British Food Journal

Determining value in the food supply chain
Louise Manning
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htm Determining value in the food Value in the food supply supply chain chain Louise Manning Royal Agricultural University. 11. hedonistic factors defining the emotional worth of food. adjusted for inflation. Gloucestershire. acquirability and the ratio of price: volume of food are explored. trade policies such as export bans and government buying policies. global food stocks have reduced over the last three decades reducing the ability to smooth out price volatility. The current issue and full text archive of this journal is available on Emerald Insight at: www. This policy can be driven at market or governmental levels through the use of farmer subsidies. subsidies and regulation. Manning and Smith. 2011).com/0007-070X. improved purchasing power and greater © Emerald Group Publishing Limited 0007-070X intellectual. Introduction Food price is inextricably linked to global agricultural and trade policy and in the wake of concern over “food-mountains”. flooding etc. Reward factors such as financial. Food. Supply chain. Originality/value – This research is of academic value and of value to policy makers and practitioners in the food supply chain. This has driven economies of scale and the spreading Vol. policies to divert land into biofuel production including tariffs. Findings – Perceptions of value are individualistic. or indeed both in the development of business centres/clusters (Manning and Baines. Increasing food supply chain globalisation has led to consolidation to the evolution of multi-national corporations (MNCs) through vertical or horizontal integration. incentives and disincentives to produce food. (1998) cited by Miller and Coble (2006) proposed that governments have overtly pursued cheap food policies to keep the price of food below the competitive equilibrium price. Brand. These factors all influence the price: margin: profit interface. emerging developing economies that put upward pressure on the input costs of food production (fuel. Shareholders are profit driven and price is the predominant factor that influences consumer purchasing behaviour leading to a constantly negotiated interface between Downloaded by UFMS At 13:50 18 April 2016 (PT) price and other reward factors. degree of utility. technological and production resources for organisations to draw upon DOI 10. Design/methodology/approach – The research included a literature review and the development of a cost: reward (give: get) stakeholder interaction model. 2011). British Food Journal 2004. Factors that have an influence on food price include: the impact of speculation and portfolio diversification on commodity future markets. slower growth in yields of cereals. declined substantially from the early 1960s to the early 2000s. Knutson et al. (FAO. Stakeholder Paper type Conceptual paper 1. increasingly scarce natural resources. 2649-2663 of fixed costs over a larger volume base. 117 No. 2015). and a series of weather shocks such as drought.1108/BFJ-02-2015-0049 .emeraldinsight. price controls and liquidating food reserves to suppress prices. depreciation of national currencies. affordability. Conflict of interest exists for business between maintaining shareholder value and delivering “value” within the food offering to its customers and the wider array of societal stakeholders. Price. fertiliser) and the demand for a higher level of protein in the diet. Prices of food commodities on world markets. UK 2649 Abstract Received 1 February 2015 Revised 16 June 2015 Purpose – The purpose of this paper is to explore what the term “value” means to the multiple Accepted 23 June 2015 stakeholders interfacing and interacting with the food supply chain. Keywords Value. 2015 pp. when they reached a historic low (FAO.

