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Module 6: Understanding food purchasing

Consumer Behaviour

Learning outcomes
On successful completion of this module you will be able to:

• Have a broad understanding of consumer behaviour in relation to food

• Understand the consumer decision making processes that consumers may


undergo when making food purchases

• Discuss the concept of consumer involvement in food purchasing decisions

• Understand the process of segmentation, targeting and positioning

Learning resources
Lawley, M. 2011, Understanding the Australian seafood consumer (and
chefs) – Overview of current CRC consumer research, PowerPoint
Presentation, presented at the Seafood Directions Conference, 23 – 25
October, Gold Coast – Available as PDF file attached with module.
Readings

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6.1 Introduction
Food purchases comprise a fundamental means of satisfying the basic physiological need
for nourishment. Yet, decisions surrounding the purchase of food are not always based
on the fulfilment of simple physiological needs. Consumers make many purchase
decisions based on wants, or specific ways of satisfying needs as deemed acceptable by
society (Solomon et al. 2014). Food purchase decisions are no different. Therefore, it is
important for marketers to think beyond the notion of food satisfying simple
physiological needs, in order to develop a more holistic understanding of what drives
consumers to make the food purchase decisions they do. Studying consumer behaviour
provides a foundation for understanding the processes involved when individuals or
groups select, purchase, use or dispose of products, services, ideas or experiences to
satisfy needs and desires (American Marketing Association 2007). Accordingly, the
purpose of this module is twofold. The first part of the module focuses on what drives
consumer behaviour in the food industry, as related to the process of consumption.
Following on, the second part of the module discusses the importance of the target
marketing process as comprised of segmentation, targeting and positioning in the food
industry. Taken together, an understanding of consumer behaviour and target marketing
helps marketers develop strategies to enhance the appeal of food products.

Before we begin this module, take a moment and think back to some of
the most recent food purchases you made or the last time you went
grocery shopping. Why did you decide to buy what you did? Was it an
impulse type buy? Did you think about your decision a lot and compare
Activity product brands? Did you buy what you always buy because that’s what
you have always bought? How were you planning on using the product
that you bought? These are some of the areas that we will be discussing in
this module.

6.2 Understanding consumer behaviour


As stated in the introduction to this module, the study of consumer behaviour explores
the processes that drive humans to make purchase decisions. Consumer behaviour
encompasses a broad range of disciplines namely psychology, sociology, and
economics—all which influence the marketing discipline. Consumer researchers work for
manufacturers, retailers, marketing research firms, governments and non-profit
organisations, and of course colleges and universities (Solomon et al. 2013). Indeed, it is
easy to see how each of the latter industries could be demonstrated in the context of
food marketing. For example, it would be important for an organisation to have a clear
understanding of how to improve the efficiency of supply chains between manufacturers
and retail outlets. If consumers want increased traceability of their food, then
manufacturers and retailers need to work together to satisfy this consumer desire.
Another example, given the health issue of obesity, may be governments trying to
encourage consumers to improve their diets through social marketing campaigns aimed
at encouraging behaviour towards more health conscious food purchases. Thus,
consumer behaviour is vital to fulfilling needs and encouraging change in food marketing
initiatives.

For marketing organisations to change consumer behaviour, it is imperative to


understand that consumption is a process. The consumption process consists of three
stages: pre-consumption, consumption and post-consumption (Solomon et al. 2013, see
pp. 3-5).

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• Pre-consumption involves how and why consumers initially decide that they
need a product.
• Consumption involves the experience of actually purchasing the product;
including the roles that consumer plays and how the purchase may reflect their
self-identity.
• Post-consumption involves the consumer’s assessment of whether a product
performed or was the experience expected; and how the product is disposed.

A ‘consumer’ is anyone who identifies and attempts to fulfill a need or desire via making
a purchase and then disposing of the product, therefore partaking in the consumption
process (Solomon et al. 2013). Based on the consumption process, the goal of marketers
is to understand consumer behaviour so that value can be created with the consumer
across the entire consumption process, not just during the consumption phase. This is
also known as value co-creation (see Prahalad and Ramaswamy 2004; Vargo & Lusch
2004). Part of co-creating value across the entire consumption process is to differentiate
between consumer needs and wants. A need is the difference between a consumer’s
ideal state and actual state (e.g. “I’m hungry”); whereas a want is a specific form of
consumption to satisfy a need based on cultural and societal influences, e.g. “I feel like
eating a banana!” (Solomon et al. 2014). Consumers may have similar needs, but the
ways in which they want to satisfy their needs differ. Value is created when marketing
organisations offer propositions in the form of wants, which satisfy consumer needs
across the consumption process.

Referring to the consumption process stages, think about the last time you
had a memorable food experience. It could be with something you bought
at a grocery store, experienced at a market or a restaurant. What was
your basic need? In what particular way did you want to satisfy your need?
Activity Were these thoughts building over a period of time or did they occur in a
small time frame? Did the consumption stage live up to your expectations?
Was the food product or experience everything you desired? And, how did
the process end in the post-consumption disposal period? Will you be a
repeat customer? Did the experience or product provide you with an
opportunity for value creation in the post-consumption period? Overall,
was value created across the entire consumption process?

