Strengthening the Competitive Position of Commodity Marketers Two Case Study Approaches

Producers and marketers of agricultural commodities are often beset with a similar set of problems that generally may be reduced to the following question: "how can we modify our product or program in such a way as to gain a competitive edge on our competition?" As every commodity marketer knows, there is, unfortunately, no easy answer to this question. Obtaining higher prices and returns for agricultural products is possible, but requires commitment, vision and attention to the ever-changing marketplace. The current monograph contains two case studies that approach this perennial question from different agricultural commodity industries--fresh produce and turkeys--that are surrounded by different sets of basic supply and demand conditions. Yet, in each case, the companies depicted have been particularly aggressive in their approach to marketing and at least moderately successful in their quest for higher producer returns. Both of these cases are based on real companies and current data. In the first instance, TruFresh International (TFI) has been substituted for the company's actual name but the circumstances documented in the case have not been altered, and in the second example, Plainville Turkey Farm (PTF) is indeed the name of the firm. The story of each is instructive in a different way. Simply put, TFI, long an innovator in fresh produce marketing, is confronted with the challenge that several of its competitors are beginning to duplicate certain of its most successful product and market innovations. The case focuses on the strategic alternatives that TFI may have at its disposal to address this problem, typical to so many commodity industries. In the second instance, PTF is faced with a related but narrower issue: the PTF brand of fresh turkey products has been received enthusiastically in Central New York State as a high quality brand and one for which consumers have demonstrated a willingness to pay a premium. The dilemma for PTF is whether, and with what strategy, should it attempt to expand its well established branded line of turkey products to new regions and new markets? Both of these firms are confronted with a set of marketing challenges that will sound familiar to nearly all commodity-based companies. In discussing the events that led to the situations faced by these two companies and the strategic options available to address them, students, executives and industry practitioners will gain an improved understanding of the process involved in adding value to differentiate agricultural commodities.Marketing,

ITEM PRICING IN NEW YORK STATE

New York State is one of only seven states that has an item pricing law. In anticipation of the law expiring on June 30, 1991, a study was undertaken to determine the impact the law has had on the food industry and consumers alike. The study focused on: 1) the accuracy of supermarket pricing systems, 2) the public's perception of the importance of item pricing and, 3) the cost of item pricing to supermarkets.Agribusiness,

Supermarket Bakery Consumers: Attitudes, Preferences, Behaviors

R.B. 95-01For at least a decade, supermarket operators have turned increasingly to fresh foods for the strategic direction of their business by remodeling existing stores and building new stores to feature and emphasize produce, the delicatessen, the bakery, and other perishable departments. These departments have been the fastest growing and offer the greatest future sales potential as consumer demand for fresh and ready to eat prepared foods continues to grow. Despite these prospects, little is actually known about how consumers perceive and respond to product offerings and retailer initiatives in perishable departments. The objective ofthis report is to shed light on consumer attitudes and behavior with respect to one of the major supermarket perishable departments: the bakery. This report is based on a study which incorporated both primary and secondary sources of data (details in Section II). The primary data were collected through consumer surveys conducted nationwide by telephone and in-person at supermarkets in several regional market areas. A total of 700 consumers were surveyed. Additional primary data and insights were gathered through personal interviews with key supermarket bakery executives. Secondary data were gathered from trade reports, academic journals, and previously published research. The empirical results and analyses presented in Section III include such key findings as: • consumers consider convenience the most important reason for shopping supermarket bakeries, • the main reason some consumers do not buy baked goods in supermarkets is freshness, which is perceived to be better at local bakeries, • consumer awareness of health and nutrition concerns is greater than consumer knowledge about these issues, • about half of consumers are familiar with the United States Department of Agriculture's Food Guide Pyramid, but the percentage varies greatly by age with the youngest shoppers being most familiar, • consumers rate many of the most popular retailer promotional efforts as uninfluential factors in their purchase decisions, and • price plays only a minor role in bakery purchase decisions for most consumers. The implications of these findings and others are discussed in Section IV which also discusses opportunities for the supermarket bakery industry to respond to the consumer characteristics and issues identified in this study. The results present many marketing challenges for supermarket bakery managers as consumers increasingly make bakery decisions based on knowledge of health, nutrition, and other issues

