Macro Environment of the UK Food Industry - Essay Example

Macro environment analysis for UK food industry Introduction: The developing retail seek for restrictive and specific food products offers new promoting chances for little and medium-measured food suppliers that comprehend the new universe of food marketing and are equipped for conveying food products that fulfill business necessities for quality, advancement, and worth. This record gives a diagram of the changing retail scene and identifies a portion of the aspects connected with fruitful food retailing. It is intended to help littler scale food makers and processors create profitable business techniques and recognize clients prone to like their special products. Littler corner market food makers have great motivation to be hopeful in todays commercial center. Expanded interest for distinguishing offering food products and buyers readiness to visit diverse retailers to get them—is making new promoting chances for food makers and processors that can offer imaginative stock intended to help and inclination of specific customer portion (Dudbridge, 2011). Consolidation of Market Share: According to Lewis, (2009) Solidification in the food business has significantly gathered purchasing force under the control of simply a couple of expansive food buyers. At each phase of the worth chain, a little handful of vast firms are the predominant players. Four organizations (Tyson, Cargill, Quick, and National Meat Pressing) control 84% of the meatpacking business sector (Hester and Harrison, 2001). In flour processing, three organizations (Cargill/chs, ADM, and Conagra) control 55% of the business sector. At the retail end, Wal-Bazaar has one quarter of the $550 billion U.K. foodstuff market. The five top retail basic supply chains control more than a large portion of (52%) of the business sector and regularly utilize that power to take a bigger offer of the overall revenue far from farmers and other downstream suppliers of food. The aftereffect of the corporate combining has been a 49% expansion in the retailers offer of the shopper dollar and a 29% abatement in the farmers offer since 1990. PESTEL Analysis: Social issue: A year in the wake of being on the cusp of passing historic point enactment to top nursery gasses, greens are coming to acknowledge the way that the shot of national and global movement on environmental change has ended up more remote than at any other time. The Ecological Insurance Office (EPA) is under ambush by recently enabled Republicans in Congress who contend that the general thought of natural security is unreasonably expensive for their obligation ridden nation. Usual to remaining idealistic even with long chances, the ecological development at the same time confronts a test simply to stay important in an antagonistic political atmosphere. In 2004, writers Michael Shellenberger and Ted Nordhaus confronted a cruel backfire from the greens when they discharged a questioning paper called "The Passing of Environmentalism," however now it shows up they may have been relatively revolutionary. Whats astonishing is the way rapidly the food development has turned into a measurable drive in American culture. Environmentalism can follow its inceptions to the Sierra Club organizer John Muir pushing for the stronghold of Americas first national stops in 1899, yet as of not long ago, food wasnt generally on the radar for progressives, past the mission of adapting to world hunger (Williams and Phillips, 2002). It wasnt until the food wellbeing embarrassments of the 1980s and 90s — emulated by the distribution of confessions like Eric Schlossers Quick Food Country and the developing risk of weight — that Americans truly began giving careful consideration to what they were consuming. Some of them werent exceptionally content with it — and they needed a change. There are currently many group backed agribusiness programs around the nation, up from only two in 1986. There are more than 6,000 farmers businesses, up 16% from simply a year prior. Offers of natural food and refreshments hit about $25 billion in 2009, up from $1 billion in 1990 and no less a corporate behemoth than Walmart has built into the natural business, searching out supportable suppliers. In the first place Woman Michelle Obama — she of the natural White House arrangement — has chosen to make youth stoutness her mark issue, and shes carried out so by pushing the food business to give healthier products of the soil over modest prepared choices. Indeed the Branch of Horticulture — normally a staunch associate of standard cultivating and the wholesaler every year of billions in regularly inefficient horticultural subsidies — has gotten into the manageability diversion with its "Know Your farmer, Know Your Food" program, which unites customers with neighborhood producers. Technological issue: In the advanced universe of worldwide deals, it has gotten basic for organizations in diverse nations to facilitate their inventory network information (Lagnevik, 2003). This coordination is called Global Data Synchronization (GDS). The objective of GDS is to make a general product code that could be seen by venders and purchasers all over. With such a code, stores and their suppliers can convey plainly, unambiguously, and—most critical precisely about the merchandise they are purchasing and offering. Efficient store grouping. Efficient renewal (In the nick of time stock minimizes the measure of stock held by appropriation focuses and store private cabins). Efficient advancement. Efficient product presentation. Before ECR, stores and food makers had centered fundamentally on diminishments in logistical costs. GDS is an amplification of ECR. Like ECR, it is intended to decrease overabundance