To remain viable MNCs have to consider the needs of their 117. the potential for reducing long-term risks associated with resource depletion. Friedman (1962.11 corporate shareholders. George (2003) determined that the pressure to increase stock prices and shareholder value in the short-term has ultimately caused MNCs to lose sight of how lasting shareholder value is actually created. animal welfare. As a business driver. Further. (2007) conclude that CSR can be at odds with a capitalist approach. maintaining shareholder value is as powerful a 2650 force as the requirement for the organisation to supply food to the ultimate consumer that is safe. p. Borregaard and Dufey (2005) defined sustainable products as those products that generate greater positive or lower negative social. (2003. which go above and beyond those required by law”. 133) is often quoted for stating that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”.e. but the firm also has special obligations to other stakeholders. but can be described as offering. environmental protection. environmental and economic impacts along the value chain from producer to end user than conventional products. it could be argued. 2006). Friedman therefore proposes that the greatest benefit to the public good is allowing businesses to operate with minimum regulation in their continued pursuit of profit. Therefore stakeholder management is more than simply managing shareholder wealth it is about value maximisation. for example. 2009). they suggest that a wish to protect brand value drives organisations to take responsibility for defining and verifying supplier and wider supply chain practice. though it is often implicit”. This brings into focus the concept of sustainability as providing value. local community. food safety. 2. employment law and employee health and safety (Lindgreen and Hingley 2009. p. This does not consider a need for Downloaded by UFMS At 13:50 18 April 2016 (PT) organisations to comply with what is deemed morally correct by wider civic society. that sustainable products can be actively . Philips et al. including their financial expectations for a suitable return in order to maintain investor confidence (Jaegar. 1995). fluctuations in energy costs. (2003) comment that stakeholder theory is not intended to provide an answer to all moral questions and debate. affordable and legally compliant. CSR encompasses many elements of sustainable development including addressing minimal legislative compliance. and pollution and waste management (Shrivastava. as MNCs are challenged by the global interaction of their supply chains and being able to demonstrate they assure the practices of all the individuals and organisations involved and that such practices are built on ethical foundations. national). government (local. Stakeholders can be internal or external to the business and include shareholders. 248) state that the organisation and its managers do have an obligation “to ensure that the shareholders receive a “fair” return on their investment. BFJ (Manning and Smith. product liabilities. The question in terms of developing value is whether all stakeholders have equal equity? Philips et al. Amaeshi et al. Stakeholder theory Stakeholder theory considers the primary role of organisations in terms of being profit focused or value focused. employees. finance houses. 2015). civil society (external) and internal stakeholders such as employees. They argue that corporate social responsibility (CSR) strategies cannot be pursued to the detriment of shareholder return. 480) determine that stakeholder theory is a theory of both organisational management and of ethics. i. suppliers. p. Indeed they argue “all theories of strategic management have some moral content. Lindgreen et al. Sustainability has been defined in many ways. Heath and Norman (2004. customers.

driven by ruthless competition seeking greater market share to benefit their shareholders (Hodges. Therefore myriad perceptions of value influence food choices and have different 2651 meanings for the various stakeholders in the food chain. 2005). . Therefore within the current market environment. technological and situational factors. bakery and dairy products. (2013) assert that in the major supermarket chains approximately 40 per cent of pig meat is sold on promotion. to attract consumers (Allain and Chambolle. differentiated in some way. for some products to “lure” customers into stores in the hope that they will also purchase high-profit impulse goods (Hess and Gerstner. minimise liability and build supply chain partnerships. 4) state that these intangible values “differentiate a product from its competitors. Trust in such partnerships can be challenged if all partners do not feel they have had a representative retention of the “value” of the overall business relationship. continue to be the major driver of consumer purchasing habits and sales uplift. Value in the sustainable products are seen as those products that can accrue value through each food supply stage in the supply chain by product or process differentiation that drives marketing and brand development. and enhance customer satisfaction levels. sometimes below cost. chain However. This begs the question this research sought to answer. 2007). Brand value Bowman et al. The English Food and Farming Partnerships (2005) argued that retailers would continue to push to be top of the cheapest supermarket league as they are well aware that for consumers the store that offers them the best value for money attracts the greatest footfall. Davcik and da Silva (2015. Therefore meat products are often used as a “loss leader” to draw customers into the retail stores. formalising supply chain compliance standards adds transactional cost in a food retail environment where competition over the price consumers’ pay for food is fierce. Built into this relationship is the need to safeguard corporate reputation. Leader pricing is a pricing strategy in which retailers set very low prices. When Downloaded by UFMS At 13:50 18 April 2016 (PT) considering the perception of value it is important to consider leader pricing. the nature of inter-firm competition and a variety of socio-political. The number of product lines available will also influence food choice. Building on this Dawson (2013) puts forward that the decisions made by retailers on what to offer in which shop and how to influence decisions on consumer’s choice reflect both the strategic and operational aspects of a large retail firm. Dawson (2013) states that consumer sovereignty is an oversimplified model of the reality of the relationship between consumers’ choice and retailers’ offer as decisions on what is available to the consumer are made by the retailer. Common loss leading food and drink products include: alcohol. Brand value contains both tangible and intangible elements. Food can be considered as a product in a race to cut unit costs and make profit. or value for money. Below-cost pricing or “loss leading” is a pricing strategy making (apparent) losses by selling some products at a price below their cost. p. Bowman et al. namely: what does the term “value” mean to the multiple stakeholders interfacing with the food supply chain? 3. (2013) suggest meat products are important to consider in terms of their being “value products” because meat is a key category where low price offers drive footfall in retailers. Kaltcheva et al. Indeed. 1987). The European Food and Farming Partnerships stated in 2005 that price. influence consumer preferences. (2013) propose that perceptions of a retailer's value proposition tend to become eroded when consumers compare prices across stores and discover lower prices on very similar (or even identical) merchandise at competitors.

