Managing a company in the food and beverage industry is a fascinating task. Food and beverage products are so deeply rooted in the culture of most countries that making and selling them is not only a matter of making and selling good and tasty products, but products that nurture people's body, soul, and heart. Given this, it's not difficult to see that the task quickly becomes complex. The objective of this course is twofold: first, we will focus on contemporary challenges that managers and entrepreneurs in food and beverage businesses should be able to face; and second, we will provide models and tools to design and implement appropriate courses of action to satisfy customers and build an advantage over the competition. This course is made up of four modules and an introduction, each exploring one dilemma that food and beverage companies face. You will be presented with a set of video lectures and guest speakers. These lectures combine an accessible introduction to specific topics integrated with interviews of managers and experts that will give precious insights and examples to the participants. To enhance your learning experience with us, we will make a Documentary on the Excellences of the Modena District available for you, which is in a format that we have developed specifically for this course in order to give you the chance to experience first-hand the territory as our on-campus students usually do. Each module is paired with an evaluated quiz and weekly discussion forums to reflect on the variety of the F&B world, its complexity, and the power of the network that we will build together during the course. Successful completion of the quizzes is required for a course certificate as explained in the Grading Policy. Below the guest speakers of the course: Masterchef Italia Sky – Nils Hartmann, Head of Movie Channels at Sky Italia – www.masterchef.sky.it Eataly - Paolo Bongiovanni, Marketing Director Italy – www.eataly.net Berlucchi – Paolo Ziliani, Owner – www.berlucchi.it Joia Restaurant – Alta Cucina Naturale – Pietro Leemann, Owner and Chef – www.joia.it Branca – Nicolò Branca, Owner – www.branca.it Barilla – Giuseppe Morici, President Region Europe – www.barilla.com Proyecto Expo 2015 Chile – Guillermo Ariztia, Chile Pavillon Director – www.expomilan.cl Winery Il Cavallante, Milano – Sergio Morpurgo, Owner Heineken – Floris Cobelens, Marketing Director – www.heineken.com TRDN – Martin Oetting, Managing Director – www.trnd.com GROM – Federico Grom, Owner and Founder – www.grom.it/en Tetra Pak – Matthew Hatton, Director Competitor Intelligence – www.tetrapak.com BioHombre – Matteo Panini, CEO – www.hombre.it Acetaia Maletti – Carmen & Claudio Maletti Cantine Riunite & CIV – Vanni Lusetti, CEO; Francesca Benini, Sales & Marketing Manager; Elena Lottici, Export Manager; Mario Vandi, Brand Manager – www.riunite.it GlemGas – Marco Guerzoni, Program Product Manager – www.glemgas.com Bibendum Catering – LaFranceschetta58 – Sabrina Lazzereschi & Marta Pulini, Owners and Founders – www.bibendumcatering.it , www.franceschetta58.it DISCLAIMER - Since most of the videos are conducted with those whose native language is not English, we have decided to sometimes preserve their more emphatic speech to keep a tighter match between the audio and the subtitles.
3. Niche Market and Mass Market: Is There One Best Strategy?
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Del curso dictado por Università Bocconi
Food & Beverage Management
902 calificaciones
De la lección
Small vs. Big
Leveraging on size to build a competitive advantage in food and beverage markets. The design of growth strategies in different markets.
Conoce a los instructores
Gabriele TroiloAssociate Professor
Department of Marketing
When talking about size we usually tend to think of the size of the company but
the size of the company in itself, it is not a real point.
The point is the matching between the size of the company and the size of the market.
It is important to move the attention from the size of
the company to the size of the market.
We know that every market can be segmented.
That is to say, every market can be broken down into different segments,
each one of which can have a size.
A segmentation is a creative act of the company,
that is to say, a single company can segment the market in many different ways.
Basically it can come up with segments,
each one of them can have a different size.
The point is to find a way that matches, basically, the size
of the company with the size of the market.
When talking about the size of the market, and so
the match between the size of the market and the size of the company,
one very important managerial issue is to try to figure out which
is the approach that a company wants to have in the market.
We can figure out a continuum.
On one opposite, one extreme, of this continuum, there are niche markets.
On the other side, there are mass markets.
Basically these are the two opposites, and
in between there are many different options that a single company can pursue.
What is a niche market?
A market is a small market which is basically made of customers whose
expectations are very different from the other expectations,
the expectations of the other customers of the market.
A company that wants to pursue a niche strategy is a company whose offering,
whose value proposition is so different from that of its competitors and
so aligned with the expectations,
of a very sophisticated small part of the market that is able to match these
expectations.
This is a niche market and a niche marketing company.
On the opposite side there is a mass marketer, so a mass marketing company.
That is to say a company which basically approaches the market with one single
value proposition:
The same value proposition for the whole market.
We know that the market can be segmented, but the company for its own reasons.
Financial reasons, competitive reasons, image reasons, and/or strategic reasons,
it decides to approach a market with one single value proposition.
Obviously this is an extreme.
In today's markets, in food and beverage businesses it is very unlikely and
uncommon to find a company which tends to approach
the market exactly the same way with the same value proposition,
but in theory there is this option.
In most of the situations, companies chose a strategy in between.
Close to the niche marketing strategy there is a specialization,
segment specialization.
That is to say, a company decides to focus on one single segment, which is not so
narrow as a niche one, which can be very broad,
but the company serves all the needs of the people,
the customers in the segment.
For this reason, it is specialized.
One example is companies specialized in baby food.
Baby foods depends on age,
it depends on the specific requirements of the mothers or the families.
I can decide to focus on that segment, to be specialized in baby food, and so
to serve all the customers in that segment with all the needs they have.