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6.3 Consumer decision making processes
All consumers are not the same. As suggested above, consumers may have the same
needs, but the way in which those needs are satisfied with wants, differs on an individual
basis. Thus, we experience various types of decision making process when deciding how
to satisfy needs most appropriately. Food consumers may simply want to satisfy hunger
with the first piece of food that they can get into their hands. This decision would be
more simplistic and satisfies hunger in a utilitarian sort of focus. But what would drive a
consumer to think more about the way in which they want to satisfy their hunger?
Sometimes a consumer may be hungry, but if they are withholding the gratification of a
need to seek more than a utilitarian or functional benefit; they are seeking a more
pleasurable experience. In this case, the consumer would think in more depth about how
to fulfill their hunger need. They may decide to go out to a nice restaurant, or they may
decide go to a gourmet grocery store to purchase fresh ingredients for an elaborate meal
they want to cook. The risk associated with the type of decisions should also be
considered. Risk is the belief about whether or not purchases a product will have
negative consequences. Most food products are relatively low on risk; however this can
vary on an individual consumer basis. Thus, consumer decision making processes can be
very simplistic or very complex, and are influenced by a number of factors.

Consumer decision making can be organised into three main types: extended, limited
and habitual. Figure 8.1 illustrates these three types of decision making.

Habitual decisions

Habitual decisions (or routine response) are characterised by little or no conscious effort.
These purchases tend to be automatic in nature, and sometimes we make them without
even knowing (Solomon et al. 2013). Many food purchases, in particular, staple
purchases, tend be very habitual. Think about when you purchase bread or milk. Do you
buy the same brand every single time? What about when you purchase breakfast cereal?
Overall, these types of decisions are said to be behavioural in nature, with minimal
thinking involved; and therefore can be very hard for marketers to break through and
influence.

Limited decisions

Another type of decision making is limited decision making (or problem solving). Most
types of consumer purchase decision making fall under the category of limited decisions

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(Solomon et al. 2013). These types of decisions are made with some minimal thought,
as opposed to the automatic nature of habitual decisions. In particular, consumers often
rely on heuristics or simple rules of thumb to make these decisions (Solomon et al.
2013). Often limited decisions using heuristics are based on not necessarily what the
product does, but how it makes us feel. Some examples of heuristics are price, brand
and place of origin. Let’s take breakfast cereal for example again. Do you rotate through
three or four cereals that you like depending on which one is on sale? What about if a
new Kellogg’s cereal is introduced, would you be inclined to try it just because you feel
that Kellogg’s brand cereals are always tasty and nutritious? Now shift to purchasing
fish, for example. If you buy salmon, do you only purchase Tasmanian salmon because
you feel it is superior salmon originating elsewhere? These types of would be illustrative
of a limited type purchase decisions.

Extensive decisions

Extensive decision making is the most complex decision making process. It involves
consumers moving through a series of steps when deciding what product to purchase.
This concept is framed by the Engel-Kollat-Blackell (EKB) (1982) model of consumer
behaviour. Figure 8.4 (Solomon et al. 2013, p. 258) illustrates the EKB model.

Kristie wants to improve her


health and sustainable lifestyle
pursuits by undertaking a diet
of only eating local foods

Kristie researches local


sustainable diets online

Kristie compares
different approaches to
local sustainable diets

Kristie chooses the local


sustainable diet plan that she
believes is most feasible

Kristie purchases the foods


that are necessary for her to
follow a sustainable local diet

As seen in Figure 8.4, the EKB model posits that consumers go through five stages while
making their purchase decisions. While most food purchases fall within the habitual or
limited type of decision making processes, it is worth noting that raised consumer
awareness of food trends (e.g. organic purchases or certain types of diets as illustrated
in Figure 8.4) require more extensive decision making. Using some academic studies as

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an example, Rainbolt, Onozaka and McFadden (2012) and Pearson et al. (2011) contend
that the decision process for local food purchases are more complex. In addition,
Hollebeek and Brodie (2009) suggest wine purchases often required more involved
decision making. On the whole, it is important to recognise that what is a habitual
decision for some, may be more of limited type decision for others, or even a more
elaborate or complex decision for other people. And finally, it is important to understand
that intended decisions do not always result in actual purchases. Consumers may go
through the entire extended decision making process, only to decide that there are not
options that satisfy their desires. Thus, decision making outcomes depend on individual
consumers as well at other factors that influence purchase decisions.

Importantly, decision making processes are influenced by various internal, social and
situational factors (Solomon et al. 2014, p. 164). These factors are highlighted below
with some food marketing examples given.