food will need to be thrown away. (4) brand associations. e. Taking this concept further could mean that brand equity is differentiated separately by the organisation itself. for retailers brand equity has a marketing perspective and it also is a subjective construct that encompasses intangible Downloaded by UFMS At 13:50 18 April 2016 (PT) cues that are valued by the consumer. (3) perceived quality. product failure. (2) brand awareness. as a result of a Table I. e. etc. Yeung and Morris (2001) .11 interfaces in the supply chain as it is of the interaction with the final consumer.g. government statutory product testing.g. One approach would be to consider that risk management requires a multidisciplinary Perceived risk component Implication Physical loss Negative health impacts of consuming unsafe. performance loss Components of Time loss Loss associated with lack of convenience. and time loss. By extension this means that product value extends beyond tangible financial return to include other factors that are drawn together in customer. Risk reduction methods translate from Mahon and Cowan’s study to considering the key factors that influence risk to brand value (Table I). Davcik and da Silva (2015) assert that whilst equity has a financial core especially for shareholders. time lost from perceived risk work owing to illness associated with Psychological loss Worries or concerns experienced by consumers that relate to the product food value Sources: Adapted from Mahon and Cowan (2004). psychological loss. BFJ often leading to greater customer loyalty”. misleading corporate communication etc. Further Mahon and Cowan (2004) argue risk reduction mechanisms can be adopted by MNCs such as quality assurance. Thus with any consideration of value there also comes the concept of financial and product risk.g. nutritional loss. Mahon and Cowan (2004) in their study considered that product performance risk had the highest correlation with overall risk. its suppliers and customers and by consumers. Aaker identified five brand equity components: (1) brand loyalty. Indeed the separate constructs of brand equity may be derived from a different perception of the balance between brand assets and liabilities at each stage with the consumer derived sense of “what is value” relating to a specific and discrete interaction of brand assets and liabilities. failure to meet stated shelf-life. money back guarantees. e. The risk components include physical loss. but brand liabilities also have impact. saturated fat and caffeine are used Performance loss The factor influences the performance of the food. Poor performance of food products will also have one of the highest impacts on perceived value. for manufacturers it can be seen as strategic worth. 2015). deterioration. differentiation to either high quality products or special offers. time spent cooking. Aaker (1991. These focus on brand assets. reputation damage derived from supply chain partners. performance loss. medical treatment may be required. poor quality food especially where ingredients such as sugar. product and financial markets and this accrued value can be determined as brand equity (Davcik and da Silva. traceability and labelling systems. and (5) other proprietary assets. taste. salt. cited by Davcik and da Silva 2015) proposes that brand 2652 equity is a balance of brand assets and liabilities that add or detract from the overall value of a product to both the organisation and also to customers. Financial loss The food can spoil meaning that it will cause a financial loss. private product testing programmes. The first three contributing most significantly to overall perceived risk. This is as true of the supplier: customer 117. financial loss.

