Chapter 2 : Food Supply Chain Management

Lecture Series… Food Safety… Week 3a

•  Our individual purchase decisions may seem relatively unimportant at the macro level but collectively it is the consumer, or more specifically the housewife (Miller, 1995), who determines success or failure in the food market.

•  Early calls for agriculture to adopt a marketing perspective recognized the importance of looking towards the end of the supply chain and were based on the premise that production was ultimately driven by consumer demand.

•  Better returns were available to those who acknowledged the sovereignty of the consumers and attempted to meet their needs.

•  Food marketing was seen as a win–win situation, improving returns to the food industry and at the same time satisfying the various needs of different consumer groups.

Introduction

•  The challenge for the food supply chain is to satisfy and meet consumer needs, wants and even their desires.

•  Explore the underlying reasons for their selection. •  There is a variety of government and commercial research

describing what UK consumers eat: •  an example is the National Food Survey (2000) sponsored by the

Department for the Environment, Food and Rural Affairs (DEFRA). •  Taking a snapshot of purchase behavior in 2000, UK consumers

spent £56bn on food (excluding alcoholic drinks). •  Expenditure on household food, soft drinks and confectionery

(excluding alcoholic drinks) averaged £16.16 per person per week, an estimated 9.5% of consumers’ total expenditure.

Food consumption

Different types of buying decision

14 Food Supply Chain Management

to which supply chain companies are spending money researching the end user. Thesceptics might say that the high failure rate of new food products suggests that westill have a lot to learn about the consumer. As well as asking what consumers arebuying we need to discover why. Taking the case of beef and veal, Table 2.1 showsthat consumption (defined here as household purchases) has returned to pre-BSElevels, but we do not know whether this is because UK consumers are more confid-ent about their beef supplies, are convinced by reassurances from the governmentand suppliers that it is safe to eat, or have simply forgotten about this food scareand resumed their old habits.

Different types of buying decisionIn looking at how consumers buy, Assel (1987) proposes four main types of buyingdecision based on the level of consumer involvement and the differences acrossbrands (Box 2.1).

Much of the discussion on consumer decision-making has centred on complexbuying behaviour where purchasers develop beliefs and attitudes about a productbefore making a considered choice. These types of decisions tend to be associatedwith expensive, risky, self-expressive and infrequently purchased goods. The othertype of high involvement decision is dissonance-reducing buyer behaviour, where aconsumer is highly involved in a product category but sees little difference betweenthe brands on offer. The purchaser shops around looking for differences in qualityor price. Alternatively, consumers may simply buy what is convenient, but afterpurchasing the product experience some psychological discomfort or ‘dissonance’following exposure to new information or brands. Consequently, they may altertheir beliefs or seek new information to support their purchase. Low involvementbuying decisions include variety-seeking behaviour. In this case, an array of branddifferences encourages consumers to switch their allegiance and consequently thereis often little brand loyalty in the category. The motivation is the desire for varietyrather than any lack of satisfaction with existing products. Finally, habitual buyingbehaviour reflects low involvement purchases in a situation where there are fewdistinguishable significant differences between brands. This is often the case withfrequently purchased low cost products.

Box 2.1 Main types of consumer buying decision (adapted from Assel, 1987).

High involvement Low involvement

Significant differences Complex buying behaviour Variety-seeking buyingbetween brands behaviour

Few differences Dissonance-reducing Habitual buying behaviourbetween brands buying behaviour

•  In modeling consumer behavior we try to take account of the decision making process and consider how environmental and marketing stimuli impact upon this (Figure 2.1).

•  Political, economic, social and technological factors clearly impact upon consumer decision-making;

•  For example, the increase in affluence, the growth in single person households, changes in family size and the greater number of women in paid employment all have an impact on the type of food we buy.

•  Consumer choice is shaped by cultural, social and personal characteristics, some of which are considered below.

Factors influencing consumer choice

Factors influencing consumer choice 16 Food Supply Chain Management

Figure 2.1 Basic model of consumer decision making (adapted from Shiffman & Kanuk,2000).