Internal influences

Internal influences consist of perception, motivation, learning, attitudes, personality, age


groups and lifestyle (Solomon et al. 2014). If a consumer says, “I’m hungry”, this is an
example of internal stimuli driving the consumer to satisfy their need (motivation). If the
consumer then sees an ad for fish and chips, it would fall within their sensory range and
therefore create perceptual exposure. If the consumer had been conditioned to the
brand in the ad and liked their food in previous experiences, they have learned to
affiliate that brand with good fish and chips and have a positive attitude toward the
brand. Furthermore, if the brand conveys an image that connects with the consumer’s
personality, demographic status and lifestyle pursuits, then it is likely that the consumer
will automatically decide to purchase fish and chips from them.

Social influences

Social influences consist of culture, subcultures, social class and group membership
(Solomon et al. 2014). While internal factors influence the psychology of consumers
from within, social factors influence the psychology from external sources. Following on
from the example above, if a consumer lives near the coast and their family has
regularly had fish and chips once a week with the local surf club members, this will have
a large and likely positive impact on their decision to eat fish and chips to satisfy their
hunger. This example would be considered a ritual.

• Rituals in particular are one type of social influence that is linked to culture and
is particularly associated with how and why consumers make food purchases.
Rituals can be defined as symbolic behaviours that occur in fixed sequence and
are usually repeated at a fixed time interval (e.g. once a day or once a year)
(Rook 1985). Think about how you consumer food. Do you eat the same thing
every morning for breakfast? Do you always have a big breakfast on Saturday or
Sunday mornings, or big family dinner on Sunday night? What sort of specialised
foods are consumed on special occasions. Most Australians have cake at birthdays
and weddings. When consumers go to sporting events they may have a sausage
and beer. In other words, the food consumed at rituals becomes symbolic of the
ritual itself.

It is also easy to see the connections that consumers have to groups when
consuming food at rituals. Consumption often occurs in groups. We may celebrate

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birthdays with close family and friends which would be a normative type group
(Solomon et al. 2013). Sometimes we may go out to pizza with our sporting club,
which is classed as a membership group, after a weekly competition. Hence
rituals tend to follow scripts that consumers follow every time they partake in the
ritual (Solomon et al. 2013). Food marketing campaigns often portray the
consumption of food with groups as part of ritual to help create a sense emotional
appeal and belongingness.

MasterChef
MasterChef’s entrance into
Australia has reinvigorated the
food industry. The competitive TV
cooking show, based off the
original British version, was
instantly popular in Australian
households since its introduction in
2009.

The reality TV show sees hand-


picked ‘home-grown’ contestants
participate in cooking challenges; (TENPlay 2013a)
their skills determining how far
they proceed through the
competition. Their dishes are
critiqued by judges, and the show regularly sees celebrity chefs tutor the contestants,
and even compete against them. MasterChef not only provides the contestants with
greater food knowledge, but encourages the audience to cook, as the knowledge
imparted to the contestants is also provided to the audience (Knox 2013; TENPlay
2013b).

The influence of the show upon the public and the food industry has been very
significant. A poll of 1000 Australians in the ‘finals week’ of the first series of
MasterChef found 61% of respondents who watched the show felt encouraged to be
more creative in their cooking habits (Huntley 2013). If this figure is applied to the
number of Australians who tuned in to watch the 2009 finale (3.7 million people), the
influence of the show is put into perspective (Idato 2009).

Termed the ‘MasterChef effect’ the revived interest of cooking gourmet food was felt by
food retailers. Coles estimates that the majority of their 5.7% growth in revenue in
2011, and a 1400% increase in demand for what it defines as ‘unusual’ ingredients
featured within MasterChef recipes was due to the show (Susman 2012; Hunter 2010).

Additionally, the monthly MasterChef magazine experienced unforeseen demand on


debut; with the publisher forced to reprint an extra 15% of the initial 226,000
magazines printed due to many newsagencies selling out (Jackson 2010).

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Situational influences

Situational influences consist of the physical environment and time (Solomon et al.
2014). Situational factors are purely external influences. Again, using the example from
above, the consumer may only go a particular place to eat fish and chips, because they
are situated right in the marina with a great view, and they have their own boat that
catches fresh fish daily. Furthermore, it may be summertime and the weather is more
conducive to eating fish and chips in an open air restaurant on the marina.

6.4 The concept of consumer involvement


In direct relation to the consumer decision making processes is the concept of consumer
involvement. Consumer involvement can be defined as ‘a person’s perceived relevance
of the object based on their inherent needs, values and interests’ (Zaichkowsky 1985).
Put simply, consumer involvement is the motivation to process information. Notably,
involvement is not limited to tangible products. Consumer involvement can occur with
promotional messages and purchase situations (Solomon et al. 2013). Generally, the
more involved a consumer is with a purchase decision, the more complex the purchase
decision is and the risk associated with the purchase is higher (Solomon et al. 2014).
Therefore, to help mitigate the risk and make a well thought-out decision, the consumer
will spend more time processing information about a product.