they are less visible and have less priority (Trench et al. the lack of focus on detecting food fraud and lastly the lack of a strong deterrent (Manning in press). approach from the senior management team and also a strategy of integrated Value in the risk management through the supply chain that will lead to improved business food supply sustainability.2 to 16. heart disease. The substitution of horsemeat for beef was undertaken in products where there was a pressure on minimising product cost and final price. a shift in consumption patterns. internal risks associated with the organisation itself chain should be easier to quantify and thus mitigate than external risk especially where there is a strong organisational operating system. Thus MNCs need to consider this risk and take mitigating action in order to maintain both shareholder and consumer confidence. stroke. Trench et al. urban or rural residence. namely.g. type 2 diabetes. the formulated approach described by Mintzberg (1978). this can lead to a trade-off between reducing budgets and reducing concerns over food integrity. 2012. a higher demand for “cheap” food and a reduction in supply chain agility due to the logistics of distributing foods to urban areas. Nutrient-rich foods are associated with better health outcomes tend to cost more per kilocalorie (kcal) than do refined grains.e. the complexity of food supply chains. and cancer and such risk to brand value might not be seen as being worthy of consideration by short-term investment shareholders during the timescale of their investment. Czinkota et al. e. Consumers perception of value Data from the Defra Food Pocketbooks (FSP) (2011. namely. income level. UK food spend has risen as a percentage of household income between 2007 and 2013 from 10. i. education of household head and women’s control of income also mediate the process. pressure on control services. 2014) suggests that price is the primary factor influencing food purchase increasing from 30 per cent of UK consumers naming it as the most important factor when purchasing food in 2010 to 39-41 per cent between 2012 and 2014. the low risk of detection. 4. Examples of such chronic diseases include obesity. They propose that a range of factors such as genetic predisposition. Price is listed as a top five influencer of food purchase by 88-90 per cent of food purchasers (Table II). 2011).4 per cent for all UK households but for those on a low income from 15. an increase in urbanisation leading to more 2653 anonymous supply chains. (2013) assert that despite changes in food prices having an impact on the quantity and quality of food consumed. mislabelling and so forth. The European Parliamentary Research Service (2014) in their briefing document “Fighting Fraud” highlight the reasons they believe led to the horsemeat incident. As many food-related health risks are chronic rather than acute. where the substitution was least likely to be detected (composite foods) and where tests were not being routinely done as part of quality assurance into the origin of the “meat” source in these products.5 to 11. Scally (2013) argues that Downloaded by UFMS At 13:50 18 April 2016 (PT) modern food processing has created the opportunity to practice consumer fraud on a truly massive and international scale. Dangour et al. (2011) identified four factors that drive increasing risk. This was in an environment of increasing housing and fuel costs as well. food price policies and the nutritional status of a given population are separated by many lengthy pathways of influence. and more specifically cheap protein. If this approach is followed. however is an incident of food crime. adulteration. 2013. A potential risk that could influence short-term share price. the 2008 financial crisis and rising food prices (and also feed prices) driving a demand for cheap food. (2014) suggest. sweets and fats .5 per cent of total spend (Table III).

6 11. 2001). 2010). which represents an increase of over a fifth (21 per cent) from its current value of Year 2010 2012 2013 2014 Price as a primary factor influencing purchase (% of respondents) 30 41 39 41 Table II. getting sufficient food when money ran out and getting food to feel good (Burns et al. However Celnik et al. and the concept of being “time scarce” which has led to the rise of the convenience food market. 2013). Price in top five factors influencing purchase Influence of price (% of respondents) 90 90 90 88 as a factor when Source FSP (2011) FSP (2012) FSP (2013) FSP (2014) purchasing food Sources: Adapted from Manning and Smith (2015) Year 2007 2011 2012 2013 Food as a percentage of household spend Table III. but also reflects the physical and mental effort required to produce a meal compared to delegating the whole activity to others through the purchase of ready meals or “fast” food. Time should be considered not only in terms of the physical element. getting the desired food items. The value perceived by the respondents in the study was in terms of meeting the challenges of time shortages and complex scheduling by “buying time” in terms of food preparation and also the ability Downloaded by UFMS At 13:50 18 April 2016 (PT) to create autonomy of food choice amongst family members. getting sufficient food to fill the family up. Dunn et al.11 cheaper sources of nutrients occurs because many aspects of what consumers consider as value are largely independent of nutrition.3 11.4 Influence of price Food as a percentage of household spend as a factor when (UK low income households) 15. They determined that decisions regarding the first three objectives involved a tri-age process of weighing up available money against satiety and value for money whilst acquiring comfort food occurred irrespective of whether there was sufficient money for other items. (2006) link the concept of “value” associated with food as reflecting the importance that mothers (as this was the focus of their study) place upon convenience food as the UK family meal. BFJ (Monsivais et al. (2011) determine that concern for long-term health may be over-ridden by the short-term benefits of “fast-food” which include the meals being tasty. (All UK households) 10. Gibson (2013) proposed that the scope for switching towards 117. (2014) found that time as a factor has significant positive impact on convenient 2654 food consumption. Celnik et al. Osman et al.6 16. Food purchasing decisions were focused on four main goals.5 11.5 purchasing food Source FSP (2012) FSP (2012) FSP (2013) FSP (2014) . satisfying.2 16. (2012) suggest that another factor driving purchase of convenience foods is the food industry capitalising on selling “cheap” food with perceived added value (convenience) at the maximum price the market can support. The UK food and grocery market is set to be worth £206bn by 2018. habit. (2012) argue that there is no simple relationship between wealth and diet quality highlighting too that other factors are at play such as taste. Carrigan et al. but also with the time costs incurred (see Table I) when purchasing and consuming the product ( Jekanowski et al. and convenient. Consumers are concerned not only with the retail price of a food product/meal choice.6 16.

