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MANAGING

FOOD & BEVERAGE COMPANIES


Module 2
Tradition and Innovation
1

KEY
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AGENDA
!Nurture Authenticity
! Innovating Value Propositions
! Innovating along the Customer Experience
! Product Lifecycle and Market Lifecycle
! The Value of Brands
3

AUTHENTICITY
How can a company be considered
authentic
by consumers?

Authenticity is a concept
that lets the company reconcile
TRADITION with INNOVATION
Why autheticity matters
4

AUTHENTICITY
Brands seek their aura of distinction and pedigree through allusions to time and
place. (Alexander, 2015, p.1)
Authenticity may be de!ned objectively by the process of creation and the physical
materials used in the creation process or by constructive values that are subjective and
derived from users perceptions of authenticity (Chhabra, 2005)
Constructive authenticity allows for di"erent interpretations of reality on the basis of
consumers projections onto objects (Leigh et al., 2006, p. 483)
Existential authenticity is a product of postmodern consumers orientation toward
pleasure which is brought into being through the liminal process of activities (Leigh et
al., 2006, p. 483)

AUTHENTICITY

PRODUCT
AUTHENTICITY
)

PRODUCER
AUTHENTICITY

PRODUCT AUTHENTICITY
There are three aspects de!ne the authenticity of a product:

TRADITIONAL METHODS OF PRODUCTION


HISTORY
TERRITORY
7

PRODUCT AUTHENTICITY
TRADITIONAL METHODS OF PRODUCTION
The production
process in"uences
the product's overall
evaluation.

A company that
wants to exploit
Parmigiano
Reggianos fame has
to respect its strict
rules of production.
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e.g.

PRODUCT AUTHENTICITY
Champagne and Prosecco are both sparkling. But what
makes them so di#erent and so authentic at the same time?
Why are they dierent?
The methods of production

source: http://winefolly.com/review/champagne-vs-prosecco/

BeFood Interviews:

Building a new tradition


We invented Franciacorta, and nobody can change this.

Paolo Ziliani
VicePresident
D9.6$)E+%-9**0.)F),);?#?G?)

10

PRODUCT AUTHENTICITY
HISTORY
Having a long history behind a brand can increase the trust that
consumers have towards it.

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11

PRODUCT AUTHENTICITY
TERRITORY

The place where a product is


produced can completely change its
image and thus its authenticity.
Sometimes territory works as a
guarantee for the product:
consumers are more likely to trust it.

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12

e.g.

PRODUCT AUTHENTICITY

Starbucks built its authenticity

Coca-Colas history

Are they authentic ?


source: http://www.gutewerbung.net/wp-content/uploads/2014/05/McDonalds-Pictograms-Campaign-3.jpg |http://pad1.whstatic.com/images/thumb/9/91/Order-atStarbucks-Step-2-Version-2.jpg/670px-Order-at-Starbucks-Step-2-Version-2.jpg | http://dismuke.net/howimages/cocacolasanta1938.jpg

13

PRODUCER AUTHENTICITY
Three characteristics de!ne the producer authenticity:

History and Reputation ! HERITAGE


Delivering high quality ! COMMITMENT
Extra-goals besides pro!t ! SOCIAL ORIENTATION
14

PRODUCER AUTHENTICITY
Heritage !

Refers to all the intangible attributes linked to a speci!c


group such as history and reputation. Belonging to this sort of tradition
give companies an extra-value.

Commitment !

Refers to the passion and the dedication that


companies adopt in producing and delivering their value.

Social orientation !

Refers to any extra goals that do not concern


pro!t which could also be an aim of the company. They often become part
of the companies philosophy and values.

15

AUTHENTICITY
Authenticity includes
both:

Tradition
"! Exploiting the product
"
authenticity
"! Based on history
"

Innovation
AND

"! Exploiting the producer


authenticity
"! Based on innovation
16

AUTHENTICITY

e.g.

Producer authenticity can overcome territory issues.

SWEDISH VODKA

FRENCH VODKA

GERMAN GIN

JAPANESE
WHISKEY

source; http://wallpaperswide.com/absolut_vodka_2-wallpapers.html | http://www.vodkaycaviar.com/120-207-thickbox/comprar-vodka-grey-goose.jpg

17

BUILDING AUTHENTICITY
The company has to identify which components of its

HERITAGE
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COMMITMENT SOCIAL
ORIENTATION

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can be recognized
by consumers
as

AUTHENTIC
18

COMMUNICATING AUTHENTICITY
Once the company has found the components to stress, it has to de!ne a

.%,#"#$(,$-.%//*,".+$"%,-#$&+$(0'A consistent communication strategy works through a well coordinated


use of di#erent promotional$ means$ that are intended to reinforce each
other.
It is a comprehensive plan whose aim is to deliver the same message.