Linked to habitual and limited decision making, food purchases are characterised by low
involvement. Most consumers exert little effort and time actually processing information
about their food purchases. The phenomenon that describes this level of involvement is
called ‘inertia’. When consumers are subject to inertia, there is very little drive to
respond to marketing stimuli or evaluate other products that may fulfil their need
(Solomon et al. 2013). So with food for example, we may buy the same bread and milk
over and over again. Thus, it can be very difficult for marketers to break this habitual
cycle perpetuated by inertia. One way to break it is the use of novel stimuli to ensure
that packaging stands out. Take wine for example. Low cost wine typically has a novel
label to appeal to consumers with low levels of involvement.

On the other hand, high levels of involvement are connected to the extensive decision
making process. Consumers that are highly involved with purchases display high levels
of motivation and passion towards purchases (Solomon et al. 2013). While food tends to
fall into the low involvement category, there are some instances, as described above in
terms of consumer decision making, where consumers can be more highly involved with
their purchase. If consumers are following a strict local, vegan or athletic diet, then they
may be much more highly involved in their food purchase decision. These consumers
would likely take the time to process information on the content and source of food
(traceability), and make comparisons between alternatives before they make a
purchase. For example, if purchasing seafood, the consumer following a strict local diet
may compare several types of the same product to ensure that it complies with the
parameters of the diet. And, again using wine as an example, marketers understand that
some consumers are very involved with their wine purchases and process information on
attributes like the vintage, the region and the wine maker’s history when selecting their
wine.

Akin to decision making, individual consumer can purchase the same product, but
display varying levels of involvement. It is important for marketers to understand this
behaviour. By understanding this behaviour, marketers can offer the right type of
involvement experience to consumers.

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Think about different food products; one that you thought about very
intensely and one that is habitual. What caused you to think intensely
about one product and why is the other habitual?

Activity
Lawley, M. 2011, Understanding the Australian seafood consumer (and
chefs) – Overview of current CRC consumer research, PowerPoint
Presentation, presented at the Seafood Directions Conference, 23 – 25
October, Gold Coast.
Reading
Based on the PowerPoint’s findings, how involved are Australian consumers
in the purchase of their seafood? Use evidence from the PowerPoint to
support your reasoning. Also, think about what types of marketing
campaigns might appeal to Australian seafood consumers.

Some additional material regarding consumer behaviour


Woolworths Trolley Trends

Trolley Trends (PDF available here) reports the major trends impacting Australians food
shopping behaviour in recent times.

The modern Australian household is being shaped by global, technological and


behavioural forces; households increasingly demand a different engagement with food
and supermarkets.

As demographic structures shift, so too are the types products demanded by Australian
consumers. Multiculturalism has become a significant element of society, bringing with it
a taste for global foods and driving the trend away from traditional meals. Globalisation
of food extends beyond the kitchen; more people than ever are eating out, with the
options of Indian, Thai or Chinese restaurants becoming increasingly available.
Traditional Anglo meals have been replaced and innovated with flavours originating from

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the Mediterranean, the Middle East and Asia. The big weekly shop has been replaced
with smaller, more frequent visits to supermarkets. As time constraints usually dictate
the types of meals created, it’s becoming increasingly difficult to plan meals on a weekly
basis. Though food prices have stabilised, other areas of household spending have
increased, placing greater strain on household budgets. As a result, more than a third of
items in Woolworths’ trolleys are purchased on a promotional basis.

6.5 Segmentation, Targeting and Positioning

Having a general understanding of consumer behaviour as related to food purchases is


important. However, with the application of segmenting, targeting and positioning
marketers can know exactly how specific classifications of consumers behave and how
they can create marketing strategies that appeal to those consumers. Segmenting,
targeting and positioning are essential to pinpointing which consumers are likely to
purchase certain types of food products, and how those products should be positioned in
consumers’ minds. Good positioning helps accentuate the prominent attributes that hold
the right appeal to consumers.

Developing a successful marketing strategy involves:

• Segmenting the market and selecting appropriate target market(s)

• Developing positioning strategies and compelling value propositions

• Developing an effective marketing mix for each target market

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Segmentation

Before we begin this module, take a moment to think about milk. How
many of you drink “plain old” normal full cream milk? If you don’t then
what type do your drink? Milk is a product that humans have been drinking
throughout history. But, not until around the 1970s and 1980s did it start
Activity to become segmented, with various types of milk targeted at specific
groups of consumers. These days we have full cream, skim, reduced fat,
flavoured (chocolate, strawberry, vanilla, banana, cookies n’ cream, coffee,
etc.), goat’s, almond, soy, rice, lactose free, extra creamy/frothy…and the
list goes on. But what happens when we go too far? Do consumers come
full circle and just want milk that tastes like milk? Watch the clip below.