etc.g. . Functionality is key when considering the development of value chains and analysing product.e. Value perceptions are situational and are influenced by the context in which the consumers’ evaluation judgement is made and therefore consumers are open to the use of value triggers (Holbrook and Corfman. where vouchers can be used to purchase them. easy to prepare. Perceived value is dynamic (Sań chez-Fernań dez and Iniesta-Bonillo. 1985 cited by Zeithamal. along with discount stores are expected to see Value in the the biggest growth in the time period. correct portion size. 2011). Thus the author argues value is different from quality in that value is more personal to an individual and it involves a trade-off between the components of “give and get”. Convenience stores. Therefore. integral to the nature. and after use (Sań chez et al. 2013). utilitarian values are easier to functionally characterise. delivery flexibility. This definition focuses on the utility elements of a food product. (3) Value is the quality I get for the price I pay: this statement suggests that value is a Downloaded by UFMS At 13:50 18 April 2016 (PT) tradeoff between price (first) and quality or utility second. This could mean being able to purchase a branded food product at one food store in preference to another because it is sold at the lowest price. The challenge when demonstrating value to consumers and also to other stakeholders is the individualistic characterisation of what value actually is. 2007). p. free range or organic production. Convenience is not just about access to food food supply whether at retail and food service level.g. Quality criteria in this regard can be intrinsic i. delivery times. The characteristic nature of “value added” in the wider supply chain may relate to quality (in terms of intrinsic and extrinsic criteria). This definition focuses on the affordability of the specific quality criteria in a food product. perceived value is a subjective construct that varies between customers. Further. experienced before purchase. i. innovativeness. The headline definitions of value have been drawn together (Table IV). 1988). cost. That is how much is purchased for my money in terms of portion size. (4) Value is what I get for what I give: this definition focuses on the ratio of price to quantity. products that are on promotion or 2655 linked to special offers and products with a perceived low price. 14) to give an overall definition of value. (2) Value is whatever I want in a product: this consideration centres on value being focused on whether the food is what the family will actually eat and drink. between cultures and at different times and as such is a dynamic variable. materials and information flow. at the time of use. These four separate definitions were synthesised by Zeithamal (1988. namely: “The consumer’s overall assessment of the utility of a product based on the perceptions of what is received and what is given”. taste and behaviour of the food or extrinsic and relate to the method of production and/or the ethical factors that support the methods of production e. Whilst terms such as hedonic and perceived values are subjective. 2006). or volume.. at the moment of purchase. or if the food as it is presented at the point of sale is considered convenient to the purchaser e. chain Zeithamal (1988) differentiated between four consumer definitions of value: (1) Value is low price: this would include products believed to be on sale. value is “created” at specific stages and by different actors throughout the supply chain and the magnitude of overall value that is added is ultimately decided by the end-customer’s willingness to pay (Trienekens. acquirability. but also ease of preparation (as Table I highlights this perception of time and performance factors associated with foods). This definition focuses on monetary factors.e. £170bn (IGD.

