Lecture 3: Food Consumption and Consumer Preferences Flashcards Preview

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Flashcards in Lecture 3: Food Consumption and Consumer Preferences Deck (28):
1

Foodways

Common patterns of dealing with food within a homogenous group of people/society

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4 characteristics of foodways:

1. No two societies have identical foodways
2. Foodways result in somewhat similar and stable food preferences
3. Foodways add social significance to the diet and are taught to each succeeded generation
4. Foodways adapt to socio-economic changes such as urbanisation, education, income and changing lifestyles

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5 factors that influence foodways

1. The functional (physiological) value of food
2. The socio-physiological values of food
3. The economic values of food
4. The availability of foods
5. Consumers' knowledge and information about foods

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Two major sources of growth in food consumption

1. Population growth determines total need for food
2. Income growth determines consumer ability to pay for their needs

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Effective food demand

Encompasses both consumer needs and ability to satisfy those needs

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Income elasticity (of demand)

- Responsiveness of food consumption to income growth

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Normal good

Quantity consumed increases as income grows

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Inferior good

Quantity consumed decreases as income grows

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Luxury good

Consumption increases more rapidly that increase in income

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Elastic, unit elastic, inelastic

- Elastic, where |E| > 1
- Unit elastic, where |E| = 1
- Inelastic, where |E| < 1

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Negative, positive, zero income elasticity

- E < 0 --> negative IE (inferior goods)
- E > 0 --> positive IE (normal goods)
- E = 0 --> zero income elasticity (no relationship to income)

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Income elasticity of food

Food has low income elasticity
- Engel's law: as income increases, % of income spent on food decreases

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As income increases...

- Substitute more expensive foods for staple foods
- % of income spent on food decreases
- Consumer broaden the product bundle
- Demand for convenience food grows due to growing opportunity cost of time

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Motivation for consumer preferences can be characterised as:

1. Psychological
2. Emotional
3. Cognitive
4. External - societal effects

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Consumer decision-making

- As a rational decision maker: assess all options based on available information
- As an uninformed shopper: emotional decision
- Usually somewhere between the 2

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Non-compensatory decision rule

Consumer rules out options that have low desirability on a particular attribute, no matter how well it performs on the other attributes
e.g. refusal to buy products not produced in AUS

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Lexicographic decision rule

Consumer chooses product based on desirability of one most important attribute, no matter how poorly it performs on other attributes

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Conjunctive decision rule

Consumer considers a product of attribute if it meets a certain attribute threshold
e.g. less than % fat

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Compensatory decision rule

- Unweighted: consumer adds up attribute desirability and chooses product with higher score e.g. biscuits with high fat if they have low sugar
- Weighted: desirability is weighted by importance e.g. willing to give up fat or sugar but not in same ratio

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Loss aversion

Individuals tend to value losses more highly than gains
Food marketing - reduce the size rather than increase the price

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Excessive choice effect

Consumers are less likely to make a purchase when presented with too many options to choose from
- search costs are higher when there is an abundance of options

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Choice bracketing

- Narrow bracket - decisions made in isolation
- Broad bracket - decisions made while accounting for all other choices made

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Exploratory research

- Initial research conducted to clarify and define a problem, to provide insight to be used in subsequent study
- Qualitative

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Confirmatory research

- Aims to provide specific answers to research problems
- Quantitative

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Primary data

Data collected firsthand by the researched using original research tools to answer specific marketing questions
- Pros: can ensure collected info is adequate
- Cons: expensive and time-consuming

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Secondary data

Already available information, typically collected for another purpose
- Pros: readily available, can be free
- Cons: may not be ideal to answer specific question, info often aggregated - much of information can be averaged-out and lost

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Stated preference research

Methods that ask individuals hypothetically, what they would do in a given situation
- Pros: can ask about products that don't yet exist
- Cons: hypothetical bias, possible loss/gain faming bias

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Revealed preference research

Analyses what people actually did in a situation that had economic consequences
- Pros: free of hypothetical bias
- Cons: limited to goods that exist now, insifficient variability to variables of interest