One very nice example is HiPP.
HiPP is one of the most popular brands, and so companies in this business,
which is completely specialized in organic food for babies.
Close to the mass marketing approach, there is the macro segmentation approach.
The company splits,
divides the market into very big segments, few but big segments.
In this case, the value propositions are different but
are different only for big segments.
The company doesn't go into more specific segments.
One example in this case could be a burger chain like McDonald's.
McDonald's has a very standardized approach all over the world, so it can
seem very mass marketing, but then a few years ago McDonald's launched McCafé.
With McCafé, the company wanted to target another segment, for
the occasions of usage, which is basically breakfast or breaks along the day.
They have the traditional McDonald's restaurant and then the McCafé.
In this case, there are two macro segments divided by the occasion of usage served with two
different value propositions.
In between, there are multi-segmentation strategies:
companies which try to approach the market and
each segment of the market with different value propositions.
This is very market-oriented because the company recognizes that in
the market, there are different segments with different expectations,
and so the company decides to serve each single segment with a different value
proposition.
Usually, this value proposition is represented internally by
a specific brand.
There are companies with very huge brand portfolios;
each one is devoted to a specific segment.
In food and beverage business,
this is the typical approach of big multinationals.
If you think about Dannone in the yogurt market,
they have many different brands for each different segment within the market.
If you think about spirits, we have big groups like DIGO or
Bacardi and they have different spirits,
so different value propositions for each segment within the spirits market.
Besides the continuum between niche and mass market,
there is another which is parallel to this, another continuum that we can
take into consideration to make managerial decisions,
which is the continuum between personalization and standardization.
Personalization basically means that I
give the specific segment a specific value proposition.
At an extreme,
it means that each single customer can have a specific value proposition.
With standardization, we have exactly the opposite.
One single value proposition for everyone.
Usually, standardization backs a mass-marketing approach,
whereas personalization backs the niche marketing approach.
Also in this case you can have many different options in between.
That is to say, if you have a multi-segment strategy, it means that you
give some value propositions to specific segments which are more personally,
meeting the expectation of that specific segment.
Let's take an example:
The food service business.
The typical example of standardization is a restaurant
with a predefined tasting menu.
You go into the restaurant and you cannot choose what to eat, basically.
There is a tasting menu, you can take only this one option.
On the opposite side, complete personalization,
you get into the restaurant and you ask for the recipe you want to have.
Obviously this is very uncommon in restaurants because if you
pursue this strategy you should be able to have all the ingredients that can be
combined to give customers all the potential recipes they like and they prefer.
In this case there are other options in between.
The typical example is a restaurant where you have a tasting menu
and a menu à la carte
where basically you can choose a predefined menu or
you can choose a combination of recipes that you like most.
And we go ahead, we move into the theme of consumption.
Needless to say, since I like my specific recipes,
I don't go to the restaurant, but I prepare them for myself.
But also in this case, a company can provide you with help and so
with a specific value proposition.
Maybe you are not so competent in cooking, maybe you're not so
competent in portioning the food that you want to prepare and eat.
In this case, there is a good example, which is HelloFresh,
which is a company basically providing you with all the ingredients of a recipe
that you can prepare at home by yourself.
The only thing you have to do is to prepare the recipe
with the ingredients that have been chosen and portioned by the company.
As you see, there are many different options in terms of personalization and
in terms of standardization.
The point is that in each market, for each product and each service,
we can imagine a standardization and a personalization.
One nice example of personalization is a project by PepsiCo which is called Spire.
Basically, Spire is a digital soda fountain machine:
a machine where you can get your soda that is your drink, and
you can mix ingredients to make the drink you like;
which is a revolutionary project in a business where usually,
customers are not able to mix the ingredients, they can only get
the brand with the flavors that they like.
Also in this business it is possible.
You have to choose between personalization and standardization, and
so between a niche marketing approach or mass marketing approach.
Obviously there are advantages and disadvantages in both.
If you go for a mass market with a standardized value proposition,
you, by definition are very efficient.
Your costs will be reduced, you have a lot of synergies: commercial synergies,
production synergies, and communication synergies,
but on the other side, you will standardize.
You are basically asking your customers who have different expectations
to reduce their expectations in order to be aligned to your value proposition.
On the other side, you have personalization, which is very effective,
The real advantage is effectiveness,
because, as an extreme, you give each single consumer a specific value
proposition, or each different segment a specific value proposition.
By doing so, you have to differentiate your value propositions.
You have to diversify,
and by doing this, you increase the cost, because you cannot use the same
combination of production factors, or commercial factors,
or communication factors for everyone, for every brand and/or product.
In this case you increase the effectiveness but lose efficiency.
Again, it is a point,
a managerial choice of the company to chose what he strategy to pursue is,
what is the position the company wants to have in this continuum:
closer to the niche, closer to the mass,
closer to personalization, closer to standardization?
Starbucks is a good example of a mass marketing approach.
Obviously as a consumer you could say, when I go into a Starbucks restaurant,
I can choose the combination of products that I want.
You would be right, but the point is the format.
Starbucks restaurants are a format of restaurants, and
the format is always the same.
Maybe you can slightly different formats in city centers or
in airports or in other locations,
but the basic format is more less the same.
It's very close to the mass marketing approach.
A nice and interesting example in the personalization of food service is Subway.
Subway is a big chain of fast food.
You can eat sandwiches, panini, and other different recipes,
but one way to approach the personalization issue is to provide
customers with the possibility of making their own sandwich.
Subway allows consumers to choose different breads,
different fillings, different dressings,
by doing so, each single customer can get exactly the recipe he or
she wants.
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