5
True or false? New product development process ensures that every
new concept idea will be tested and reformulated until each idea is
produced and placed on the shelf for consumers.
1. True
2. False
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Question 5
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Question 5
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Question 6
Fill in the gaps.
The market is said to be saturated when a food product has been
available for a _____ period of time and sales are no longer ________.
1. long, increasing
2. short, increasing
3. long, decreasing
4. short, decreasing
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Question 6
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Question 6
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Question 7
Which of the following would not be included in the product specification
records?
2. Ingredient details
3. Sensory characteristics
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Question 7
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Question 7
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Question 8
Which aspect of the marketing mix would describe considerations for
different channels of communication for the product?
1. Product
2. Price
3. Place
4. Promotion
5. People
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Question 8
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Question 8
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Question 9
What has happened at the point where the arrow is indicating on the
product lifecycle graph?
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Question 9
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Question 9
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Question 10
Why are products tiered to provide a basic, mid-range and premium
products for consumers?
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Question 10
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Question 10
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End of questions.
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Extension
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Thank you for using
Marketing and new product development.
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