Literature review

4.2.1 Marketing and market orientation

The concept of marketing emerged in the 1950s, placing the consumer as the focus of the business, to meet current and future needs (Keith 1960). From this philosophy, the market orientation countered the sales orientation, which was focused on the needs of the seller and not on the consumer’s needs (Jaworski & Kohli, 1993; Keith, 1960; Levit, 1960). With this in mind, marketing can be considered as a process aimed at satisfying the agents that perform the exchange.

In the contemporary view, Kotler (2000, p. 4) define marketing as ‘a social process by which individuals and groups obtain what they need and desire through the creation, offer, and the free exchange of value products.’ As synthesised by Neves (2000), marketing is used to understand the needs of final consumers and intermediaries – through a research process – analysing the behaviour of consumers and markets to define which segments can be satisfied, which targets the company will explore, which kind of differentiation can be provided, the correct strategies of price, and how to make products available to consumers through channels.

Drucker (1954) points out that companies have two fundamental functions – marketing and innovation – which must interact constantly with other activities. The objective of marketing is to make selling superfluous, understanding consumers’ needs so well that products and services sell on their own. On the other hand, innovation must provide economic satisfaction, resulting in low prices, higher quality, convenience, or a definition of a new desire. Other authors, such as Traill & Grunert (1997), point to the relationship between marketing and innovation, stating that, to be innovative a company should be market-oriented. Companies that adopt the philosophy of market orientation tend to be more successful in responding to environmental changes and to have a greater capacity for innovation (Atuahene-Gima, 1996).

Marketing planning involves several different steps, taking into account the analysis of suppliers, competitors, industry, resources, and capabilities, and finally, customers (Neves, 2013). As the philosophy of marketing is focused on the consumer’s needs, special attention should be paid to the final link of agri-food chains, to predict patterns and anticipate trends. Consumers are influenced by four categories of factors: cultural, social, personal, and psychological. Cultural factors include the consumer ecosystem and values;

social factors are related to reference groups such as friends and family, among others, that exert influence on their behaviour; under personal factors, the most important ones are age, life-cycle, profession, economic

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circumstances and lifestyle; and finally, the psychological factor is related to motivation, learning process, and attitudes (Kotler, 2000). With this in mind, monitoring the consumer is essential for determining the strategies of marketing stimulation – product characteristics, price, place and promotion strategies (Neves, 2014a).

The macro-environment can influence consumer behaviour. Food industries must be aware of what is happening in the external environment, which they cannot control, including economic and natural factors, political and legal factors, social and cultural factors, and technological factors. In so doing, they can identify the facts that are occurring and shaping the environment, measure the impacts of each one of them and how the company will be influenced, and finally, analyse opportunities and threats, and set up the action plans (Neves, 2014a).

4.2.2 Transformation in the environment and consumer behaviour

As stated by Neves (2014), food and beverage industries, retailers, and other food channels are facing critical changes in their external environment, resulting in changes in the final consumer choices. From the 1980s to 1990s, markets started to become global, reducing regulation and increasing competition, reaching a high level of global transactions with greater interdependence of nations and standardisation of product quality and safety (Sheth, 1986). The opening of the economy, the deregulation of markets, the crisis of traditional forms of state intervention, and the formation of economic alliances were the main structural changes that made globalisation possible and, with this, generated the need to increase competitiveness in different sectors, including agri-food chains. Because of this conjuncture, nations, companies, and individuals needed to adapt to the broader competitive environment, identifying sustainable competitive advantages (Jank and Nassar, 2000).

According to McKinsey (2019), the world’s economic centre of gravity is shifting back to Asia, especially due to the Chinese market economy and opportunities from the perspective of population growth, increased urbanisation, and internationalisation of companies. Neves and Trombin (2017) expect that the food and juice markets will grow strongly in what they called ‘food booming markets’, countries such as China, India, Bangladesh, Vietnam, Pakistan and others, most of them on the Asian continent, with some common characteristics: growing population, young population, fast urbanisation, growing income generation and distribution, lack of production resources, with resources of value being exported, regulations that favour food and juice imports, among others.

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With the advance of digitalisation and technology in today’s scenario, socio- cultural change has accelerated, and the information and communication flows move faster from end to end of the agri-food chains. So, the digital world has become increasingly accessible and integrative, breaking down physical, institutional, and biological barriers. Internet and information access have created a new consumer profile with a desire for personalisation, instantaneity, transparency and less dependency on third parties (Kumar &

Kapoor, 2017; Manning, 2016; Manning et al., 2007; Planet Retail, 2017).

On the other hand, instead of globalisation and global competitiveness, there is a growing movement valuing local food production, based on the idea of production transparency, traceability and quality assured due to location.

Moreover, in local production, it is easier to monitor environmental aspects, animal health and responsible production (De-Magistris et al., 2017; Planet Retail, 2017; Woo & Kim, 2018).

Sustainability, as well as responsible consumption, waste awareness, animal welfare, and respect for the environment throughout the entire production chain have become recurring consumer concerns. In addition, they have been changing their concepts of time, in order to set their own limits by selecting their activities to have a more enjoyable life (Giampietri et al., 2015). Also, there is a greater awareness among consumers about what they are eating: whether it is of natural origin, authentic, nutritious, full of fibre and protein (De-Magistris et al., 2017; Hedin, 2019; McCarthy et al., 2016).

Besides that, the current media have enabled greater consumer empowerment. Everyone can be an ‘expert’ with quick information at hand, and with a ‘compulsive’ need to share this information. Through public evaluation, consumers can enhance or destroy the reputation of companies, products and services based on their experience, which is part of the sharing economy in which we are living (Hedin, 2019; Kumar & Kapoor, 2017).

Consumers are looking for immediate experiences that suit their lifestyle, allowing them to spend more time on their work or social life. In addition, they are getting tired of generic products. Today there is an increasing appreciation of quality and differentiation that transmits a certain level of

‘status’. Good user data management conveying public confidence in access to information is a key factor in meeting this need for uniqueness and personalisation (Heide & Olsen, 2018; Angus & Westbrook, 2019).

Brands that emerge in this context of practical and sustainable products, discover an unmet need and focus on the consumer, tend to show rapid evolution, due to the dynamism of the market. In addition, packaging has become very important to reinforce brand positioning, providing

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information to highlight products on the shelves. Another effort in the scope of packaging is to adapt to the demands of reusing materials, zero waste and recycling (Mascaraque, 2019).