If we look at the world one single marketplace, it is very fragmented. Creating a good
marketing strategy begins with segmenting potential groups of consumers that your
product may appeal to. In particular, we look for segments with common characteristics.
A simple way to visualize segmentation is to literally think of it like an orange (fitting for
food marketing). Each segment within the orange represents a group of consumers with
shared characteristics. So, segmentation is the process of dividing the total market for a
product into smaller homogeneous segments based on one or more meaningful shared
characteristics. Based on those characteristics, marketers can then decide on the
potential segments that are worth targeting. To divide large, fragmented markets into
smaller groups, marketers use segmentation variables

Traditionally, there are four variables that we use to segment target markets. Bases for
segmenting markets include:

Geographic

Geographic segmentation is simply where potential target markets are geographically


located. Aspects of geography such as climate, urban/suburban/rural, country, region
and location provide insight to the type of consumer segments we may encounter. For
example, there is a reason Coles, Woolworths and IGA have various types of grocery
stores. In urban areas, groceries stores are smaller and located in places with high foot
traffic. Whereas in suburban in regional areas grocery stores are larger and usually
found in larger shopping centres. Also, the behavioural heuristic of place of origin can
also be used as an example. Qantas uses the kangaroo as a symbol of it geographic
heritage (Solomon et al., 2014). Another example is the purchase of seafood. Many

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consumers of seafood consider freshness an important attribute when purchasing
seafood (Birch & Lawley 2010). Hence, seafood outlets that are in close geographic
proximity to the coast, can emphasise the freshness attribute.

Demographic

Classifying consumers by demographic characteristics is the most commonly used


segmentation method by marketers. Demographic characteristics can be comprised of
age, ethnicity, gender, family structure, income (Solomon et al. 2014). Notably, there
are demographics that can be classed as primary and secondary. Primary demographics
are characteristics that cannot be changed (e.g. age, gender). Secondary demographics
are characteristics that can change over time (e.g. income, family structure). Taking
gender as an example, food marketers may try to create promotion that appeals more to
females, as they typically do the shopping in traditional households. Also, considering
family structure and the consumption of food, children have a powerful influence known
as “pester power” (Solomon et al. 2013). That is, children have a large impact on the
types of food that are purchased in households.

Another important facet of demographic segmentation is generational characteristics.


Figure 6.1 presents a brief summary of some of the characteristics that describe some
generations.

Figure 6.1: Characteristics of generations

Generation Z •persuasive force in the economy – child pester power


(millenials (1995 plus)
Generation Y (1980- •difficult to reach through traditional marketing efforts
1994)
Generation X (1965- •individualistic and opinionated
1980) •‘I am not the target market’

Baby Boomers (1946- •a big market, approaching retirement, with money to spend
1964)

In terms of food marketing, it is important to consider how each generation might


consume and purchase food. For example, baby boomers have the most discretionary
income to spend on food purchases. Generations Y and X would likely been more open to
a wider variety of food as they have grown accustomed to having several cuisines to
choose from instead of the traditional meat and three ‘veg’. In addition, almost one
quarter of Australian’s were outside of Australia and over one third speak another
language in addition to English; which are cultural and ethnic demographic indicators
that would influence food consumption. These exemplars demonstrate a clear link
between demographic characteristics and food consumption.

Specifically looking at seafood, the Baby Boomers make an interesting case. Research
shows that seafood consumption increases once people reach 50 (ie the baby Boomers).
Two explanations are put forward for this trend: firstly at this stage most children have
left home so disposable income increases allowing the purchase of more expensive
proteins. Secondly at 50 health starts becoming a more important issue and consumers
become more aware of a healthy diet – again resulting in an increase in seafood
consumption.

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Psychographic

Psychographic segmentation focuses on understanding the deeper meanings concerning


consumer’s values toward consumption. When using psychographic segmentation to
understand consumer groups, marketers are keen to develop a deeper understanding of
consumers’ attitudes, interests and opinions. Understanding consumers’ attitudes,
interests and opinions give marketers insight to how products and services allow
consumers to express themselves and demonstrate what they are passionate about in
their life. Thus, psychographics connects to the lifestyles that consumers pursue. The
VALS instrument is one way to understand this.

In regard to lifestyle in Australia, food plays a key role. For example, Australians enjoy a
strong coffee culture and spend over $11 billion annually on dining out and takeaway
food (Solomon et al. 2013). Many Australians also seek to make healthy eating a salient
part of their lifestyle; with an increased focus on healthy choices (e.g. organic produce)
when making food purchase decisions (Pearson, 2013). Another example of
psychographic segmentation can be demonstrated with seafood consumers. Research
from Birch and Lawley (2010) and the ASCRC (2010) found that consumers’ value of the
natural environment and sustainability are key influencers in the consumption of fish.
Hence, psychographics can be a useful way to position products via the values, attitudes
and lifestyles that characterise consumer segments. What food products that you can
think that are segmented by psychographics?