stock in any case, on the grounds that it lessens the frequency of information failures and permits information to be imparted all the more effectively, it spares time and cash all around the store network process. The approach of computerization, the Web, and the declining expense of high-controlled machine supplies and programming have made this kind of consistent correspondence and concentrated stock administration progressively conceivable and moderate. The Worldwide Information Synchronize System: GDSN is a system of information pools with a worldwide registry for imparting data about products and organizations. It was considered, and is backed by, the European Article Number (EAN) Companionship, the Uniform Code Committee (UCC), and heading organizations and industry bunches around the world. It empowers exchanging accomplices in the store network to trade information that is exact, breakthrough, and agreeable with all around upheld EAN and UCC framework principles. GDSN is dependent upon a unified worldwide registry that joins with information pools around the globe, empowering institutionalized information to be synchronized on a close continuous premise. GDSN was produced in light of the high expenses connected with mistaken information. To guarantee GDSN helps the client group, EAN and UCC made an oversight board of 17 senior executives from assembling, retailings, and EAN part associations to administer GDSN, advertise its worldwide appropriation, and location key issues identified with its rollout. Political issue: On political components, the UK government has expanded the weight on food suppliers to concoct healthier foods. The legislature announces and helps good dieting by making activities, for example, Sound Schools. This urges students to contemplate the decisions they make when picking what to consume. Economic issue: Budgetary components incorporate changes in purchasing examples as individuals salaries climb (Henningsson and Hyde et al., 2004, pp. 505--512). Case in point, as livelihoods go up individuals like to purchase what they see as unrivaled assortments of a product sort. We see this with the improvement of prepared arranged foods. As individuals get to be money rich and time-poor they like to switch to prepared dinners and easy to get ready foodstuffs that they can rapidly warm in a broiler or microwave. Instead of purchasing potatoes and making chips at home or taking the time to go to a fish and chip shop, it may be seen as additional alluring to purchase broiler chips. Obviously, it may be less expensive to make your own particular chips by peeling and cutting up potatoes. Dependable consuming and solid activity empowers everybodys wellbeing and prosperity. Environmental issue: Carbon foot shaped impressions -as opposed to food miles -will be the ecological catchphrase with the most impact over the food and beverage industry throughout the following five years. Producers and retailers are making moves to survey their carbon foot shaped impression, either inside or by outsourcing the exploration to organizations offering techniques, for example, Lifecycle Appraisal (LCA). The significant effect regions (forms that help the biggest volume of GHG emanations) will differ by organization and by product inside an organizations portfolio (Fsg.org, 2012). The point of recognizing a carbon foot shaped impression is to quantify the products natural effect and afterward decrease emanations accordingly decreasing and inevitably dispensing with the carbon foot shaped impression inside and out. Be that as it may, there are reactions of the framework as large plan organizations are paying to balance their discharges instead of earnestly bringing them through progressions down to the handling process/supply chain. Key issues: According to these market scenarios analysis a food company in UK can face these problems- 1) government intervention i.e., the government is keeping an sharp eye upon the food manufacturing companies taking into consideration the environmental issues like carbon emission, sudden changes in climate, sustainability etc. Apart from these, government is taking serious steps for lowering the high obesity rate throughout the country. From the past record, it can be seen that the people of this country generally depends upon high fat added foods which produces a dangerous result if consumed for a longer time period. Obesity causes a lot of diseases even among the children (Tropp and Ragland et al., 2008). 2) On the other hand, the majority of the food that consumers generally like the frozen food or ready-to-eat/ make food as these foods consume less time frame for preparation. UK people have money in their pockets, and have poor situation for time. Eventually they opt for a food which does not need to be “cooked”. That is why, the people of UK depends upon fast food concept, under which burger, frozen foods and lot more falls abruptly. A company which is manufacturing or has started manufacture food, should keep in mind the food habit of the general UK people, as they are major in number. The proper identification of the food habit may lead the company towards definite profit figure in future. 3) Again, in some recent years, the high consciousness about a healthy food habit among the consumers has been noticed. As the government has taken up measurements to remove obesity from the country, it actually has broadened the consumer’s eye and changed concept about the daily food habit. Though this silent movement has not reached every single consumer in allover UK, but some people are actually motivated by concept. 4) Technologically the country is sound in every possible ways. Implementation of any measurement would not take much time to come out with desired results. 