processors and buyers (2006). enablers and risks. This interface between corporation and consumer that . This is in contrast to the profit based theory of Friedman (1962). This is based on the assumption that there is a mutually exclusive set of “get” and “give” components and further that there are a set of corporate and consumer components. and final disposal after use. and after use Utilitarian value Instrumental.11 Hedonic value Reflecting the entertainment and emotional worth of Babin et al. (2015) Downloaded by UFMS At 13:50 18 April 2016 (PT) Value chain Multi-dimensional assessment of the performance of value Taylor (2005) cited by analysis (VCA) chains. suppliers and citizens and the power balances that flow between them. at the 2656 moment of purchase. In their construction. and that they are co-created in order to deliver value. functional. Sań chez et al. investors. (2015). Babin and James (2009) argue that as the consumer becomes more engaged then the “give” and “get” elements become more blurred thus value and worth are two separate constructs. flows and the management and control of the value chain. task related. This approach does not on the surface seem to address the interaction of assets and liabilities. non-instrumental. at the time of use. as corporate or consumer or collectively. The “get” components derive a benefit. (1994) shopping. Iglesias et al. rational. (2006) between cultures and at different times and as such is a dynamic variable. BFJ Term Definition Source 117.e. employees. information El-Sayed et al. El-Sayed et al. VCA focuses on the position of the lead firm in value chains Value terms and and power relationships between developing country their definitions producers and Western markets or MNCs Value chain analysis (VCA) is often driven by margin-based approaches through the specification of processes and the standards to be used by the organisations that have overarching control of the supply chain i. Trienekens (2011) Table IV. “give” elements require investment from either or both parties and such resources or investment can encompass the engagement of financial. including the analysis of product flows. Babin et al. the lead organisation. (2013) argue that brand value is co-created by different stakeholders as a result of negotiation in a social process. that also can be high or low involvement. physical or human assets. Utilitarian and hedonic values (see Table IV) may appeal to the consumer and are often of an interacting nature and not necessarily mutually exclusive. (1994) and a means to an end Value The consumer’s overall assessment of the utility of a Zeithamal (1988) product based on the perceptions of what is received and what is given Value chain A chain of activities and services required to bring a Kaplinsky and Morris product or service from its conception to final customers. cognitive. These stakeholders they contend include customers. limited time and energy are involved in the interaction through a spectrum of engagement to high-involvement constructs. experiential and affective Perceived value A subjective construct that varies between customers. Babin and James (2009) discuss Zeithamal’s four elements of value approach and consider that consumers and producers actually co-create value. The co-creation of such value can have a low involvement “give” construct where limited money. experienced before purchase. (2000). Babin and James (2009) develop a framework based on “get” and “give” components arguing that value equals “get” components minus “give” components.Hellin and Meijer producers. Actors include input suppliers.

Thus absolute price will influence food choice in terms Value = Co-created (co-agency) minus Co-created (co-agency) Benefits or Resources or “Get” components “Give” components Corporate Consumer Corporate Consumer Efficiency Function / performance Time Time Economic/Shareholder wealth Economic Money Money Intrinsic quality Equipment Equipment Extrinsic quality Energy Energy Convenience in supply Convenience Knowledge Knowledge Enhanced corporate reputation Personal prestige Creativity Creativity CSR Socialisation Opportunity Opportunity Experience Emotions Emotions Ability to charge a premium Uniqueness/scarcity Image Image Nostalgia Worth: evaluation is latent and can only occur after purchase.. (2013) suggest that absolute price is the primary metric against which value is assessed especially by low income families. Burns et al. Consumers when considering the elements of give and get will also consider risk and associated with risk is the element of loss. term the conversational space that builds brand value is where Value in the information. A financial construct. influence. Worth can have both financial and ethical elements. This food supply suggests that the identity of value is not controlled by the corporate. Figure 1. Further these factors can be differentiated between cost and reward (Sanchez et al. Inglesias et al. 1988. control. but can also have ethical and moral elements. Worth is thus a latent factor that may affect satisfaction. 1994). Factors that influence perception of cost – monetary factors include price. promotional activity and the use of loss leader products to draw customers into retail stores or food service. use or both. i. it is wider than the concept of value which is what you get minus what you give in return for that asset (Figure 1).e. The co-production of value and worth Source: Adapted from Babin and James (2009) . Zeithamal. Mahon and Cowan (2004) building on the work of Yeung and 2657 Morris (2001) distinguished between consumer perception of risk and how it affects behaviour. and involvement affect the interaction. alignment.e. rather it is flexible and fluid. Consumers when considering the elements of “give” and “get” will also consider risk and associated with risk is the inverse of “get” the element of loss. If the “give” elements outweigh the “get” elements then something represents negative value. and the potential to repeat the purchase. Downloaded by UFMS At 13:50 18 April 2016 (PT) The literature reviewed in this research highlights a number of factors that influence consumer perception of value. the alternative end to the spectrum of get. Net worth in financial terms is the sum of the assets minus the liabilities i. Babin et al. 2006. Mahon and Cowan (2004) considered consumer perception of risk and how it chain affects behaviour. Babin and James (2009) argue that evaluation of worth occurs only after the fact.