Behavioural

Behavioural segmentation divides consumers based on how and why they use products.
Consumers often buy the same products for different reasons and use them in different
ways. For example, two people might buy fruit for different purposes. One might buy the
fruit to pack in their child’s lunchbox and to be eaten as an after-school snack, whilst
another person might buy fruit to make smoothies to align with their busy lifestyle.
Simialrly some consumers may buy soup to use as a meal while others may buy the
soup to use as an ingredient in another dish. Thus, it is important to know how
consumers use a product.

The occasion when consumers use a product is also an important aspect of behavioural
segmentation. Some consumers may also use certain products more regularly than
others. If a consumer purchases the same breakfast cereal every week, for instance,
they would be considered a heavy user of the product. Notably, some marketers abide
by the 80/20 rule, which states that the 20% of consumers that use a product most
frequently (heavy users) equate for 80% of an organisation revenue from that product
(Solomon et al. 2014). Some products or services may also be seasonal. Using food as
an example, more lamb may be sold near Australia Day, because it is Australian to eat
lamb. Prawns are often consumed in Australia around the Christmas holidays. And
certain types of chocolate are sold on Easter and Valentine’s Day.

Figures 6.2 and 6.3 provide an example of segmentation using the variables discussed
for seafood consumers.

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Figure 6.2: Seafood Consumer segmentation

Figure 6.3: Consumer uses of seafood

Notably, it is important that marketers consider all of these variables when segmenting
potential target markets. Given the abundance of information that is accessible,
marketers have the ability to focus on very specific consumer segments. Also, when
looking at segmentation, business-to-business contexts should also be considered.
Business-to-business segmentation variables differ from those of business to consumer.
Some business-to-business segmentation variables consist of: Organisation size (sales or
employees), Number of facilities, scope of operations (state, national, multinational),
purchasing policies and approaches, type of business, production technology used and
geographic location (Solomon et al. 2014). Figure 6.4 provides an example of some
potential B2B segmentation in the seafood industry.

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Figure 6.4: B2B Seafood Segmentation

(Source: ACRC and USC Finfish Study 2010)

Targeting
Once the market has been segmented, marketers have to determine which of those
segments are worth targeting. As it is not financially viable to target every segment
marketers make a choice which to target by evaluating their potential. Five points
marketers should consider when selecting and evaluating target markets are drawn from
Solomon et al. (2014, p. 222) as follows:

1. Members within a target segment should be similar to each other in their product
needs and wants, but different from consumers in other segments. In other
words, is there enough difference in consumer needs to target various markets
via segmentation. If not, market cannibalisation can occur; where one segment
cannibalises the other because their wants and needs are too similar. One final
way to think about this is that there may be a gap in the market, but is there a
market in the gap?

2. Is the segment measureable? It is important for marketers to be able to have a


clear understanding of a target market’s size and buying power. This will provide
insight into the potential profitability of the market. For example, are they growth
or niche markets?

3. In relation so the size of the target market, marketers also need to consider
whether it has present profitability and future profitability. Importantly, just
because a potential target market is large does not mean it will be profitable. It
may have little discretionary income, therefore lowering its purchasing power.

4. Once a target market has been deemed sizeable and profitable at the present and
in the future, marketers have to consider how reachable it is with promotional
communications. Different segments will respond to different types promotional
elements. For example, using social media and internet promotions, along with
traditional mediums such as TV, would be effective for reaching Gen Y; while
mostly using traditional mediums would likely be effect for reaching older
segments.

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5. Finally, marketers have be able to sufficiently serve the needs of a target
audience. Marketers should consider if their organisation has the resources to
satisfy and delight the target market better than their competition. Sometimes
the target market is too large or the needs are too complex for an organisation.
Thus, organisations should be realistic in the degree to which they believe they
can satisfy a potential target market and may consider the following

• Do we have a competitive advantage?

• Can we deliver a consistent supply of the desired quality?

• Can we service the market cost effectively?

• Can we develop and maintain good relationships?

Figure 6.5 summarises the five points above.

Figure 6.5: Evaluating target market segments

Once some viable target markets have been identified, marketers can begin to create
profiles of each segment. A target market profile would provide a detailed synopsis on
each of the segmentation variables and an analysis of market’s potential (Solomon et al.
2014) Figure 6.6 summarises some of the characteristics that marketer may use to
create target market profiles.

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Figure 6.6: Developing target market profiles

Once the target market profiles are generated, marketers can decide on what type of
targeting strategy to use. There are four basic strategic targeting approaches marketers
might choose to implement: undifferentiated, differentiated, concentrated and
customised (Solomon et al. 2014).

Undifferentiated strategies attempt to appeal to the mass market. On the whole, mass
marketing strategies are not common, as most markets can be segmented. An example
of a mass marketing strategy in the food context would be large grocery store retailers,
such as Woolworths or Coles. They attempt to appeal to and satisfy a wide spectrum of
consumers because the general population needs groceries. Woolworths and Coles
accomplish this through achieving economies of scale that allow them to offer a large
variety of grocery products in a cheap price and convenient manner.

