Agro-food and territorial marketing

Gervasio Antonelli

Faculty of EconomicsUniversity of Urbino “Carlo Bo”antonelli@econ.uniurb.it

Contents- Overall reference framework and competitive system - Behaviour of the “new” consumer- Growing attention to agro-food and territorial

marketing applications (the extension of the principles of traditional marketing management to these items raises, however, a number of theoretical and application issues)

- The issues of agro-food product differentiation - The concept of “product system” - Information over the quality features of a product - Critical areas of marketing applications - Conclusions (i.e. critical factors)

Overall reference framework and the competitive system – 1

- Growing globalization of markets

This is a rather complex issue that is set to identify a new business framework: information systems, habits, preferences, market expectations, competitors, rules and market size have gone through several changes. This has implications as regards competition and both the domestic and the foreign market.

Overall reference framework and the competitive system - 2

- EU agricultural policies:- Greater market orientation - Progressive reduction of aid and change in their composition (greater

resources for interventions in favour of rural development)More in particular:- Decoupling of aid (single payment per company regardless of the

productive directions adopted by the beneficiary; the payment replaces most direct payments from PAC)

- Conditionality (payments are subject to the compliance to all environment protection, food safety, animal well-being, etc. regulations

- Modulation of aid (reduction of all direct payments to obtain resources to be allocated to rural development policies)

- Intensification of rural development policies through the increase of the allocated resources (rural development policies will be allocated additional resources as a result of the modulation of aid. New environment, animal well-being measures are then introduced, etc. )

Overall reference framework and the competitive system – 3

- Development of new information technologies (these may create new opportunities to bring farmers closer to consumers)

- Strong development of transgenic crops

- Growing importance of environment issues

- Changes in the internal arrangement of the agro-food system and development of modern distribution

The “new” consumer -1

Giampaolo Fabris, Il nuovo consumatore: verso il verso il postmoderno (The new consumer: a journey towards postmodenity), FrancoAngeli, Milan, 2003.“In the transition to post-modernity the leading player is the “new” consumer...

- more demanding, shrewder, more selective, proactive and unfaithful to a single brand. - the new consumption: tangible meanings, signal aspects, communication, social exchange. - A new language, the language of consumption, with its grammar and syntax, whose knowledge is called for . (…)”

The “new”consumer - 2

According to Fabris the competitive challenge is played in terms of quality, a complex and multi-dimensional concept. The main components of agro-food quality are summed up in a handbook called the “The system of Ss; each item of such Ss should be in turn divided in a wide variety of sub-categories

Agro-food quality: the system of Ss

Knowledge (Italian:Sapere)

Taste (Italian: Sapore)

Sensory

Health (Italian:Salute)

SupernaturalismHistory (Italian: Storia)

Syncretism

Show

Status

Consumer surveys - 1

Survey conducted by PeopleSWG/ Mipaf/ 2001

The results clearly show that the Italian consumer is characterised by:- General wariness of GMOs- Marked attention to issued related to the quality and

safety of agro-food products - A growing and widespread interest in the choice of

typical products- A strong demand for information on the properties of

products- A greater demand for guarantees and certifications

(product and/or system certifications, traceability, etc.)

Based on the results of the above survey quality of agro-food products means for the Italian consumer:

- trueness of products (64% of answers);

- safety (47%);

- naturalness (30%);

- wholesomeness (28%);

- taste (28%);

- cost (20%).

Quality guarantees are required not only for typical or organic products but more in general for convenience goods .

Consumer survey - 2

Survey conducted by the Istituto di Ricerche Economiche e Sociali (IRES – Institute for Economic and Social Researches),Gli italiani a tavola. Stili di consumo e rischi alimentari – Italians at the dinner table. Consumption styles and food risks) in 2005 through a questionnaire that was administered to a sample of 750 individuals all over the national territory . - 87,4% >productive system “very risky” - 75,8% >“anxious” in eating food . - 45,2% > premium price for better quality ,

Major risk elements include: - 95,2% > use of chemicals;- 88,3% > presence of GMOs; - 82,1% > transport; - 76,4% > management of sales outlets - 75,6% > production in non-EU countries; - 52,6% > lack of brand

Features of foodstuffs as choice factors (val. %)

Taste 97,5 Organic product 51,7Expiry date 96,5 Brand 49,1Benefits for health 94,0 Religion 24,9Price 87,9 Long shelf-life 23,7Appearance 64,3 Ready to use 23,0

Source: Ires, Gli italiani a tavola. Stili di consumo e rischi alimentari, Sintesi per la stampa, p. 5

Relationship of consumers with typical products (Dop, Igp, etc), products with a registered designation of origin (Doc), as well as organic and fair trade products.

Knowledge and consumption of some quality products (val. %)

% people % people

that know them that use them

Typical products 82,6 75,5

Doc products 74,3 63,6

Organic products 80,2 50,0

Fair trade 31,7 19,5

Source: Ires, Gli italiani a tavola. Stili di consumo e rischi alimentari, Sintesi per la stampa, p. 6

Consumer survey - 3

Eurobarometer/February 2006 in:

“European consumers’ perception of health risks (25 EU countries)."

- 42% > concerned about the safety of foodstuffs for their health .

- the majority of consumers> factors affecting the choice: quality (42%), price (40%), appearance/freshness (23%), taste (17%), health (14%), family choices (11%), values (9%), production methods (7%), country of origin (6%), brand

name(5%), etc.