19

COMMUNICATING AUTHENTICITY
Consumers identify three di"erent types of authenticity when they read adversiting: pure
(literal), approximate and moral. (Beverland, 2008)
[..] using advertising to project an image of authenticity is di#cult because methods of
mass marketing are believed to undermine such claims (Beverland and Luxton, 2005)
hStern (1994) posits that even though advertisements are representations of reality, they
are still considered authentic if they "convey the illusion of the reality of ordinary life in
reference to a consumption situation" (p.388). (Chalmers, Tandy D., 2008)

20

AGENDA
! Nurture Authenticity

!Innovating Value Propositions


! Innovating along the Customer Experience
! Product Lifecycle and Market Lifecycle
! The Value of Brands
21

VALUE PROPOSITION
The customer value is composed of
a set of bene!ts that the organizations o#ering can provide and
the set of sacri!ces that the customer has to make in order to enjoy the
bene!ts provided by the organizations o#ering.
Bene!ts represent the
positive side of what
consumers get from
consuming a speci!c
product/service: they can be
either psychological,
economic, or functional.

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22

VALUE PROPOSITION
How can a company innovate this ratio?

Bene!ts

Bene!ts

Bene!ts

Sacri!ces

Sacri!ces

Sacri!ces

Increasing
bene!ts

Simpli!cation

Decreasing
sacri!ces
23

e.g.

VALUE PROPOSITION
WINE INDUSTRY
Competition
transformed wine into a
complex product.

Yellow tale simpli!ed the way


consumers perceive wine.

Wine can only be


consumed
by expert consumers.

source: http://www.yellowtailwine.com/media/141396/yt%20fullcol%20yel%20ban.jpg | http://www.totalwine.com/_static/webupload/730/2_93192015_3.jpg

24

COMPONENTS OF VALUE
PROPOSITION
Innovation can involve di#erent components of the value
proposition:

PRODUCT

DISTRIBUTION

PRICE

SERVICE

25

COMPONENTS OF VALUE
PROPOSITION
PRODUCT

Ingredients
Companies can modify their
products by either adding or
subtracting ingredients.

source:https://m1.behance.net/rendition/pm/143147/disp/856981225715285.jpg
http://www.myamericanmarket.com/components/com_virtuemart/shop_image/product/COCA_COLA_CHERRY__x6__400.jpg

26

COMPONENTS OF VALUE
PROPOSITION
PRODUCT

Method of production
Companies can innovate their
production method.

Source: http://www.brewdogbar.se/wp-content/uploads/BrewDog-core-range.png

27

COMPONENTS OF VALUE
PROPOSITION
PRODUCT

Occasion of usage
Companies can urge or cause
consumers to consider their
product for new occasions of
usage.

Source: http://coolmaterial.wpengine.netdna-cdn.com/wp-content/uploads/2013/10/Heineken-Sub-1.jpg|
https://www.philadelphia.co.uk/~/media/Philadelphia/en/Images/Brands/press_ad_06.jpg

28

COMPONENTS OF VALUE
PROPOSITION
DISTRIBUTION
Distribution identi!es the
way that the product is
provided through.
Companies can renovate the
way that consumers buy the
product or the service.

Source: http://a1.mzstatic.com/us/r30/Purple3/v4/ca/7c/fd/ca7cfd3e-27bf-71ca-d2ad-3ec6f3c64b17/icon320x320.png
http://lincolnpizza.co.uk/wp-content/uploads/2011/09/Late-Night-Window-Cling-lr_2.jpg

29

COMPONENTS OF VALUE
PROPOSITION
PRICE

Companies could introduce


new consumer-oriented
pricing strategies based on
market segmentation.

Source: http://www.hibachisuperbu#etnewbern.com/images/bu#et_menu4.png | http://1.bp.blogspot.com/_mpbRVvqlUmQ/TPR0Ech3CPI/


AAAAAAAAAHY/DY-rbDRcFHU/s1600/menu3.png

30

COMPONENTS OF VALUE
PROPOSITION
SERVICE
Companies can give
consumers the
opportunity to enjoy
the product or the
service based on their
speci!c needs and
occasion.