The Role of the Supermarket Buyer

R.B. 96-06This study investigates the standard procurement and merchandising practices of wholesale and retail supermarket dairy buyers in New York State. Although much anecdotal and trade information exists regarding how wholesale/retail buyers make decisions, their standard operating practices have not previously been well documented. Yet these decisions and resulting strategies at wholesale/ retail levels can significantly enhance or diminish marketing initiatives and, in particular, the impact of advertising and promotion programs of the dairy industry. The primary data for this study were gathered from dairy directors and buyers from 17 wholesale and retail supermarket companies serving New York State. Mail surveys were employed to determine the factors that influence dairy buyers in their decision making. Additionally, a number of dairy industry leaders were interviewed to assist with interpretation of the survey data. The empirical results and analysis of the study are presented in Section 3. They are categorized into seven principal themes: • Dairy buyer profile • Dairy department structure and operations • Dairy department performance and pricing • New product status in the dairy department • Promotional activities in the dairy department • Buyers' perceptions of dairy suppliers • Impact of legislation on dairy department operations Strategic implications of the study results are elaborated in Section 3 and summarized in Section 4. These perspectives are intended to assist dairy suppliers in their quest to improve industry understanding of their wholesale/ retail customers. Among the key findings: • a shift in emphasis is occurring-away from the buying function alone to bottom line category profitability through the implementation of category management in the dairy department • despite flat sales in the dairy department, as new stores are built and older stores remodeled, buyers expect the dairy department to expand by over 14 percent • labor productivity in the dairy department appears to be the highest of any major department in the supermarket • despite industry urging, direct product profit analysis has not been widely adopted as a dairy department evaluation tool • over one-third of supermarket dairy department sales are from non milk-based products 0, • price alone is not an important factor when considering new products or potential suppliers • relatively large volume increases can be motivated in the dairy department by various non-price merchandising approaches Dairy Department Procurement Dynamics • supplier willingness to tailor promotional programs to retailer needs is viewed as critically important by dairy buyers • the dairy category lags behind most other categories in the supermarket in new product introductions • there are striking and significant differences in how large supermarket firm (annual sales over $1 billion) and small supermarket firm (annual sales less than$1 billion) dairy buyers view and manage the dairy department These and other findings present numerous opportunities for positive responses from dairy suppliers/processors. This type of in-depth knowledge of customer behavior and decision-making criteria allows forward thinking companies to develop successful sales and marketing strategies. This research suggests that closer supplier-buyer relationships and alliances are not simply needed to prosper, but necessary to survive

Fresh Fruit and Vegetable Procurement Dynamics: the Role of the Supermarket Buyer

R.B. 94-1Over the past several decades, the fresh fruit and vegetable industry has been one of the most dynamic sectors in the U. S. food system. Consumer demand has soared to record levels and both suppliers and distributors have responded with impressive new programs, products and technologies. The objective of this report is to provide critical information on one of the most influential but least studied elements of the produce system: the supermarket produce buyer. This buyer represents the gate-keeper between the supply end of the distribution channel and the supermarket shelves. His standard operating practices (SOPs) and decisions have an enormous influence on industry performance. A framework for produce buying and selling SOPs is set forth in Section 2. The methodology employed for this research relied on both secondary information and primary data collection (Section 3). The primary data were gathered from the produce director or buyer in one hundred supermarket chains who responded to an extensive mail survey. Together, these respondents represent approximately 75 percent of overall supermarket chain produce sales. Additionally, several groups of key industry leaders, suppliers and buyers, were interviewed to assist with interpretation of the survey data. The empirical results and analyses of the study are contained in Section 4 and categorized into five principal themes: • Produce buying organization • Produce buying process • New product issues • Produce department management: pricing and performance • Produce department of the future: buyer projections Further, perspectives and strategic implications of these results, particularly from the view of the supplier, are elaborated in Section 4 and summarized in Section 5. Among the key findings: produce buyers are operating under increasing pressure as their stable to declining numbers are now responsible for three times as many items as they were 30 years ago; terminal markets continue to decline as important sources of produce, particularly for larger supermarket companies who currently procure only about 7 percent of their total needs at a terminal; quality and consistency were repeatedly reinforced as being more important than price alone in buyers' purchasing decisions; despite considerable industry urging, DPP has not been widely adopted as a produce department evaluation tool; and, despite POP material being the most frequently available type of promotional material from suppliers, produce buyers report that this is the least influential factor in their new product acceptance decisions. These and other findings present numerous opportunities for positive responses from produce grower/shipper operations. This type of in-depth knowledge of customer behavior and decision-making criteria allows forward-thinking companies to develop successful sales and marketing strategies. This research suggests that closer supplierbuyer relationships and alliances are not simply needed to prosper, but are required to survive