Cultural influences include general mores, taboos and rituals that predeterminedwhat is deemed appropriate and culturally acceptable (Falk, 1994). Hindus donot eat beef, Muslims reject pork, and few UK citizens would contemplate eatinghorsemeat or, worse, their pets. What we eat is governed by ritual; for example,each culture has prescribed patterns of eating and combining foods into recognis-able dishes and sequences that they identify as meals. In the UK, this typicallytakes the form of meat, potatoes and vegetables, but there is evidence of moreplurality in our meals and some redefinition of the idea of what constitutes a‘proper meal’ in certain households (Marshall, 2000, 2003). Eating for many isessentially a social activity: the example of meals is a case in point and who we eatwith can have a major impact on what is chosen (Makela, 2000). Sobal (2000)identifies the three main dimensions of sociability as facilitation (how people’seating is influenced by others), interaction (the social interchanges that occur at

Environmentalinfluences

• Political• Economic• Social• Cultural

Marketingstimuli

• Product• Price• Promotion• Place

Ext

erna

l inf

luen

ce

Input

Sociocultural environment

• Culture and subculture• Social (family, friends, social class)• Personal

• Need recognition

• Pre-purchase search

• Evaluation of alternatives

Psychological field

• Motivation

• Perception

• Learning

• Personality

• Attitudes

Process

Output

Purchase(1) Trial(2) Repeat purchase

Con

sum

er d

ecis

ion-

mak

ing

Pos

t-dec

isio

n be

havi

our

Post-purchase evaluation(satisfaction or dissatisfaction)

Experience

•  Eating for many is essentially a social activity: the example of meals is a case in point and who we eat with can have a major impact on what is chosen (Makela, 2000).

•  Sobal (2000) identifies the three main dimensions of sociability as

i.   facilitation (how people’s eating is influenced by others), ii.   interaction (the social interchanges that occur at meals) and iii.  commensality (how eating partners are selected and excluded).

•  This social context includes the company of family, friends, acquaintances and work colleagues, even strangers.

The food supply chain management environment

•  In the family/household unit, individuals often take on different responsibilities and buying roles can be identified as follows (adapted from Kotler, 2003):

(1)  Initiator: Person who first suggests the idea of buying food product or service. (2)  Influencer: The person whose view or advice influences the decision. (3)  Decider: The person who decides on any component of a buying decision and whether to buy, what food to buy, how to buy or where to buy. (4)  Buyer: The person who makes the actual food purchase. (5)  User: The person who consumes or uses the food product or service. (6)  Gatekeeper: The person who regulates exposure to information and products intended for the family/household.

The food supply chain management environment

Stages in the buying decision process The Food Consumer and the Supply Chain 21

that food is a somewhat unique commodity, in the sense that it is actually ingestedand literally becomes part of you (Falk, 1994). This raises the question aboutwhether we should regard it as a low involvement commodity. However, the highfrequency of most food purchases means that after initial exposure there is littleneed to go through an extensive decision-making process and, for the most part,consumers have to trust those who supply the products from farm gate to the plate.Ultimately, it depends on how consumers regard their level of involvement withfood, and the degree of consumer confidence depends on how much trust con-sumers place in the supply chain.

A number of specific food choice models have focused on cognitive and motiva-tional elements (Krondal & Lau, 1982; Michela & Contento, 1986), whilst somehave included social factors (Worsley et al., 1983). More comprehensive models(Figure 2.2) consider the relationship between personal characteristics, environ-mental features and the food product (Parraga, 1980; Shepherd, 1989). Thesemodels are very product focused and centre on the relationship between tasteand flavour in relation to these other influences. Furst et al. (1996) looked at howconsumers viewed their own food related behaviours and constructed a conceptualmodel that grouped factors involved in food choice into three main components:(a) life course, (b) influences and (c) personal system; the inter-relationshipsbetween these determine what is chosen. Life course includes social, cultural andphysical environments to which the consumer is exposed and also personal roles.This generates influences that inform and shape personal systems. It is the lifecourse that gives rise to the influences that emerge in a food choice situationand the ways in which individuals execute that choice under different social andphysical settings.

