1. © Food – a fact of life 2009 Marketing and research Extension/Foundation

2. © Food – a fact of life 2009 What is the consumer market? The consumer market is made up of all the people who make decisions about what to buy and what not to buy. Everyone who buys products or services is a consumer. ‘Market’ has a special meaning – relating to the likely demand for a product or service. Over time the size of the population of a particular country may not change dramatically, so the consumer market is fixed in size. This means that manufacturers and retailers must compete for business and try to maintain or increase their share of the market. The maintenance of regular large sales by food manufacturers and retailers benefits the wider community by: - providing employment for large numbers of people - It also boosts local and national economies by promoting cash flow from one area to another. Therefore it is important that companies monitor trends in their sales and continually review the range of products they make, to keep their sales figures high. If one type of product, such as baked beans, is popular for a long time, there will come a time when sales cannot be improved by the introduction of new brands. The market has become ‘saturated’. Companies may therefore diversify product lines in order to create new markets. For example, the baked bean market was diversified by offering the product with flavoured sauces, such as barbeque or curry, or by adding burger bites.

3. © Food – a fact of life 2009 Target group To offer a greater choice of products and reach a larger portion of the consumer market, companies often target groups of consumers who are similar in one respect. This may be their age, income, taste, lifestyle, health or beliefs. Foods are then produced to meet their needs. The product range is designed to meet the needs of the particular types of consumer, such as children or single people or slimmers. Niche market Some product lines are not expected to sell in vast amounts, but they fill a special gap or ‘niche’ in the market. A ‘niche market’ is usually based on a reaction to a trend in consumer purchasing. Environmental concern has resulted in consumers developing a greater interest in the way products and packaging is made, so many manufacturers have reacted by producing environmentally friendly products and packaging. Products such as ready meals have been devised to provide convenience for those with a busy life and little time to cook. ‘Premium priced’ (luxury products), have been developed with consumers aspiration for status and/or a higher disposable income in mind.

4. © Food – a fact of life 2009 Market share Companies compete with one another to sell their products and increase their market share. In order to compete effectively, information is needed about why consumers buy some products in preference to others. This information can be collected through a variety of market research methods. It is important that food companies continue to look at their sales figures and review their product range in order to keep and increase their share of the market. Market research Companies need to keep up to date information about factors affecting patterns in consumer purchasing such as: price consumer preferences availability of and level of demand for products in different areas of a country product ‘fashion’ or trends, for example increased demand for organic foods or reduced fat foods influence of advertising familiarity with and loyalty to brands and products

5. © Food – a fact of life 2009 The Consumer Market The consumer may consider factors such as: product appeal (the food and it’s packaging) value for money health special attributes, e.g. Kosher advertising portion size convenience

6. © Food – a fact of life 2009 Types of market research An example of research is the ‘Expenditure and Food Survey’ (DEFRA) which provides information on trends in food consumption. Different types of market research, such as surveys, group discussions and home product trials, provide information about what customers are buying, whether they like certain products and whether they would buy a particular product again. Surveys – surveys are usually carried out in main shopping areas, e.g. shopping centres and high streets. The interviewer has a questionnaire. This is a set of defined questions with a set of answers from which the person being interviewed must select. This type of research provides a ‘snap-shot’ of trends or opinions. Focus groups – group discussions - a small group of consumers and a trained interviewer meet to talk about particular products of trends in food consumption. The group is made up of a mixture of consumers representative of the population. However ‘target’ groups e.g. 18 year old females or older people, are sometimes used to measure their reactions to specific products. Home trials – consumers are given products to try at home and a follow up discussion is carried out at a later date. This method provides responses from the whole family, not just the person who does the shopping. It is possible to see whether the product meets the needs of a particular ‘target group’.

7. © Food – a fact of life 2009 Desk research – another method of detecting trends, such as consumers’ food purchasing habits or population changes. Many organisations conduct research of this type. It is often cheaper and less hard work than other techniques such as surveys. Study existing food products – - Studying existing products is often used by product development teams to find new ideas for new products. - Competitors products provide a useful source of information for manufacturers, who carry out 'in house' testing on them. Such tests will include sensory evaluation and identification of ingredients, portion size, packaging, value for money and so on. -They may look for emerging social, cultural and lifestyle trends, gaps in the market, new technologies, new ingredients, new packaging and promotional techniques, new recipe ideas, emerging health and nutritional trends etc.

