Title: Brand Leadership and Product Innovation as Firm Strategies in Global Food Markets Mark J' Gehlhar An
1Brand Leadership and Product Innovation as Firm
Strategies in Global Food MarketsMark J.
GehlharAnita RegmiSpiro StefanouBarry
ZoumasInternational Food and Agribusiness
Management Association15th Annual World Food and
Agribusiness Forum, Symposium and Case
StudiesJune 25-28, 2005
2Competition in global food markets
- Competitiveness re-emerging issue of national
interest in the United States - U.S. is now a net importer of processed food
- Is innovation taking place and what are the
motivations?
3New Drivers of Change
- The consumer -Aging, educated, affluent
consumers in developed markets-Greater
urbanization in developing countries - Product design merging of food science and
health awareness into products - The retailers growing concentration in developed
markets with global retailers now reaching
developing countries
4Shift in balance of power
- Retailers pressuring manufacturers (quality and
reliability) - Margins on branded products under greater
pressure more with private labels (store brands)
- Food products more difficult to differentiate
with imitator manufacturers increasingly
supplying retailers - Branded manufacturers undergoing an identity
crisis?
5 New Food Products Introduced Globally
Number of products
Source Productscan
6Dairy products as share of all new food products
is rising
Dairy share of food products
Number of new dairy products (thousands)
SourceProductscan,2005
7New Food Products Introduced Globally by the H.J.
Heinz Company
A period of divestments but focused growth
Number of new products
Source Productscan, 2005
8New Food Products by Snyders of Hanover A
medium sized U.S. private company Americas
Pretzel Bakery
Number of new products
Source Productscan, 2005
9How does the branded manufacturer compete in the
changing environment?
- Marketing
- Quality
- Productivity
10Basic Orientations of Firm
11Types of firms and motivationfor innovation
- Previous study using case series approach Trail
and Meulenberg 2002, Agribusiness - Hypotheses-Every successful firm has a single
dominant orientation either in product, process,
or market -Successful branded manufacturers are
predominantly product or market
oriented-Privately owned companies are more
likely to be product oriented than public
companies-Cooperatives are less product
innovative and expected to be more process
innovative
12Firm orientations and competitive forces
Market orientation (produce what current market
wants)
Non-branded manufacturer
Branded food manufacturer
Process orientation (adopt efficient production
and distribution technology)
Product orientation (innovate products with
quality focus)
Traditional cooperative
13Our Approach
- Interview leading firms of different ownership
types and sizes supplying in different product
markets - Discover their identity (or who they think they
are) What makes them different ? - What are they doing about securing growth and
leadership? - Who they are is revealed by their actions
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16Leading Companies in Global Dairy Sales, 2003
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18Case profiles of large public, medium private,
and international cooperative
19Case profiles of large public, medium private,
and international cooperative Company statements
20Leaders recognize strategic resources and use
innovation to influence market for sustaining
profits and growth
Market orientation Influence
what market wants
Direction for sustaining superior profits
H.J. Heinz Make existing product
under Heinz brand healthier with convenient
packaging
Process orientation adopt processes using
strategic resources more effectively
Product orientation Innovate to differentiate
products using strategic resources
Snyders of Hanover Specialize in baking
tradition using product extensions of pretzels
Fonterra Use RD
extensively and promote wholesome green pasture
image to promote milk products and ingredients
Resource base Leaders recognize strategic
resources
21Summary
- A dominant orientation is not revealed in cases
here, rather there is a balanced orientation - A focused growth strategy using improved
processes to enhance product innovation - Leaders have clearer identity when recognizing
their strategic resources - Leaders try to steer the market with new products
and consumer education