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New Market Strategies in a Global Market

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Over half spent on meals outside home $2 Trillion output: ... WalMart, Safeway, Kroger, Ahold, SYSCO. Consumer demands are now controlling. I want it 'MY WAY' ... – PowerPoint PPT presentation

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Title: New Market Strategies in a Global Market


1
New Market Strategies in a Global Market
  • Reginald Clause
  • Iowa State University
  • Extension Value Added Agriculture

01.515.294.6601 rclause_at_iastate.edu
11/30/2004
2
Session Goal To Offer a USA Perspective
  • Frame the forces of change
  • Describe current responses to change
  • Implications for the future

3
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4
Scope of US Market
  • Population 293 million
  • 900 Billion spent on food
  • Over half spent on meals outside home
  • 2 Trillion output Total food and fiber
  • 24 million employed in the industry

5
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6
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7
Issue Drivers
  • Food Safety
  • Food Security
  • Health
  • Obesity
  • Trade
  • Environment
  • Key pulses of nature important to consumers

8
Demographic Drivers
  • Baby Boom
  • Price is major
  • Convenience
  • Knowledge marketing is working Labels
  • Relationship Food with a Face
  • Desire for more direct
  • Affluence
  • Want Variety
  • Want nuance
  • Trading up Authenticity
  • Global perspective and curiosity
  • Ethnicity

9
Cultural Drivers
  • Religion
  • Personal Values (buyers conscience)
  • Motility of the experience of food
  • Home town food where-ever you are
  • Ethnic diversity
  • Segmentation and nuance
  • Trading up
  • Willing to pay for the experience and quality
  • Authenticity
  • You cant hype this one it has to be there

10
Culture vs. Personal
  • Consumer wants taste
  • Society expects better nutrition
  • Consumer wants abundance on the shelf
  • Society expects easy on the environment

11
Technology Drivers(From Because we can to
Because it works)
  • Information tech
  • Efficient info sharing
  • Efficient traceability
  • WalMart inventory system
  • Bio-tech
  • Example
  • Low linolenic soy
  • Mid oleic soy
  • No saturated fat soy
  • Production tech
  • Massive reduction in chemical farming
  • Extraordinary New Processing tech
  • ADM soy processing example

12
Stakeholder Evolution (Revolution?)
  • Through mid 1980s Processor Controlled the power
    in the Supply Chain
  • Large scale, undifferentiated, Processor
    mentality
  • IBP, Tyson, General Mills, Kraft, Green Giant
  • Power shifted to consolidated retail and food
    service
  • WalMart, Safeway, Kroger, Ahold, SYSCO
  • Consumer demands are now controlling
  • I want it MY WAY
  • And Ill move the target on you!

13
Old Chain Format
Processor Drove Demand Down the Chain
Processor
Wholesale Retail Food Service
producer
Consumer
No Transparency
14
Todays Chain Format
Consumer Drives Demand Signals up the Chain
Consumer
producer
Wholesale Retail Food Service
Processor
Transparency (Visible Value to the Consumer)
15
Supply Chain Trends
  • HACCP trending to QMS
  • No Information trending to
    full transparency
  • Consumer connected to Producer
  • Traceability
  • Authenticity
  • Labels and Brands
  • Differentiation
  • Trading up

16
Supply Chain Trends
  • Three Ts are driving and enabling change
  • 1) Technology
  • 2) Traceability
  • 3) Transparency

17
Supply Chain Trends
  • Farnhamville Coop AIB Certification
  • New Feeds ISO 9000 Certification
  • SE Iowa Ag Guild ISO 9000 producers
  • Diamond V Mills GMO segregation

18
Safeway ResponseFourth Largest US Food Retailer
  • Differentiate on
  • Quality
  • Selection
  • Communication
  • Ranchers Reserve Tender Beef
  • Coordinated effort with packer and feedlots
  • Technology solutions
  • Traceability
  • Absolute tenderness guarantee
  • Return of the meat cutters case

19
SYSCO(Largest US Food Service)
  • Pushing suppliers for differentiated product
  • Customers pushing SYSCO
  • Relationships with very small niche companies
  • Autonomy for their various marketing companies
  • New central distribution with decentralized
    marketing

20
Organic/Natural
  • 20 growth year on year Organic
  • Mainstreaming
  • Safeway forecast 1.2 billion
  • 167 growth conventional stores
  • 650 growth new format stores
  • White Wave now owned by Dean Foods
  • Affluence enables
  • Baby boomer values fit
  • Cost may be a constraint

21
Marketplace Trends
  • Private Label Products (Supermarkets 2003)
  • Total sales for private label products 42.9
    billion
  • Market share of private label food products for
    the year was 16.3 percent
  • Toll Processing
  • Pure Marketing (Brand) Companies
  • Outsourcing Production Processing

22
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23
Marketplace Trends
  • Market segmentation
  • Player consolidation
  • Globalization
  • Product differentiation
  • Supply chain coordination
  • Integration and disintegration co-exist
  • Innovation
  • process
  • product

24
Market Reality Advertising
  • General advertising not working
  • Old advertising methods not working
  • Word of mouth more dominant
  • Consumers are more like a community in action

Advertising conundrum A wealth of information
creates a poverty of attention.
25
Market Realities
  • Shorter product life cycles
  • Most new products will fail in two years
  • Supplier relationships are crucial
  • Transportation/logistics a dominant force

26
Market Realities
  • Quality Management Systems (QMS)
  • Internal efficiency
  • Perfect order to the customer
  • Perfect quality to the customer
  • Audit-ability
  • Certification
  • Ag 9000 initiative
  • US National Animal Identification System

27
A Great Food Chain Company
  • Emphasizes communication and knowledge to the
    customer
  • Emphasizes communication and knowledge from the
    customer
  • Innovates in product, service AND process
  • Balances customer wants with society expectations

28
A Great Food Chain Company
  • Establishes business organization for perfect
    orders and continual improvement
  • Linkage forward and back for coordination,
    response and change
  • Implements Traceability
  • Values Transparency
  • Implements Quality Assurance

29
New Market Strategies in a Global Market
  • Reginald Clause
  • Iowa State University
  • Extension Value Added Agriculture

01.515.294.6601 rclause_at_iastate.edu
11/30/2004
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