Brand leadership and product innovation as firm strategies in global food markets
| Published date | 17 April 2009 |
| Date | 17 April 2009 |
| DOI | https://doi.org/10.1108/10610420910949013 |
| Pages | 115-126 |
| Author | Mark J. Gehlhar,Anita Regmi,Spiro E. Stefanou,Barry L. Zoumas |
| Subject Matter | Marketing |
Brand leadership and product innovation as
firm strategies in global food markets
Mark J. Gehlhar and Anita Regmi
Economic Research Service, US Department of Agriculture, Washington, District of Columbia, USA, and
Spiro E. Stefanou and Barry L. Zoumas
Pennsylvania State University, University Park, Pennsylvania, USA
Abstract
Purpose – This paper aims to understand the motivations for product innovation and brand leadership using a series of case studies focusing on firms
with leading market positions of different types.
Design/methodology/approach – A qualitative study is presented of three leading food sector firms of different types (large/public, medium/private,
and international/cooperative). An analysis of brand leadership is undertaken in the context of a conceptual framework linking process innovation,
product innovation, and the firm’s resource base and market orientation.
Findings – The cases suggest that process innovation supports product innovation as firms implement strategies to differentiate their products.
Response to changing demand is a disciplined reaction where firms exploit their specialized resources using superior product knowledge and branding
power. Leadership positions are maintained not only by responding to changing demand but by steering the market using innovative products and
consumer education.
Research limitations/implications – This study suggests that firms use their unique resource base and form strategies to capitalize on their
capabilities. A single, dominant orientation is not necessary to maintain leadership. Rather process innovation can facilitate product innovation leading
to successful product differentiation and enhancing a leadership position. The question of whether the growing power of retailers means the demise for
branded food manufacturers is one that deserves attention. Innovation and its motivation is a national public policy concern that is influenced by a
myriad of regulations and laws administered by various agencies.
Originality/value – This study is the first one to pull together the experiences of food-firm brand leaders with their branding and innovation strategies
as they look to the global arena for growth.
Keywords Brands, Innovation, Marketing strategy, International marketing
Paper type Case study
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
The global food industry is changing in ways that require even
the most seasoned and skilled food manufacturers to rethink
their long-term strategy. Global retailers are capable of
upsetting the fortunes of even the largest manufacturers with
iconic brands. The power of the retailers is now placing
greater pressure on manufacturer’s margins. Moreover when
manufacturers are unable to meet specific quality demands of
large retailers, they may be unable to achieve adequate
distribution levels for their products.
Branding and the corporate image of brands has been the
lifeblood of the largest food manufacturers. In the 1980s,
leading US food manufacturing firms could easily
differentiate products using branding strategies supported by
significant advertising expenditures. In the US, breakfast
cereal manufacturers were highly successful in using
marketing campaigns with aggressive brand promotions and
intensive media advertising. The lack of new entrants and
private label manufacturers in the cereal market created a
tight oligopoly market structure raising further questions
about sources of profits and nature of firms pricing behavior
(Reimer, 2004). Marketing and promotion expenses
constituted 30 percent of cereal manufacturers price while
gross margins exceeded 40 percent (Cotterill, 1999). While
this strategy constituted successful marketing, it hardly counts
as innovation. Even as prices of cereal rose twice as fast as of
all food products little can be said of added benefit for
consumers (Gejddenson and Schumer, 1999).
Branded food manufacturers are now facing a different
environment from previous decades. The supplier’s ability to
respond to changing demands is a key factor for attaining
success in global food markets (Regmi and Gehlhar, 2005).
As private labels grow globally, the space available for
manufacturer brands dwindles. The survival of a
manufacturer brand depends increasingly on being a leader.
Suppliers have the option of becoming low-cost flexible
manufacturers for private labels or becoming a manufacturer
of their own branded products taking on responsibility for and
risk of product innovat ion. Careful long-te rm strategic
planning is critical for branded manufacturers in an
environment where sustaining superior returns and
maintaining leadership becomes more challenging.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
18/2 (2009) 115–126
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420910949013]
115
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