pack size. ease of physical purchase. Net worth is derived from an equity calculation on a balance sheet. Figure 2 outlines that there are four elements to consider in the co-creation of value. and (4) Utility factors – these factors include issues such as convenience. Burns et al. Burns et al. Strategic worth also encompasses the intangible assets and liabilities of a business. shareholder value. The element that defines value to manufacturers and retailers is strategic worth. 5. size of portion. (2013. shareholder equity. The reward factors against which low- income families are negotiating value can be categorised as: (1) Acquirability factors – consideration of what is physically obtained for the ratio of price e. e. ease of access can also include opening times such as 24 hour opening. ethical factors surrounding the supply of the food. Often if this puts further strain on the household budget this action in itself can perpetuate the stress that results in such hedonistic behaviour. the number of meals the food will provide for the money. customer value and strategic worth.11 the reward “get” factors for those on low incomes. Individuals on low incomes cannot afford to risk purchasing food products that do not live up to their perceptions of value so are less likely to be innovative in their food choices or be willing to divert from existing behaviour and practice. BFJ of available weekly income and how it is allocated to food purchases. individuals on a low income find the fact they are in poverty as stressful therefore they purchase food to compensate for that psychological stress so called “comfort foods”. The challenge with this concept of value is that it focuses on energy dense rather than nutrient dense foods by meeting hunger needs rather than health needs. through co-creation.e. Fair Trade. and extrinsic attributes such as method of production. value of certification of the product etc. Downloaded by UFMS At 13:50 18 April 2016 (PT) (3) Hedonistic factors – the emotional worth of the food to the individual. delivery times. p. There is.g. product value.g. (2) Affordability factors – perception of quality in terms of intrinsic factors such as taste. However the co-creation of value by multiple stakeholders is more than just a focus on shareholder value. animal welfare standards and so forth. The interaction between shareholder risk and consumer risk and its impact on the characterisation of organisational strategy and operational activity is worthy of further consideration. Strategic assets have traditionally been . 212) suggest this mindset is about getting 2658 enough to fill you up. a mutual interface between the different stakeholder(s) and the cost and reward elements (give and get) of the perception of value. (2013) suggest that this is a spontaneous psychological response to food often aligned with stress i. Cost will outweigh 117. External factors also have a role that may only be of relevance to particular stakeholders e. Burns et al. (2013) define this as getting the food you want which requires the purchaser to negotiate the value of a food against the additional money required to purchase that product.g. location of restaurant or shop. freshness etc. Strategic worth extends beyond tangible financial parameters. family or community. Developing a conceptual stakeholder interaction model Ultimately shareholders will want senior management executives and executive boards to address the degree of risk to shareholders’ financial investment in their strategic planning and thus deliver value to them too.

chain . (2013) get) stakeholder interaction model 2659 food supply Value in the Cost: reward (give: Figure 2. Burns et al. Shelf-life Shareholder Environmental Affordability equity Ease of preparation issues Intrinsic Previous experience Efficiency/Time saved Flavour/Taste with purchasing Simplicity Freshness Functionality Shape Smell Visual Strategic worth Manufacturer Retailer Sources: Adapted from Zeithamal (1988). Babin and James (2009). Downloaded by UFMS At 13:50 18 April 2016 (PT) Trademark or product Brand name value Get minus Give certification interaction value Product value Monetary Ease of physical Promotional activity access / purchase Seasonality Brand loyalty Location Hedonistic Price Distance of travel Emotion Nostalgia Acquirability Relaxation Portion size for Culture price paid Prestige Pack size Customer Shareholder value Co-creation value of value Affordability Extrinsic Utilitarian Method of Convenience production Usefulness Animal welfare Storage.