Bottom line

The “new” consumer and his/her expectations towards agro-food products:

- In the consumption of agro-food products the consumer seeks to meet his/her food requirements as well as experiences, emotions, sensations, services, nature, culture, etc.

- Safety of foodstuffs and quality ;

- Qualities: chemical-physical and organoleptic qualities of the product + health issues, territory of origin, typicality, respect of environment, well-being of animals, ethical content, etc.

- Details on product features and guarantees on its

characteristics and the related production processes

Growing attention to agro-food marketing

Theoretical issues:

- agro-food marketing can not be seen as the mere transposition of marketing management principles to the agro-food marketing reality

Marketing for the reinforcement of the existing economic

texture

Marketing for the attraction of prospective users

Marketingfor the dissemination of

skills and innovation

Marketing for the development of new entrepreneurship

initiatives

FUNCTIONS OF TERRITORIAL MARKETING

Functions of territory-applied marketing

Non-profit marketing

Relational marketing

Social marketingTerritorial

marketing

-General well-being purposes-Significance of extra-economic factors-Long-term guidance

-nature of objectives-organizational nature of territorial marketing facilities

-systemic nature of the supply-interaction components of supply and demand-basically cooperative relationships between individuals

Territorial marketing’s conceptual references

TERRITORIAL OPERATIONAL MARKETING

Creation of conditions for an improved exploitation of the territory

Communication of the territory’s attractiveness factors

Provision of assistance to investors during and after their settlement

Advertisement and promotion of territory exploitation opportunities

Interventions on the territory’s tangible and intangible components

Reinforcement and diffusion of the perception of placement

Territorial marketing

Synergic action

agro-food marketing.

Marketing:

Improvement of opportunities for differentiation (Dop, Doc, Igt..)

Significant only if PERCEIVED BY THE CONSUMER

VALUE PERCEPTION

DIFFERENTIATION

Improvement of perceived values through appropriate territorial marketing and agro-food policies

Territorial marketing

agro-food marketing

-enhancement of territory and its agro-food products-differentiation -creation and management of value signals that may guide the consumer in his/her perception

Territorial promotion through typical agro-food productsTerritorial promotion through typical agro-food products

Territorial Territorial marketingmarketing

Territorial Territorial marketingmarketing

Strategy for the promotion of the territory through the

implementation of network systems for the enhancement of

typical agro-food products

Actual network Actual network systemssystems

Virtual network Virtual network systemssystems

Interventions that may increse the value of the territory

Network systems for the promotion of the territory through typical products: a strategy

Actual systems:Actual systems:

Territorial franchisingTerritorial franchising

Virtual systems:Virtual systems:

Telematic networksTelematic networks

Structure:

• the Promoter or Franchisor is a collective entity;

• franchisees belong to different sectors

Interventions:

• Awareness of people as to the intervention;

• Promotion of franchisees’ products;

• Development of guided routes for the research of franchisees;

• Marketing and promotion of franchising trademark;

• Development of advertising materials

Structure:

Development of an internet site for the are and the

activities

Interventions:

Promotion and integrated marketing of different

products overcoming space and time barriers and

quasi-unlimited accessibility barriers

Territorial Territorial marketingmarketing

In a marketing perspective you should, however, take into account:

- The understanding of purchase behaviours and the needs of the consumer

- The only criteria that count in the evaluation of quality are consumer-defined criteria

- Only if quality is perceived the manufacturer will be able to get a premium price

- Sharing of the quality concept between manufacturer/consumer

The concept of “product system”

- multiplicity and complexity of factors contributing top the creation of value for the consumer

- an enterprise (and/or a system of enterprises): definition of own offer in terms of “PRODUCT SYSTEM”

Components of the product system:- Health and hygiene safety - Nutritional, health and sensory requirements- Guarantee requirements (information, product

and/or system certification)- Aesthetic features- Symbolic meanings- Related services- Offer system requirements (availability at right

time, right place and required quantity)- price- etc.

improvement of perceived differential value

achievement of a premium price

improvement of the value of perceived differential quality

Information over the product’s quality features

Characteristics of the product systems within three feature categories:

Research features (these may be known before the purchase and are brand, price, packaging, etc.);

Experience features (quality may be assessed after the purchase through a test);

Trust features (quality may not be assessed even after purchase and consumption: wholesomeness, nutritional value, etc.)

Some marketing tasks- consumer and market behaviours: information on expectations, evaluation criteria, consumer and purchase behaviours

- redefinition of product features; product system

- Improvement of the product’s utility

image, balancing between material values and immaterial values, appropriate sale channels, relationships with purchasers, product

communication

Formulation and implementation of marketing strategies-issues

SMEs cannot often rely on resources, skills and critical product mass;

Possibility/need to create cooperative organizations (consortia, networks..)

Delegation of marketing functions to associative organizations

Development and management of a collective brand

The guidelines for the collective brand

define process and product requirements that are common to all acceding manufacturersbinding > as it limits the possibility of an adjustment

to technological development Less binding> improved flexibility but lower

product specificity and weakening of the collective brand’s role

Conclusions- enhancement and promotion of agro-food products> territorial marketing- Operators > striving towards a common goal - organizational-management structure (consistent and uniform approach for territorial marketing interventions ) - cultural approach to the management of the relationship between offer and market- development of the internal and external environment- government modes and tools (rural districts, territorial understandings, negotiated planning, Local Action Groups, etc. )- new professional figures and skills within the framework of agro-food and territorial marketing