Physiological effectse.g. satiety, hunger,

thirst, appetite

Food intake

• Perception of sensoryattributes e.g. appearance,aroma, taste, texture

• Psychological factorse.g. personality, experience,mood, beliefs

• Physical /chemicalproperties

• Nutrient content

• Price, availability

• Brand

• Social /culturalissues

Attitudese.g. to sensory properties,health/nutrition, price/value

Food choice

PERSON ECONOMIC ANDSOCIAL

FOOD

Figure 2.2 Factors affecting food choice and intake(Source: Shepherd, 1989, 2001).

Consumer segments: the who?

22 Food Supply Chain Management

Figure 2.3 Cognitive structure model for food related lifestyle (adapted from Grunert et al.,1995).

Productcategories/concrete

attributes

Qualityaspects

PurchasingmotivesValues

Consumptionsituations

Ways ofshopping

Cookingmethods

Food relatedlifestyle

Consumer segments: the who?Marketing not only advocates addressing consumer needs, but also demands thatwe clearly identify which consumers we aim to please. Market segmentation isabout identifying groups of consumers with similar wants and needs, and thencatering specifically to those needs. The basis of this segmentation may be demo-graphic (age, gender, social class, occupation, income, ethnic group), geographic,geo-demographic, psychographic/lifestyle, or behavioural (brand loyalty, usagesituation, benefits) (Solomon et al., 2002). Each aims to identify distinct groups ofbuyers that become the target for marketing activities. This is where the consumer/customer distinction is important as most of the channel members have to cater fortheir customers’ needs rather than concern themselves with the end consumer.Most of these segmentation bases are self explanatory, but psychographic or life-style segmentation looks at differences in terms of consumer activities, interestsand opinions, and reflects differences in consumer attitudes or values. Lifestylesare patterns of consumption that reflect how consumers spend their time and money.National or linguistic borders are significant in defining food consumption pat-terns, and one study has identified twelve general food cultures in Europe (Askegaard& Masden, 1998). Another application is the food related lifestyle (FRL) concept:it is a person related construct that complements the more established measuressuch as attitudes and beliefs, or personality traits such as variety seeking orneophobia, and can help explain differences in patterns of choice across a range ofproducts (Figure 2.3). The model is an intermediate cognitive construct locatedbetween more abstract life values and concrete product/brand perceptions or

(1)   The uninvolved food consumer (9%): •  For these consumers, food is not a central element in their lives.

Consequently, their purchase motives for food are weak, and their interest in food quality is limited mostly to the convenience aspect.

•  They are also uninterested in most aspects of shopping, do not use specialty shops, and do not read product information, limiting their exposure to and processing of food quality cues.

•  Even their interest in price is limited. Their interest in cooking is limited as well, they do not plan meals and snack a lot.

Consumer segments: the who?

(2)  The careless food consumer (27%): •  These consumers are in many aspects like the uninvolved food

consumer, meaning that food is not very important to them, and their interest in food quality, with the exception of convenience, is correspondingly low.

•  The main difference is that these consumers are interested in novelty: they like new products and tend to buy them spontaneously, as long as they do not require a great effort in the kitchen or new cooking skills.

Consumer segments: the who?

(3)  The conservative food consumer (19%): •  For these consumers, the maintenance of security and stability in

life by following traditional meal patterns is a major purchase motive.

•  They have major interests in taste and health of food products, but they are not particularly interested in convenience, since their meal preparation is traditional and regarded as part of a woman’s task.

Consumer segments: the who?

(4)  The rational food consumer (33%): •  These consumers process a lot of information when shopping; they

look at product information and prices, and they use shopping lists to plan their purchases.

•  They are interested in all aspects of food quality. Self-fulfillment, recognition and security are major purchase motives for food for these consumers.

•  Also their meal preparation is characterized by planning and reason.

Consumer segments: the who?

(5)  The adventurous food consumer (12%): •  These consumers have a somewhat above average interest in most

quality aspects, but their profile is most pronounced with regard to meal preparation.

•  They are very interested in cooking, look for new recipes and new ways of cooking, involve the whole family in the cooking process, are not interested in convenience and reject the notion that cooking is the woman’s task.

•  They want quality and demand good taste in food products. •  Self-fulfillment in food is an important purchase motive. Food and

food products are an important element in these consumers’ lives. •  Cooking is a creative and social process for the whole family.

Consumer segments: the who?