5) According to the analysis of the market share of food industry in UK, the retailers are operating to circulate the food products almost every cities in the country. They are actually leading in the market over the farmers. People are also interested in buying the food products direct from the farmers. As the healthy food consciousness is spreading rapidly through the people, they are buying food products more in organic forms, lesser than proprietary. Marketing Strategy: If the company is in medium or small size, and if the company sets its goal to cater into the broader market scenario, then they can involve the farmers for their strategy. The farmers in UK are operating rapidly. The majority of the consumers are still dependent upon the fast foods options. So, manufacturing fast food and operating business with it will be profitable for the company (Walsh, 2011). This is because, for a medium size company a huge financial investment or burden would be riskier than investing relatively smaller amount into the business. The small or medium companies can purchase or take over the production of a farmer and sell it into the market adding higher price. For doing this, the company authority must invest a moderate amount of finance. In this case the company should have the previous market base to deal with this stuff. If they are not having a market base or, they have emerged as new company, then they can take the help of the retailer. The retailer would rather help this type of company to grow a market position where many other companies are working. Again, if the company is dealing with larger market scenario, they can involve both the retailers and the farmer as well. It is completely depending upon the company’s motto or mission & vision of the company authority to choose the alternative path to maximize the profit. They can produce the food product which they are planning in its company premises or they can easily purchase the food product direct from the farmer and sell it into the market with the help of retailers by hiking the selling price to some extent. As a new entrant the company should have the strong resolution for the quality they are distributing among the consumers in form of products. A good quality product always attracts the consumers if they get to know that this kind of product exists into the market among all. This introduction of the products can be performed through the proper advertising and market promotion. Segmentation: In this case the market segmentation would focus on to the homogeneous group. As the market is already cluttered by the existing competitors, so it would not be a suitable idea to start production with heterogeneous products. Marketing a heterogeneous product would be needing a ready consumer base who have faith upon the company, and loyal to company, that is., company has its brand name in the market. Here, homogeneous products indicate the fast food or ready-to-eat products which have a broader acceptance among the consumer markets. Again, for a heterogeneous production or rather say the production of not so popular food option might show the profit if the marketing promotion and the advertisement is performed properly. Only an extraordinary marketing promotion can help the product to be known to the consumers. Targeting: The target market would be the people that fall under an age bracket starts from the adolescent period to the age of 40. Under this age bracket people generally keep themselves busy either with study or with jobs. According to this busy positioning of their life they need their food to be tasty and to avail as quickly as possible. A broader homogeneous group can be captured if the company deals with the production of fast food options. Positioning: To perform its positioning framework the company should invest some amount to acquire a place or placing an imprint in consumer’s mind. Price discounting, free sample distribution of the food products, demonstration into the market places, arranging contests to involve more consumers who will be the prospect of that food product etc. The advertisements should be eye catching, and should be formed in such a way that leaves an appeal in the consumers mind. For advertising this sort of advertising, the company can invest several amounts in researching for neuromarketing techniques that actually helps to improve the advertising methods. Recommendation: 1) If the company is small/medium/large in size, then at first they have to allocate the budget for resources, manufacture, logistics and promotion of the product. 2) Company should maintain proper quality strictly at its initial stages. 3) Selecting a food option for manufacturing and for doing business with that needs proper market research before starting the venture. 4) Knowing the competitors before starting the manufacture of the product is important. 5) Internationally people have different choices according to different cultures, social structures, and economical, financial and geographical factors. The company has to manufacture its product maintaining a uniform norm to sustain into the strong competition. 