8. © Food – a fact of life 2009 Changes in food retailing On-line ordering from all types of retailers – web addresses. Farmers’ markets, Food Fairs and Food Shows, where suppliers, producers, manufacturers and retailers can advertise and promote their products, e.g. with free tasters and then ask consumers to order from them on-line. Packaging developments have meant that new products can be developed, e.g. packaging in relation to food preservation, food production, presentation, storage, reheating and cooking. New packaging materials have been developed which enable multi-functions to take place e.g. freezer to oven plastics. New methods of manufacture e.g. 'cook-chill' which can result in frozen ready meals being delivered to the door. A very good method for elderly or disabled consumers. Family members can do the ordering at a distance. New ingredients and food additives e.g. modified starch/stabilisers, which enable food to remain stable so that they can withstand transportation. Refrigerated lorries with effective alarm systems in case of temperatures rising. Developed understanding of Food Hygiene, HACCP and Risk Assessment systems, which have made packaging and transportation safer for the consumer. Effective QA systems in place with the aid of CAD and CAM. Better research and nutritional understanding which opens the market for a variety of consumer needs, including allergy and intolerance awareness. Consumer access to fridges, freezers and microwaves, which has enabled the ready meal industry to boom. Development of air travel and sourcing ingredients and products from abroad, which can be triggered by the press of a computer button. The use of ‘night riders’ who will transport food products overnight to meet internet orders that are placed during the evening when consumers return from work. More flexible delivery times to suit the working person. Insulated delivery boxes to maximise the life of a frozen or chilled product.

9. © Food – a fact of life 2009 Our love affair with ready meals is driving an influx of innovative new products, with the independent business analyst reporting that the UK clocked up the highest level — 19% — of all ready meal product launches in Europe in 2009. Alternative sales channels such as independent ready meal stores and Internet-based home delivery services are also pushing up demand in the mature markets of Europe, particularly in the UK. The high level of product launches combined with the increased level of spend is reflected in the trend for tastier, and more traditional products that claim to be homemade. Specifically Business Insights believes that growth in the market will come from the trend of ready-to- cook rather than ready-to-eat meals. (Brits eat most ready meals in Europe, 19th May 2010: Food Processing) Discuss in detail the issues raised in the article below. The food industry in the UK is well established, with several successful research establishments leading the way (e.g. Marlow Foods and Quorn development). Consumers in the UK seem to be receptive to new ideas – travel etc. Buying ready meals has become a tradition in the UK – working parents, wide ranges available in supermarkets (more than in many other European countries). An acceptance that it is OK – time saving – convenient – cheaper than buying fresh ingredients. De-skilled cooks and lazy approach to food and cooking, supported by the fact that most homes have a microwave, freezer and easy access to supermarkets.

10. © Food – a fact of life 2009 A luxury market developing as many people choose not to eat out, but to eat in, making use of the ‘ready to cook’ ranges, which could be passed off as home cooking. A desire to cook and eat traditional British foods, such as cottage pie, spotted Dick etc., which has increased production of these types of ready meal products. Use of the internet to buy food e.g.’ Tesco on line’ is being extended to people ordering ready meals on line. Internet a very popular method of shopping. Many companies jumping on the bandwagon. Useful for the elderly (e.g. Wiltshire Foods - bought frozen from a catalogue and delivered to their homes)– a lot of single people in the UK. Other countries have a different attitude to caring for the elderly, tending to bring them into their own homes and home cooking. Popularity of ready meal products means a high sale which in turn produces profit that can be use to develop new and more innovative products. There is a general view that ready meals are generally viewed as unhealthy. Eating in is now popular because of the economy, drink- driving laws, celebrity chef endorsement / TV advertising. It is generally much cheaper, especially with the ‘dining in’ meal deals offered by supermarkets.