The Role of the Supermarket Buyer

This study investigates the standard procurement and merchandising practices of wholesale and retail supermarket dairy buyers in New York State. Although much anecdotal and trade information exists regarding how wholesale/retail buyers make decisions, their standard operating practices have not previously been well documented. Yet these decisions and resulting strategies at wholesale/ retail levels can significantly enhance or diminish marketing initiatives and, in particular, the impact of advertising and promotion programs of the dairy industry. The primary data for this study were gathered from dairy directors and buyers from 17 wholesale and retail supermarket companies serving New York State. Mail surveys were employed to determine the factors that influence dairy buyers in their decision making. Additionally, a number of dairy industry leaders were interviewed to assist with interpretation of the survey data. The empirical results and analysis of the study are presented in Section 3. They are categorized into seven principal themes: • Dairy buyer profile • Dairy department structure and operations • Dairy department performance and pricing • New product status in the dairy department • Promotional activities in the dairy department • Buyers' perceptions of dairy suppliers • Impact of legislation on dairy department operations Strategic implications of the study results are elaborated in Section 3 and summarized in Section 4. These perspectives are intended to assist dairy suppliers in their quest to improve industry understanding of their wholesale/ retail customers. Among the key findings: • a shift in emphasis is occurring-away from the buying function alone to bottom line category profitability through the implementation of category management in the dairy department • despite flat sales in the dairy department, as new stores are built and older stores remodeled, buyers expect the dairy department to expand by over 14 percent • labor productivity in the dairy department appears to be the highest of any major department in the supermarket • despite industry urging, direct product profit analysis has not been widely adopted as a dairy department evaluation tool • over one-third of supermarket "dairy" department sales are from non milk-based products 0, • "price" alone is not an important factor when considering new products or potential suppliers • relatively large volume increases can be motivated in the dairy department by various non-price merchandising approaches Dairy Department Procurement Dynamics • supplier willingness to tailor promotional programs to retailer needs is viewed as critically important by dairy buyers • the dairy category lags behind most other categories in the supermarket in new product introductions • there are striking and significant differences in how large supermarket firm (annual sales over $1 billion) and small supermarket firm (annual sales less than$1 billion) dairy buyers view and manage the dairy department These and other findings present numerous opportunities for positive responses from dairy suppliers/processors. This type of in-depth knowledge of customer behavior and decision-making criteria allows forward thinking companies to develop successful sales and marketing strategies. This research suggests that closer supplier-buyer relationships and alliances are not simply needed to prosper, but necessary to survive

Supply Chain Management in the Produce industry

R.B 2001-05Much of the success of the produce industry relies on a carefully choreographed supply chain. Planting the perfect varieties, harvesting at the peak of ripeness, packing in customized cartons, transporting fresh produce thousands of miles, and merchandising, marketing and promoting it at just the right moment, is a feat that relies on careful and detailed communication and coordination between grower/shippers and produce retailers. The objective of this study is to document the status, challenges and changes within the fresh produce distribution system. The method guiding this study has three major components: (1) a review of the relevant trade and academic literature on the fresh produce industry, (2) an extensive mail questionnaire directed at produce retailers, and (3) focus groups with grower/shippers. The retail questionnaire was sent to 270 produce retail executives in April 2001. At each retail firm, senior-level produce executives were asked to complete a questionnaire by describing supply chain management practices within their organizations for 1996 and today, 2001. Furthermore, they were asked to projectwhat the practices will be 5 years into the future, in 2006. The survey generated 44 useable questionnaire responses, from a representative sample of supermarkets in terms both of geographical and size distribution. Respondents ranged from a number of singlestore operators to the very largest of multi-billiondollar retail operators. Such representativeness allows for a cautious generalization from the survey results to the produce industry as a whole