•  The segmentation results from the UK show how the different segments relate to food and suggest that a variety of decision-making processes co-exist, depending on the consumer’s lifestyle and how he or she relates to food provisioning.

•  While the FRL concept does not explicitly discuss the nature of the decision making process, it seems reasonable to assume that certain segments,

•  e.g. the conservative and adventurous segments, are likely to be much more highly involved in the decision making process compared to the uninvolved and careless.

Consumer segments: the who?

•  Over half of the UK population is more or less uninterested in cooking or shopping!

•  The FRL concept has a number of applications in the area of new product development.

•  In one application, a fish processing company targeted adventurous and rational consumers for a range of new fish-based meals based on FRL segment profiles for the UK and French markets.

•  This research illustrates the possibility of defining cross-cultural segments on the basis of psychological rather than behavioral variables.

•  Similar purchase behaviors may reflect very different motivations and this adds a further perspective to consumer food choice.

Consumer segments: the who?

•  While policy emphasis has shifted towards improving safety and quality amidst heightened consumer awareness, there is little evidence that consumers have had much impact on agricultural policy, despite calls for greater consumer voice (Flynn et al., 1998).

•  The FSA will complement and support the European Food Authority (Anon., 2000), as well as increasing public involvement in regulating issues to do with food safety.

•  A recent Commission of the European Communities White Paper reflects this emphasis on safety, with calls for the establishment of an independent European Food Authority to guarantee a high level of food safety.

•  It considers the need for community-wide food safety legislation, food safety controls and consumer information.

Limits on choice

•  It is difficult to determine the extent to which consumers have had an impact on food policy, and there is a need for more robust and comprehensive criteria to determine whether or not various mechanisms for public participation have been successful (Rowe et al., 2001).

•  Consumers have become increasingly distanced from the farm gate and even more reliant on the food industry to supply them with their food.

Limits on choice

•  Most of us eat our food as part of a meal and, despite the trend in snacking, this remains a fundamental part of how we ‘do food’.

•  With the current interest in ‘meal solutions’ the boundaries between the retail and food service sectors have become blurred as food preparation moves out of the home and ‘eating out’ moves into the home.

•  Surely this is a good time to look at what happens after purchase and how consumers use food products as part of their provisioning process.

Limits on choice

•  Moreover, the food buyer (acquisition) and the food consumer (use and disposal) are not necessarily the same person.

•  It appears that most of the meal solution developments are being driven by the food service sector with endorsement by celebrity chefs rather than grounded in an understanding of what happens in the household.

•  Consumers are one of the main forces driving change in the food industry (Box 2.2), but the extent to which they do this depends on how well the industry monitors and responds to the end consumer.

Limits on choice

Limits on choice

The Food Consumer and the Supply Chain 25

and vegetables, and exposés on the fast food industry have all heightened consumerawareness. These concerns are not only with safety and quality issues, but extendto labour conditions and working practices (Klein, 2000; Scheauser, 2000). When abook on fast food becomes a best seller you can be sure that consumers are takingnotice. Consumers can make an impact through their buying behaviour and someare beginning to question how their food has been grown, reared, processed orpackaged, or how it is served, stored or handled. Consumer concerns over theintroduction of genetically modified ingredients played a key role in the decision towithdraw brands with genetically modified ingredients from supermarket shelves(Davis, 2001). Furthermore, the interest in farmers’ markets, ‘slow food’, sus-tainability and organics is not main stream, but it may be the start of consumersseeking alternative sources of supply. With (arguably) little to distinguish betweenthe quality, taste and price of competing brands, consumers are looking at howfirms conduct their business between the (agricultural) fork and the plate. Consumersare beginning to rattle the chain and those organisations supplying these highlycompetitive markets will feel the repercussions.

Understanding food choice requires companies to adopt a broader perspectiveon consumer food choice. Food supply chains are built around individual productsor brands, but consumers eat a wide variety of food. Supply chains ultimatelyconverge at the point of consumption, when consumers make the final decision toeat. Take the case of meals, mentioned earlier. Most of us eat our food as part of ameal and, despite the trend in snacking, this remains a fundamental part of how we‘do food’. With the current interest in ‘meal solutions’ the boundaries between theretail and food service sectors have become blurred as food preparation moves outof the home and ‘eating out’ moves into the home. Surely this is a good time tolook at what happens after purchase and how consumers use food products as partof their provisioning process. Moreover, the food buyer (acquisition) and the foodconsumer (use and disposal) are not necessarily the same person. It appears thatmost of the meal solution developments are being driven by the food service sectorwith endorsement by celebrity chefs rather than grounded in an understanding ofwhat happens in the household.