Differentiated targeting strategies attempt to develop one or more products that satisfy
consumer needs in various target markets (Solomon et al. 2014). This type of strategy is
common in markets where there are numerous competitors. For example, it is easy to
see that Kellogg’s uses a differentiated target market strategy. Kellogg’s has a wide
variety of breakfast products to satisfy various segments that they target. In addition,
sometimes differentiated strategies work by offering the same product to numerous
target segments via altering the communication mix to focus on different product
attributes (Solomon et al. 2014). Jamie Oliver, for instance, communicates the fun
attributes of eating nutritious food when promoting products to children; and focuses on
communicating to adults that providing healthy food for your family can be convenient.

Concentrated targeting strategies focus on marketing one or more products to a single


target segment (Solomon et al. 2014). This is common strategy utilised by smaller
organisations that may not have the resources to support a differentiated targeting
approach. A farmer that specialises in organically raising and selling a rare breed of
cattle may use a concentrated strategy as only a particular segment of consumers will
want to purchase such specialised produce.

Finally, customised marketing strategies centre on tailoring specific products to


individual consumers (Solomon et al. 2014). For example, a consumer may have strict
dietary restrictions. A food company like NuShape, provides customised meal plans with
a delivery service to satisfy consumers’ specific dietary requirements. Mass
customisation is a targeting strategy that affords large companies the opportunity to
allow consumers to fully or semi-customise a product. Both Nike and Dell provide
consumers with the opportunity to design aspects of shoes and computers, respectively.
In the food context, the company Yo-Get-It utilises mass customisation their stores
where consumers can create their frozen yogurt versions by adding various toppings to a
variety of basic yogurt flavours.

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Watch the clip (starting at minute 1:00 to minute 16:00, accessible here)
and think about how the various food items are segmented and targeted to
different groups of consumers based on various attributes of the products.
How many other food items can you think of that use various types of
product attributes to target certain consumer segments? Is there such a
Activity thing as a perfect tasting food product?

Positioning
After specific target markets have been identified and selected, and an appropriate
target strategy developed, marketers then aim to position the product against
competitors. Product positioning can be understood as a consumer’s psychological
perception of how a product compares to other similar alternatives (Solomon et al.
2014). The way in which consumers perceive a product’s positioning, depends on how
marketers communicate the specific attributes of the product which consumers use as
criteria to determine if the product will satisfy their needs and wants. To establish
positioning marketers develop strategies using the marketing mix variables.

Solomon et al. (2014, p. 226) suggests the four steps to help marketers position
products.

1. It is important to understand and analyse how the completion is positioned in the


market. Similar to competing in team sports competitions, understanding the
strategies of competitors is key to developing a positioning strategy that
successfully sets one product apart from others. Notably, direct competitors and
indirect competitors should be considered. Consider Coca-Cola, not only do they
compete against other soft drinks, but also other beverages in general (e.g.
orange juice, milk, bottled water). Hence, the reason why the beverage 7-UP was
positioned as the “un-cola” to distinguish itself from the competition.

2. Once a company understands how its competitors are positioned, marketers can
develop a competitive advantage that gives consumers a reason to perceive a
product as superior to others. Sometimes this is achieved via a lower price.
However, it can be difficult to constantly position by the lowest price; maintaining
profit margins is difficult and only conveys economic value to consumers.
Marketers can create and communicate other types of value through well-crafted
positioning, which leads to a competitive advantage. For example, while many
Australian consumers purchase seafood when it is reasonably priced, they also
purchase based on reasons such as taste, availability, health, convenience,

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country of origin and sustainability as seen in Figure 6.7 (ASCRC and UniSA
Omnibus survey 2009). As such, it may be useful for Australian seafood
marketers to communicate these other attributes and benefits in order to
distinguish themselves international competitors.

Figure 6.7: Seafood attributes that are appealing to Australian consumers

3. After a positioning strategy is decided, the next task is for marketers to adjust
the marketing mix variables to accentuate the competitive advantage offered to
consumers if they purchase the product. The product must hold value that
satisfies the target segment, the value must be communicated through the most
effective promotional mediums, and offered for purchase at an appropriate price
through the right distribution channels. Importantly, the marketing mix is always
finalised at the end of the segmenting, target and positioning process—as it is
costly to make adjustments once the product is made available on the open
market.

4. Finally, marketers must constantly evaluate their positioning strategy. They


should consider if they are garnering the correct response and uptake from their
target market. Eventually, all products will need to refreshed and possibly
repositioned over time. Sometimes repositioning the product helps revive a
product in the decline stage of the product lifecycle or rejuvenates growth in a
product that has reached maturity. Take the food soup as an example. When
most consumers think of soup, they think about it as a hot meal to eat in winter.
However, in the summer months marketers often reposition soup as an ingredient
to use in other types of meals.

To summarise, the target market process consists of three steps summarised in Figure
6.8. It is important that each step is well thought out by marketers. Mistakes at any
point in the process can result in damaging a product’s success in the open market.