Source: http://www.nutella.com.au/static/nutella/images/products/nutella-products.png

31

BeFood Interviews:

Innovation in the kitchen


The restaurant is like a temple; holy food means happy customers.
Pietro Leemann
Owner and Chef
Joia)

32

AGENDA
! Nurture Authenticity
! Innovating Value Propositions

! Innovating along the Customer Experience


! Product Lifecycle and Market Lifecycle
! The Value of Brands

33

CUSTOMER EXPERIENCE
The customer experience is composed of four stages:
PRE-CONSUMPTION
PURCHASE
CONSUMPTION
POST-CONSUMPTION
34

CUSTOMER EXPERIENCE
PURCHASE
EXPERIENCE

CONSUMPTION
EXPERIENCE
PERCEIVED
VALUE

EXPECTED
VALUE
PRECONSUMPTION
EXPERIENCE

EXPECTED
VALUE

PERCEIVED
VALUE

POSTCONSUMPTION
EXPERIENCE

(DIS)SATISFACTION
35

CUSTOMER EXPERIENCE
Pre-Consumption
Can an
advertising
campaign
drive
consumer
choices?
Absolute AD
Source:https://postmedialeaderpost.!les.wordpress.com/2014/07/coke-can-e1405370395240.jpg | https://artitudeusj.!les.wordpress.com/2013/04/absolut004.jpg

36

CUSTOMER EXPERIENCE
Purchase

Subway

Source:
http://www.wine.com/v6/Dom-Perignon-Limited-Edition-MetamorphosisRose-in-Gift-Box-2003/wine/134791/Detail.aspx

37

CUSTOMER EXPERIENCE
Consumption Experience

Dinner in the sky


Source: http://www.nuovetendenze.net/wp-content/uploads/2013/09/dinner_in_the_sky.jpg | http://www.jagermeister.com/client/styles/assets/stages/visual/en-int/
brandstage-product-int-3.jpg

38

CUSTOMER EXPERIENCE
Post-Consumption

Source: http://www.sararosso.com/wp-content/uploads/SaraRosso_MyNutellaStory-1024x583.png |
http://www.bullbrand.co.za/your-story

39

AGENDA
! Nurture Authenticity
! Innovating Value Propositions
! Innovating along the Customer Experience

! Product Lifecycle and Market Lifecycle


! The Value of Brands

40

TIME
Tradition and innovation should be seen within
the concept of time.

PRODUCT
LIFECYCLE

MARKET
LIFECYCLE
41

MARKET LIFECYCLE
A market consists of a set of actors who interact to exchange goods,
services, reputation and information. These activities and additional
actors who exert their in"uence form the basis for this interaction
The market lifecycle relates to di#erent stages in the life of a market
based on a time unit (weeks, months, or more often years) and the
supply-demand dynamic (I.e. sales). The latter can be expressed with
product units or values.

42

MARKET LIFECYCLE
SALES

Unlikely
to
happen!

TIME
43

MARKET LIFECYCLE
Introduction:

In this stage sales are usually limited and sale growth is slow.
There are only a few competitors (in some cases only the innovator who created the
market) and not many customers.) The objective of competitors in the market
creation stage is customer education.

Growth:

It is the result of the combined e#ect of new customers, who take


advantage of the experience and word of mouth of the original customers, and new
competitors who are prompted to enter the market thanks to growth opportunities.)
The objective of competitors is to follow market expansion, facilitating further
dissemination of product knowledge and building a di#erential image.

44

MARKET LIFECYCLE
Maturity:

When sales stabilize and sales growth by and large stops. Since
potential customers are now actual customers, product purchases tend to be
substitutions and there are few entirely new customers. Maturity for most of the
markets is the longest stage, so sales may "uctuate somewhat due to changes in the
macro-context.

Decline:

This stage occurs when market growth decelerates ever more rapidly,
dropping to the levels of the introduction stage and dipping lower, even to the point
of disappearing. Decline in this context is mainly theoretical, because after expansion
and contraction, along with competitors relaunching and revitalizing their products,
very rarely does a market actually reach this stage.

45

PRODUCT LIFECYCLE
SALES

Likely to
happen
because
products
can lose
their value

TIME
46

DYNAMIC BETWEEN
LIFECYCLES
Dynamic between the two life cycles is fundamental for companies to take
decisions.
The lifecycle is an endogenous process.