Consumers are one of the main forces driving change in the food industry(Box 2.2), but the extent to which they do this depends on how well the industry

Box 2.2 Consumer forces driving partnerships and alliances in the European food industry(adapted from Hughes, 1994).

(1) Population and demographic change(2) Incomes and levels of living(3) Social change and family work patterns, and cultural attitudes to work(4) Increasing consumer awareness of health, animal welfare, and environmental

issues(5) Growing ethnic diversity(6) The pleasure principle

•  Despite claims about addressing consumers’ needs, and the proclamations about efficient consumer response (ECR), these programs appear to do more for the retailers and their appointed suppliers than consumers.

•  While there is some question over the extent to which consumers have any real sovereignty in a market where retailers exert considerable control over the supply chain and what is available (Marshall, 2001), they do have access to more independent information and can assess what companies are doing.

•  And, if they don’t like it, they can always shop elsewhere (Scansaroli & Szymanski, 2002).

Conclusion

•  Purchase may be seen as the final stage in the supply chain, but for consumers it is just the start of their engagement with food that has to be stored, prepared, cooked, and often combined with other foods, before it is eaten and disposed of (Marshall, 1993).

•  The retail stage is the main point of engagement with the supply chain for most consumers, but it is only the beginning of their involvement as food consumers.

Conclusion

•  Many are beginning to look back along the supply chain and ask questions about the processes by which food makes it to their store, their refrigerator and their plate.

•  Those further down the supply chain may choose to ignore what happens at the consumer’s end of the chain and focus on building better relationships with their customers.

•  However, …………………………………………………………………………………………the trend towards globalization, further distancing consumers from production, growing concerns over health and safety, a lack of trust, ethical concerns and questions of sustainability, along with the search for authenticity, ……………………………………………………………

are all likely to have a major impact on the supply chain(s).

Conclusion

Future

The Food Consumer and the Supply Chain 27

AcknowledgementsThanks to Professor John Dawson, University of Edinburgh, and Joachim Scholderer,MAPP (Centre for Research on Customer Relations in the Food Sector, www.mapp.asb.dk),for their help in sourcing some of the material for this chapter.

Box 2.3 Consumer trends and new retail values (adapted from Scansaroli & Szymanski,2002).

Consumer trends(1) Household diversity

— wide variety of structure ofhouseholds – nuclear family,same sex groups, singles, etc.

— variety of ethnic and culturalbackgrounds

(2) Behaviour clues have changed— individuality of lifestyle means

young ‘old’ people, ‘old’ youngpeople, house-husbands, etc.

— shorter attention span, moreinformed

— forget the assumptions

(3) Consumer power has shifted— more empowered— ability to assess fairness of

transactions— aware of opportunity cost of

time – many views of whatconstitutes convenience

— expect to be rewarded

(4) Stimulation and sanctuary— balance between these— ‘real’ experiences— desire for retreat, reflection,

comfort and security

(5) Amorphous codes and spaces— no norms – single parents,

elder care, etc.— wear multiple hats – roles not

clearly specified— redefinition of spaces – home

as office, car as office, etc.

(6) Communities everywhere— big variety with different aims

– virtual and real— multiple community

membership – multipleinfluences on consumers

— consumer values communitiesmore now

New retail values(1) Consumer respect as central to

success not tangential— respect for individual lifestyles— respect for consumer time— respect for consumer space— respect for consumer choices

(2) Soul of the customer, notsuperficial understanding— extended role for customer

relationship management— deep understanding of

consumer

(3) Customer enthusiasm, notcustomer satisfaction— outcomes exceed expectations— development of customer

advocates— enthusiasm results in

innovation

(4) Customers customise, not retailers— customers exercise power— need to customise the

experience— more complex retail

environments andmanagement

(5) Community leadership, notparticipation— leading causes not just

supporting— important when entering new

markets— customer communities