ITEM PRICING IN NEW YORK STATE

New York State is one of only seven states that has an item pricing law. In anticipation of the law expiring on June 30, 1991, a study was undertaken to determine the impact the law has had on the food industry and consumers alike. The study focused on: 1) the accuracy of supermarket pricing systems, 2) the public's perception of the importance of item pricing and, 3) the cost of item pricing to supermarkets

Supercenters: The Emerging Force in Food Retailing

A.E. Ext. 93-15The distinctions between various types of retail firms, such as supermarkets, mass merchants, and discount drug stores are disappearing as part of the continuing evolution of retailing. With the overall US population growing slowly and the near saturation of good retailing locations in most market areas, retailers have increasingly sought to grow sales and profits by expanding their appeal to include a broader spectrum of consumer products. As various retailers expand their product offerings into the traditional domains of other retailers, competition for consumer spending reaches new heights while the distinctions between retail alternatives are greatly reduced. During the 1980's, supermarkets, seeking higher profit margins, aggressively expanded their product offerings to include general merchandise and other non-grocery products. With the dawn of the 1990's, traditional general merchandise retailers, seeking higher customer traffic, have aggressively added grocery items to their product offerings. The grocery retailing universe has expanded to include supercenters, mass merchants, wholesale membership clubs, drug stores, limited assortment stores and convenience stores as well as traditional supennarkets and grocery stores. At least initially, consumers appear to benefit as this frantic race results in lower prices and a myriad of shopping choices. However, in the longer run, intensified competition for sites and customers, results in some retailers gaining while others are forced to sell out due to unprofitable operations. As the strong become stronger and the weak weaker, mergers, acquisitions and consolidations result in fewer but larger competitors. The introduction of the supercenter concept presents a new competitive challenge to traditional supermarket operators. Drug stores of all types have also expanded merchandise lines so that these retailers now compete directly with both supermarkets and mass merchandisers. Each type of retail fonnat has certain competitive strengths that need to be understood and addressed in the strategic planning of all firms in this increasingly competitive retail sector. The states of New York and New Jersey have recently become focal points for expansion by some of these alternative grocery retailing formats and will soon see the physical presence of all these retail formats in a number of marketing areas. Understanding the dynamics and strategies of these alternate retail formats will be critical to establishing and maintaining a clear competitive advantage

Strengthening the Competitive Position of Commodity Marketers Two Case Study Approaches

Producers and marketers of agricultural commodities are often beset with a similar set of problems that generally may be reduced to the following question: "how can we modify our product or program in such a way as to gain a competitive edge on our competition?" As every commodity marketer knows, there is, unfortunately, no easy answer to this question. Obtaining higher prices and returns for agricultural products is possible, but requires commitment, vision and attention to the ever-changing marketplace. The current monograph contains two case studies that approach this perennial question from different agricultural commodity industries--fresh produce and turkeys--that are surrounded by different sets of basic supply and demand conditions. Yet, in each case, the companies depicted have been particularly aggressive in their approach to marketing and at least moderately successful in their quest for higher producer returns. Both of these cases are based on real companies and current data. In the first instance, TruFresh International (TFI) has been substituted for the company's actual name but the circumstances documented in the case have not been altered, and in the second example, Plainville Turkey Farm (PTF) is indeed the name of the firm. The story of each is instructive in a different way. Simply put, TFI, long an innovator in fresh produce marketing, is confronted with the challenge that several of its competitors are beginning to duplicate certain of its most successful product and market innovations. The case focuses on the strategic alternatives that TFI may have at its disposal to address this problem, typical to so many commodity industries. In the second instance, PTF is faced with a related but narrower issue: the PTF brand of fresh turkey products has been received enthusiastically in Central New York State as a high quality brand and one for which consumers have demonstrated a willingness to pay a premium. The dilemma for PTF is whether, and with what strategy, should it attempt to expand its well established branded line of turkey products to new regions and new markets? Both of these firms are confronted with a set of marketing challenges that will sound familiar to nearly all commodity-based companies. In discussing the events that led to the situations faced by these two companies and the strategic options available to address them, students, executives and industry practitioners will gain an improved understanding of the process involved in adding value to differentiate agricultural commodities