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Figure 6.8: The Target Market Process

(Source: Solomon et al. 2014, p. 213)

What is the future of food? Is there room in the market for not just meal
replacement products (which a number of companies already produce in
the form of shakes or bars), but for a product that is a total food
replacement? Read this article, accessible through this link.

Activity Using what you have learned in the module how would you position the
food replacement product discussed in the article? Think about the value
propositions and how attributes of product can be used to communicate
value.

6.6 Conclusions
This module provided a foundation for understanding consumer behaviour. In doing so, it
has discussed the various decision making processes consumers may experience and
how these are exhibited in the context of food marketing experiences. You should now
be aware that most food purchases are characterised by habitual or limited decision
making processes; however, there are certain purchase occasions where consumers
might work through the extended decision making process. In connection with the
different types of decision making, the concept of consumer involvement provides insight
into why some consumers may partake in a more intensive decision making process than
others. Overall, it is clear why food marketers should familiarise themselves with the
way consumers behave in the marketplace. To supplement the readings and content of
this module, please refer to the additional material in form of websites, articles and clips
below.

This module also provided an understanding of the target marketing process. When
applying the target marketing process it is important to understand the three steps
involved - segmentation, targeting and positioning. Each of these steps is sequential.
First, segmentation variables are used to organise a fragmented population of consumers
into groups based on similar characteristics. Next, marketers have to decide which of the
groups are viable to target and what strategy they will use to target them. And finally,
the product has to positioned, using certain attributes that communicate the value
associated with the product to the target audience who’s needs it will satisfy. With the
choices available and habitual tendencies of food product purchases, it is critical for
marketers ensure that the right group of consumers have been segmented and targeted
with a product positioned to satisfy their needs and creates loyalty.

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References
American Marketing Association 2007

ASCRC and UniSA Omnibus survey 2009

ASCRC and USC Finfish Study 2010

Birch, D and Lawley, M 2010, ‘A conceptual framework for investigating fish consumption
in Australia’, proceedings of the Australia New Zealand Marketing Conference
(ANZMAC), December.

Engel, JF, Kollat, DT and Blackell, RD 1982, Consumer Behavior, 4th ed, Hott, Rinehart &
Winston, New York.

Hollebeek, LD and Brodie, RJ 2009, ‘Wine service marketing, value co-creation and
involvement: research issues’, International Journal of Wine, vol. 21, no. 4, pp.
339-353.

Lawley, M. 2011, Understanding the Australian seafood consumer (and chefs) –


Overview of current CRC consumer research, PowerPoint Presentation, presented
at the Seafood Directions Conference, 23 – 25 October, Gold Coast.

Pearson, D, Henryks, J, Trott, A, Jones, P, Parker, G, Dumaresq, D and Dyball, R 2011,


‘Local food: understanding consumer motivations in innovative retail formats’,
British Food Journal, vol. 113, no. 7, pp. 886-899.

Pearson, D 2013, ‘Consumer-defined attributes and choice methods for fresh produce
purchases in Australia’, Journal of International Food & Agribusiness Marketing, vol.
24, no. 5, pp. 298-310.

Prahalad, CK & Ramaswamy, V 2004, ‘Co-creation experiences: the next practice in


value co-creation’, Journal of Interactive Marketing, vol. 18, no. 3, p. 5.

Rainbolt, GN, Onozaka, Y and McFadden, DT 2012, ‘Consumer motivations and buying
behaviour: The case of the local food’, Journal of Food Products Marketing, vol. 18,
no. 5, pp. 385-396.

Solomon, MR, Marshall, GW, & Stuart, EW, 2009, Marketing: Real People, Real Choices,
6th edn, Pearson Education, Frenchs Forest.

Solomon ,MR, Hughes A, Chitty B, Fripp G, Marshall GW and Stuart EW 2014, Marketing:
Real People, Real Choices, 3rd ed, Pearson Education, Frenchs Forest.

Solomon, MR, Russell-Bennett, R and Previtte, J 2013, Consumer Behaviour: Buying,


Having, Being, 3rd ed, Pearson Education, Frenchs Forest.

Vargo, SL & Lusch, RF 2004, ‘Evolving to a new dominant logic for marketing’, Journal of
Marketing, vol. 68, no. 1, pp. 1-17.

Zaichkowsky, J 1985, ‘Measuring the involvement construct’, Journal of Consumer


Research, vol. 12, pp. 341-352.

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MasterChef Vignette References

Huntley, R 2013, ‘MasterChef’s ratings may slide, but here’s why its impact will last’,
Business Review Weekly, 11 June, viewed 04 April 2014,
<http://www.brw.com.au/p/brw-
lounge/masterchef_ratings_last_slide_but_aQb84x8AXHRuttFMU3ob1J>
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masterchef-effect-20100722-10lsg.html
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TENPlay 2013b, MasterChef – S5 Ep.48, viewed 04 April 2014,


<http://tenplay.com.au/channel-ten/masterchef/season-5/episode-48>

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