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  • Published on: 14th September 2019
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3 Innovative Marketing

Increasing competition on the food market, unfavorable production of the farming sector and constant changes in consumer demand make the outlining of regional products very important. The origin of these products is a significant criterion for profiling and differentiation. This is precisely the reason why increasing sales opportunities are opening up for providers and marketers of regional products, against the backdrop of increasing globalization and competition in trading. Although scientific studies on consumer behavior place increasingly importance on the aspect of origin as a product selection criterion, origin-oriented marketing concepts are only used to a limited extent in many small to medium sized enterprises (SMEs; Benner & Kliebisch, 2004).

From the point of view of the agriculture industry, research has dealt intensively with the subject of regional food marketing. Agricultural actors see the success of the regional food-marketing dependent on a number of factors. According to Kullmann (2003) the factors that have particular importance on the success of selling regional products are:

• product quality

• organizational form of the company

• key person

• process competence

• marketing

The product quality refers to the quality of the product's core (e.g., consistency, color, smell, taste, feel, etc.) and the product setting, such as packaging and label. The organizational form denotes the existence of a task-oriented organizational structure. The key person and process competence success factors lay in the person of the project manager: the key person must be involved in the whole process of development, production and selling of the product. They must have the ability to manage the project and to lead all involved stakeholders. The success factor marketing consists of a professional marketing conception (Kullmann, 2003).

Gothe (2002) adds that a crucial factor for successful marketing of regional food are regional key figures who can influence important partners in the region (e.g., in trade and politics) and show a high level of commitment. Likewise, the availability, quality standards and management of products, and the labeling of products with a regional brand are of considerable relevance. And finally, communication policy has a central role. It must be designed to adequately familiarize the consumer with the product "regional food", which in principle requires a great deal of explanation. As part of the communication process, the use of employee training, tasting campaigns, sales promotion instruments, like posters, shop radio, shelf stoppers, etc. and joint advertising campaigns seems to be necessary (Gothe, 2002).

According to Gerschau et al. (2002), the food industry sees the following advantages of the distribution of regional products:

1. regional food products make it possible for self-employed food retailers to be given a higher profile

2. food vendors can rely on an existing, effective distribution system that offers opportunities to expand distribution channels

3. consumers will find the products in their familiar shops

4. positioning in the high-price segment may allow the retailers larger margins

However, the disadvantages of the food industry for regional products are:

1. the requirements of the trade in terms of quantities, logistics, prices, dates, qualities, etc. are difficult to meet

2. a positioning in the high-price segment and thus a surplus for producers and processors is questionable

3. in the case of assortment adjustments, regional articles with a low proportion of sales are at risk

4. at the prepress stage, the partner who takes over the function of the coordinator is often missing

5. actors at the producer and processing level generally do not have an active culture of communication with trade

6. lack of dialogue on the part of the customer

Gerschau et al. (2002) see the centrally managed regional food vending rather skeptical, due to the procurement problem. The marketing of regional food, however, has chances if the products meet the requirements of the trade. The basis for their listing are impeccable quality, a well-rounded assortment, bundling of supply, delivery reliability, perfect logistics, competitive prices and as far as possible recognizable added value of the products, which must be supported by accompanying communication.

According to Lademann et al. (2002), the key motive for listing regional food is the desire to meet local customers' demand and engage customers in the business. Less important is the motive to differentiate from the competitor. On the other hand, the intention to increase sales by listing is relatively insignificant. The most important requirement for the listing is the high quality of the food. However, the lack of ability of suppliers, quantity and logistics requirements, or the lack of producer, sales and marketing competence is a major barrier (Czech et al., 2002).

Although different degrees of shelf sovereignty exist in the market, that means that the market leaders determine the assortment, there is only limited importance for the listing of regional food: chain stores and self-managed businesses claim to have a turnover share of around only 5% from regional foods (Lademann et al., 2002).

In the context of regional product marketing, national origin programs are particularly important (Balling, 1997). Such programs are for example the quality and origin programs of the federal states and the provisions of EU Regulation 2081/92.

The usage of labeling programs that put the state-of-origin in the centre of their concepts, has advantages and disadvantages for retailers. The benefits of using the programs of origin are above all financial support for advertising and the interface function to agriculture, which is carried out by the program sponsors. The financial support disadvantages are the advertising costs. The interface function lowers the transaction costs of the trade and of course also the producer and vendor, which are connected with the coordination of marketing requirements (Benner & Kliebisch, 2004). The disadvantages are further that all providers can use the origin labeling programs and thus the community symbols, provided that they meet the program-specific requirements. This results in a certain leveling of the unique position that can be achieved by claiming regionality (Balling, 1997; Spiller, 2001).

Moreover, the marketing of regional products plays a key role in the credibility of the information and communication that accompanies these products throughout the marketing process. The application of regional food has a special credibility bonus if it is labeled on the basis of state regulations. National origin programs can therefore be of benefit to the food vending industry and support the claim of regionalism. However, these programs are in a field of tension between sales promotion and the state labeling system. The credibility bonus and therefore the benefits of the trade marketing programs can be lost if the programs are not based on consistent quality assurance and sanctioning. It would, however, be more advantageous if the origin programs and their community symbols were communicated exclusively through sales-neutral information campaigns, which would mean renouncing state advertising campaigns (Benner, 2000; Benner, 2003, Kliebisch & Wanner, 2004).

It can be added, that the marketing of regional food through the food industry can bring about an overall social advantage. In the marketing of regional products, it is possible for food vendors in particular to ensure, through the combination of short distances and efficient means of transport, that regional products have a more favorable transport life cycle assessment than food whose marketing is linked to long-distance transport (Demmeler & Heissenhuber, 2003). In the case of an overall assessment, however, attention must be paid to the life cycle assessment of companies and the methods of production used at the level of agricultural production (Fleissner et al., 2004).

Regional marketing products can be divided and defined in different ways:

• regional product: the term "regional product" is reserved for the products that are produced and processed in the region and distributed in the immediate vicinity.

• regional specialty: regional specialties are special agricultural products that represent a typical product for a region whose marketing stages, such as production, processing, and distribution, do not take place exclusively in this region. The "typical" of the product lies in the traditional background of its production or processing. The product then usually bears the name of the region. Examples can be the “Steirischer Vulkanland Schinken” or the “Zotter Schokolade”.

The central marketing concepts of producer- and customer-oriented regional marketing are designed differently. However, the focus is always on an individual regional marketing concept. One approach is the generation of regional own brands. The regionalism is partially upgraded with further product characteristics (e.g., “biologic” or “organic”). Another regional marketing approach is high quality. Regional origin marks of community marketing are sometimes used (Benner & Kliebisch, 2004).

Benner & Kliebisch (2004) claim further that the motives for a listing of regional products and specialties from a marketing perspective are first and foremost the consolidation of regional competence and, as a result, the claim to stand out from the competition. In addition, the regional product range is intended to create an alternative to the common brands.

Barriers that from a marketing point of view are against the listing of regional products and specialties are primarily quality defects of the products. Also, inadequate performance of the suppliers, in particular with regard to delivery shortcomings and discontinuities of deliveries, are generally regarded as obstacles.

The activities of companies as part of their communication policy are diverse. They range from the organization of “Bauernmärkten”, the participation in city festivals, loyalty point promotions to graphical illustrations in shops. Depending on the company, the farmers who supply regional products must also commit to taking part in promotional campaigns every year for a certain period of time. Intensively used advertising mediums for regional products are leaflets. In these leaflets, regionalism is highlighted in cooperation with various cooperation partners. In addition, the origin of the products is made aware with the help of self-designed motifs.

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