and cultural factors. As a result there is a constantly negotiated interface between price and those factors that suggest reward through the degree of utility that reflects the price paid. previous history and experience of the products. Stakeholder perceptions of value are always an interface between reward and risk. Conclusion This research has reviewed the evolving nature of what represents value in the food supply chain. There are conflicts of interest between maintaining shareholder value and delivering this kind of “value” within the food supply chain offering especially where there is an ongoing race to the bottom with price. dangerous work conditions such as in subcontractors factories. Value is a term that is constructed by individuals and communities as a combination of factors that revolve around cost and reward. M. Businesses need to consider these intangible assets and liabilities and the impact on their strategic worth especially in the context of the co-creation of value. This could be extended in the food context to consider factors such as the intangible liabilities 2660 associated with chronic health issues associated with the food products. hedonistic factors defining the emotional worth of the food and acquirability. the concept of affordability in terms of intrinsic and extrinsic quality. 1. trademarks and copyright. Further this internal focus is influenced by the external factors of ease of access.L. hedonism and utility) is of importance. Managing Brand Equity. and Chambolle. Harvey and Lusch (1999) define intangible liabilities as weak strategic planning processes. This model of consumer value cost (price): reward (acquirability. food-related health and the need for adequate financial reward and price at the point of purchase. affordability. These factors enable a negotiated approach to food purchase that is dynamic and fluid as the influence of factors can be ever changing. but also in its wider social context has been discussed. but they extend far 117. D. the ratio of price to volume of food purchased. New York. 3 No. Pressure to increase shareholder value in the short term can ultimately lead to long term losses if the foundations for how shareholder value is created in the first place are eroded through the loss of consumer confidence in a brand or organisation.A.11 beyond this capturing hedonistic values. References Aaker. 1092-1092. 6. Price is the prime factor that influences purchasing behaviour for a major proportion of food purchasers in the UK (30-40 per cent). Allain. food crime. poor animal welfare conditions driven by the monetary aspects of what can be termed as “cheap” food etc. Journal of Agricultural & Food Industrial Organization. utilitarian and affordability factors too. risk of environmental damage. How this challenge is mediated sits with the executives that run private companies and their supply base. potential for crime and fraud associated with the product and so forth. (2007). The concept of convenience not just in terms of time. . The Free Press. This risk assessment needs to address food quality. NY. C. Capitalizing on the Value of a Brand Name. “Loss leaders banning laws as vertical restraints”. BFJ focused on a description of goodwill. Strategic worth is about ensuring that in the co-creation of value both intangible assets and liabilities are considered too and further that such intangible liabilities that present a risk to the organisation and the wider supply chain are suitably mitigated. Vol. (1991). Zeithamal (1988) focused on consumers considering what is received and what is given against the wider concept Downloaded by UFMS At 13:50 18 April 2016 (PT) of utility. Manufacturers and food retailers need to consider both what represents value to their customers and equally what represents value to the shareholders who invest in them. pp.

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Pozarevac. .. Value chain analysis: an iterative and relational approach for agri-food chains. 2016. Ilija Djekic Department of Food Safety and Quality Management.. 1041-1066. Serbia Vesna Kekic Koncern “Bambi” a. Faculty of Agriculture.d. 2016. Serbia Zoran Miloradovic Koncern “Bambi” a. University of Belgrade. Pozarevac. Pozarevac. British Food Journal 118:5.d. Pozarevac..d.d. Serbia Snezana Miljkovic-Zivanovic Koncern “Bambi” a. [Abstract] [PDF] 2. Belgrade.. Serbia .d. Supply Chain Management: An International Journal 21:3. Pozarevac.. Janet Howieson Curtin University Bentley Australia Meredith Lawley University of the Sunshine Coast Sippy Downs Australia Kathleen Hastings University of the Sunshine Coast Sippy Downs Australia Beverly Wagner University of Strathclyde Glasgow United Kingdom of Great Britain and Northern Ireland United Kingdom of Great Britain and Northern Ireland . Serbia Marija Savic Koncern “Bambi” a. Serbia Sladjana Dragojlovic Koncern “Bambi” a. This article has been cited by: 1. Improving the confectionery industry supply chain through second party audits. [Abstract] [Full Text] [PDF] Downloaded by UFMS At 13:50 18 April 2016 (PT) .