SALES
Product

TIME

47

PRODUCT LIFECYCLE
The shape of the product lifecycle is in"uenced by:
CONSUMERS

COMPETITORS

SALES

TIME

48

Consumers

SALES

Late
majority
Early
majority
Early
adopters

Laggards

Innovators
TIME
49

Consumers
Innovators:

Have distinctive traits: a low aversion to risk, a tendency to be nonconformists, and a strong desire for social distinction, close connections with sources
of innovation, and marked interest in new trends in general.

Early Adopters:

Have a greater aversion to risk (especially social risk), and more


intense social connections with other customers; they are more often opinion leaders.
These are the people who set the much more powerful imitative dynamic, the
bandwagon e#ect, in motion.

50

Consumers
Early and Late Majority:

Both of these groups, at varying levels of intensity,


are adverse to risk and as such not particularly taken account for by innovations;
they tend to be conformists and need to see that other people have already adopted
the product before they do the same.

Laggards:

Represent a minority of the market (numbering about the same as the


innovators and early adopters put together). These consumers are very resistant to
change; for the most part they are not opinion leaders and are very strongly tied to
tradition and habit.

51

Competitors
Imitation-Di"erentiation Game
New entrants have to imitate but also try to
innovate with respect to incumbents
It stimulates sales overall
Companies have to choose whether to

Innovate:
LAUNCH A NEW
PRODUCT

Renovate Tradition:
OR

REVITALIZATION

52

PORTFOLIO SOLUTION
Companies may have both
innovation and tradition
in the same portfolio,
o#ering both
conservative and innovative
products.

Source:http://upload.wikimedia.org/wikipedia/commons/c/cb/Coca-Cola_Life_0.5_liter.jpg | http://stander.it/wp-content/uploads/Coca.jpg

53

AGENDA
! Nurture Authenticity
! Innovating Value Propositions
! Innovating along the Customer Experience
! Product Lifecycle and Market Lifecycle

!The Value of Brands


54

BRAND
A brand is a set of symbols
that distinguishes a product of a company from a competitors one.
A brand is a set of mental associations, held by the consumer, which add to the
perceived value of a product or service (Keller, 1998).
These associations should be unique, (exclusivity), strong (saliency) and positive
(desiderable).*

*JN Kapferer, Strategic Brand Mangagement pg. 10, 2008

55

BRAND
Food and beverage products are experience goods

Brands serve as a quality clue


Knowing the
brand
helps consumers,
especially who are
not experts in the
!eld,
make a choice

source: http://wijnbloggers.nl/wp-content/uploads/2012/12/champagne-veuve-clicquot.jpg

; http://www.winereviewonline.com/images/labels/moet_chandon.jpg

56

BRAND EQUITY
Brand Equity: The extra value that the brand adds to the product when the
customer knows the brand.
It is composed of:

Brand Awareness

Brand Image

The extent to which a


brand is recognized by
consumers

The judgment that


consumers have
towards the brand
57

POSITIONING
Positioning: Where your product stands in respect to others
o#ering similar products in the mind of consumers.

Without a di#erence
there is no preference.

58

e.g.

POSITIONING
Can you perceive any di"erence?

Source:http://www.cosmo.com.ua/upload/image/marc-jacobs-diet-coke6.jpg https://wanphing.!les.wordpress.com/2011/05/diet_pepsi_skinny_can_ad.jpg

59

BUILDING A POSITIONING
In order to build a positioning
companies should link to the brand
some associations which have to be:

"!F A V O R A B L E
"!U N I Q U E
"!R E L E V A N T
60

BUILDING A POSITIONING
Primary Associations: Are associations that are directly connected to the
brand such as:
- Attributes of the product
- Bene!ts provided by the product
- Value behind the product
- Competitors

61

BUILDING A POSITIONING
Secondary Associations: are associations that are linked to third parties
that have a link to the brand, such as:
- Awards

- Country of origin

- Events

- Co-branding

- Celebrity Endorsement

- Distribution channels

- Characters

62

BRAND ELEMENTS
Brand Elements: are visual elements that distinguish the brand from
competitors ones.

PACKAGE

JINGLE

NAM

LOGO
&
SYMBOLS

SLOGAN

CHARACTER

URL
63

BRAND ELEMENTS
Brand elements provide value for consumers in two di"erent ways:

#! They help consumers making choices.


#! They provide consumers with meanings.

64

LINKS
Why autheticity matters

Subway

Why are they dierent?

Dinner in the sky

The methods of production

Jager Bond vimeo

Starbucks built its authenticity

Jager bond

Coca Cola history

Berlucchi

Yellowtail

Joia

Coca Cola AD
Coca Cola AD - vimeo

Pinterest Board

Absolute AD
65