6) The company can introduce numerous food categories by increasing its product line. Pricing strategy: To enter into the previously cluttered market, pricing strategy holds a special role to grab attention among the consumers. People always ask for the economic option for their needs to their nearest retailers. They also want the proper value against the price they are paying for. The general tendency is to acquire the best product against a minimum possible price which is quite common amongst the regular purchasers. Consumers negotiate for their need, wants and their desires to get it in the lesser prices. Making work of this theory the company should enter into the already established market by discounting its product’s price. In this case the company would be doing business by keeping the product’s price at the marginal level as possible. The whole price discounting technique would be best suitable for the homogeneous products, which have less difference with the other competitor’s product. In this case the company is not coming with any newer version of the product; it is just following the market trend in its genre (Duffy and Fearne et al., 2003, pp. 682--694). Whereas, if the company is introducing a brand new genre of the food product, the setting of the higher prices for the product would be relevant in this case. It would be no longer necessary to minimize the price for the sake of creating an appeal towards the consumer. It is not always true that the higher priced product does not attract the major portion of the consumers. There are different kind of consumers; some prefers low price, some prefers good quality, some only purchase the product in respect of the advertisement they remembers, some don’t have any preferences at all, etc. Distribution of the product: In considering the business channel, the scope of the target business sector accomplished is resolved, the expenses assessed and the deals anticipated for the diverse sorts of outlets in the business channel (Mawson and Fearne, 1996, pp. 34--41). The logistics are paramount, particularly in fare promoting. The areas of the plants, stockpiling offices and the clients in the dispersion framework, the transport accessible, the stock held in the aggregate appropriation framework and the misfortunes in amount and nature of product in the framework need to be explored so that the ideal framework for nature of product, deals and expenses could be resolved (Mann and Adebanjo et al., 1999, pp. 5--21). Promotion of the product: For a food development, the buyer is made mindful of the product, taught about its utilization and profits, and urged to attempt it. Despite the fact that television promoting is regularly utilized for new food products on the grounds that it achieves an extensive number of customers rapidly, it may not be the best decision. Shows and tasting can sway the buyer to attempt the product and to evacuate some of their questions about it due to its originality. Advancement is additionally to the retailer, a vital middle person on the route to the buyer. On account of the trouble of influencing grocery store chiefs and holders to give rack space to another product, retailer advancement is constantly given a bigger extent of the special plan. The clear essentials to the choice of strategies for advancement are to know whom the advancement is pointed at and what it is attempting to do. The individuals to impact are normally the buyers and each one of the individuals who influence their choices, and obviously the last purchasers who consume the food. The points of the advancement may be to generate quick deals, to empower brand distinguishment and to "teach" the purchaser on another sort of product profit or trademark. At the point when the target individuals and the explanations behind the advancements are chosen, coherent choice of media can initiate. There are sensibly great quantitative systems for this undertaking, yet it is still often left to encounter and quality judgments. References: Dudbridge, M. 2011. Handbook of lean manufacturing in the food industry. Chichester, West Sussex, UK: Wiley-Blackwell. Hester, R. E. and Harrison, R. M. 2001. Food safety and food quality. Cambridge, U.K.: Royal Society of Chemistry. Williams, P. A. and Phillips, G. O. 2002. Gums and stabilisers for the food industry 11. Cambridge: Royal Society of Chemistry.  Lagnevik, M. 2003. The dynamics of innovation clusters. Cheltenham, UK: Edward Elgar. Mawson, E. and Fearne, A. 1996. Purchasing strategies and decision-making processes in the food service industry: a case study of UK restaurant chains. Supply Chain Management: An International Journal. Agnew, M. D. and Thornes, J. E. 1995. The weather sensitivity of the UK food retail and distribution industry. Meteorological Applications.  Mann, R., Adebanjo, O. and Kehoe, D. 1999. An assessment of management systems and business performance in the UK food and drinks industry. British Food Journal. Duffy, R., Fearne, A. and Hornibrook, S. 2003. Measuring distributive and procedural justice: an exploratory investigation of the fairness of retailer-supplier relationships in the UK food industry. British Food Journal. Henningsson, S., Hyde, K., Smith, A., Campbell, M. and A. 2004. The value of resource efficiency in the food industry: a waste minimisation project in East Anglia, UK. Journal of Cleaner Production. Tropp, D., Ragland, E. and Barham, J. 2008. The Dynamics of Change in the U.S. Food Marketing Environment. [online] Available at: http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5070995 [Accessed: 11 Apr 2014]. Walsh, B. 2011. Breaking News, Analysis, Politics, Blogs, News Photos, Video, Tech Reviews - TIME.com. [online] Available at: http://content.time.com/time/health/article/0,8599,2049255,00.html [Accessed: 11 Apr 2014]. Fsg.org. 2012. Social and Economic Equity in U.S. Food and Agriculture Systems. [online] Available at: http://www.fsg.org/Portals/0/Uploads/Documents/PDF/Equity_in_US_Food_Agriculture_Systems.pdf?cpgn=WP%20DL%20-%20Social%20and%20Economic%20Equity%20in%20U.S.%20Food [Accessed: 11 Apr 2014]. Lewis, H. 2009. Issues, trends and challenges facing the food and drink industry - forecasts to 2014. [online] Available at: http://www.in.cpm-int.com/pdfs/Issues%20Trends%20and%20Challenges%20facing%20the%20food%20and%20drink%20industry%20-%20forecasts%20to%202014.pdf [Accessed: 11 Apr 2014]. Read More