A SEGMENTATION ANALYSIS OF U.S. GROCERY STORE SHOPPERS

Cluster analysis was used to conduct a segmentation analysis of U.S. supermarket shoppers. This study is based on the responses of a sample of 1,000 shoppers concerning the importance of 21 store characteristics in selecting their primary grocery store for the Food Marketing Institute's 2000 consumer trends survey. Stores must satisfy the attributes important to all consumers in order to be successful. In order of importance, the four top characteristics are a clean/neat store, high quality produce, high quality meats and courteous, friendly employees. The three key supermarket shopper segments identified are time-pressed convenience seekers, sophisticates, and middle Americans. In order to cater to a particular consumer niche, a store must better fulfill the store preferences of that segment. Time-pressed convenience seekers, 36.70 percent of the sample, put a premium on features such as childcare, gas pumps and online shopping. They are likely to be younger, urban with lower or moderate incomes and have the greatest number of children six years old or younger. Quality and services are important to the sophisticates, 28.40 percent of the sample. This group is middle-aged, better educated with higher incomes than average. Middle Americans, 34.90 percent, are attracted by pricing/value factors such as frequent shopper programs, sales and private label brands. They want stores that are active in the community. Demographically they are in the middle with the highest proportion of high school graduates.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing,

THE FOOD SERVICE INDUSTRY: TRENDS AND CHANGING STRUCTURE IN THE NEW MILLENNIUM

By 2010, foodservice establishments are projected to capture 53 percent of consumers' food expenditures, whereas in 1980, foodservice captured less than 40 percent. The foodservice industry accounts for approximately 4 percent of the Gross Domestic Product and about 11 million jobs. It has been rapidly changing due to economic factors, technological advances, and labor matters.1 This overview covers many of the issues and trends affecting the different segments of the foodservice supply chain including the foodservice operators, distributors and food manufacturers. Changing customer demographics are a driving force in the evolution of the foodservice industry. As the baby boomers reach middle age, they do not seem to have time to cook and their children and grandchildren do not seem to have the interest, or talent. The U.S. population in 2000 had over double ($6,500) the per capita discretionary income that it had in 1975 ($3,109) 2 and, with a high value for recreation and pleasure they are pulled out of the kitchen and into the restaurants. An ever-shrinking world also brings variety to menus as cultures and cuisines converge, introducing new flavors and textures. A tight labor market has affected the foodservice industry from top to bottom leading to a derived demand for convenience products from manufacturers. At all links in the chain, companies are experiencing mergers and acquisitions. Operators, manufacturers, and distributors are all fighting for a share of the profits as competition continues to intensify. This review of the foodservice industry incorporates interviews with industry professionals, current information from leading foodservice associations, and predictions from the top industry research firms and consultants.Agribusiness, Industrial Organization,

Beyond the Cost of Price Adjustment: Investments in Pricing Capital

Abstract The literature on costs of price adjustment has long argued that changing prices is a complex and costly process. In fact, some authors have suggested that we should think of firms' price-setting activities as "producing" prices, similar to the way firms use production processes to produce goods and services. In this paper we explore one natural extension of this view, that besides observing costs of price adjustment, we should also expect to see firm-level investments in capital expenditures into these "pricing" production processes. We coin the term "pricing capital" for these investments, and suggest that they can improve the efficiency of the "pricing production" activities by both reducing the costs of adjusting prices, and improving the effectiveness of price adjustments in future periods. Using two types of data sources, we find compelling evidence of the existence as well as the importance of pricing capital in firms. The existence of firm-level "pricing capital" has the potential of fundamentally altering the way we think about pricing and price adjustment in many areas of economics. It suggests looking toward the "pricing capital" to decipher the likely degree and causes of price rigidity and its variation across price setters, markets, and industries. Moreover, "pricing capital" introduces a new, higher-level, pricing decision made by individual firms. Decisions to invest in pricing capital compete with traditional capital investment decisions that have long been studied in economics, such as capital investments in plant, equipment, and R&D. Furthermore, since pricing capital is a choice variable, it implies that costs of price adjustment often used in models of price rigidity are endogenous. As such, pricing capital offers new insights into the micro-foundations of the costs of price adjustment. The most provocative implication of the new theory of pricing, however, is that the allocative efficiency of the price system itself may be determined endogenously by individual price setters who choose whether and how much to invest in pricing capital.

A SEGMENTATION ANALYSIS OF U.S. GROCERY STORE SHOPPERS

Cluster analysis was used to conduct a segmentation analysis of U.S. supermarket shoppers. This study is based on the responses of a sample of 1,000 shoppers concerning the importance of 21 store characteristics in selecting their primary grocery store for the Food Marketing Institute's 2000 consumer trends survey. Stores must satisfy the attributes important to all consumers in order to be successful. In order of importance, the four top characteristics are a clean/neat store, high quality produce, high quality meats and courteous, friendly employees. The three key supermarket shopper segments identified are time-pressed convenience seekers, sophisticates, and middle Americans. In order to cater to a particular consumer niche, a store must better fulfill the store preferences of that segment. Time-pressed convenience seekers, 36.70 percent of the sample, put a premium on features such as childcare, gas pumps and online shopping. They are likely to be younger, urban with lower or moderate incomes and have the greatest number of children six years old or younger. Quality and services are important to the sophisticates, 28.40 percent of the sample. This group is middle-aged, better educated with higher incomes than average. Middle Americans, 34.90 percent, are attracted by pricing/value factors such as frequent shopper programs, sales and private label brands. They want stores that are active in the community. Demographically they are in the middle with the highest proportion of high school graduates

THE FOOD SERVICE INDUSTRY: TRENDS AND CHANGING STRUCTURE IN THE NEW MILLENNIUM

By 2010, foodservice establishments are projected to capture 53 percent of consumers' food expenditures, whereas in 1980, foodservice captured less than 40 percent. The foodservice industry accounts for approximately 4 percent of the Gross Domestic Product and about 11 million jobs. It has been rapidly changing due to economic factors, technological advances, and labor matters.1 This overview covers many of the issues and trends affecting the different segments of the foodservice supply chain including the foodservice operators, distributors and food manufacturers. Changing customer demographics are a driving force in the evolution of the foodservice industry. As the baby boomers reach middle age, they do not seem to have time to cook and their children and grandchildren do not seem to have the interest, or talent. The U.S. population in 2000 had over double ($6,500) the per capita discretionary income that it had in 1975 ($3,109) 2 and, with a high value for recreation and pleasure they are pulled out of the kitchen and into the restaurants. An ever-shrinking world also brings variety to menus as cultures and cuisines converge, introducing new flavors and textures. A tight labor market has affected the foodservice industry from top to bottom leading to a derived demand for convenience products from manufacturers. At all links in the chain, companies are experiencing mergers and acquisitions. Operators, manufacturers, and distributors are all fighting for a share of the profits as competition continues to intensify. This review of the foodservice industry incorporates interviews with industry professionals, current information from leading foodservice associations, and predictions from the top industry research firms and consultants