Tuesday, 9 July 2013

Food Marketing

Food Marketing
© Sabari Ganesh; “All Rights Reserved”
authorsabariganesh@zohomail.in
  https://sarahah.top/u/authorsabariganesh
 
Introduction:
            Food is the most essential and elemental necessity for the sustenance of any life form. In the case of human beings, the requirement of food has evolved to a great extent over time. The pointer has always been sloping towards taste and convenience factors. The preparation and use of food items has all along been influenced by the climatic and cultural conditions of the region. The opening up of economies that led to the unrestrained interaction of people of various cultures, customs and ethnicity across borders has had a very marked impact on the preference of food. The technological developments that enable the preservation of food over long periods of time are the prime driving force. The innate ability to reason and analyse has given a whole new twist to the production process of food items that originate from one part of the world to the rest.
The procurement of food is in a state of transition from raw and uncooked supplies to semi/partially processed food that requires just a finishing touch to become fit for consumption. The changing demographics; shifting family values, rising nuclear families, double income households, blurring of gender lines in food preparation at home, increase in expatriates, proliferation of multiplexes and outdoor entertainment options linked to vital activities have created a whole new market for processed food. No wonder, packaged foods have become an industry of their own; so huge that is expected to touch around $30 billion by 2015. This makes the Indian food processing sector, one of the largest in the world in every aspect – Be it consumption or exports or imports or marketing or production.
Changing Social Trends:
            There has been a phenomenal psychological transition in the Indian family value system. The information explosion and access to higher education irrespective of gender has effectively opened the doors to a whole new world of opportunities. The result witnessed is a precise and incisive focus in becoming a professional of one’s choice and preference. The economic independence achieved by every member of the family, has made everyone equal partners who share a common roof. The breaking of societal barriers, cross border movement of people powered by education and professional prowess; the resultant necessity to socialize and interact with people of various genesis has enabled every person to focus on being part of a society of one’s own choice and personality. In short, the society does not overpower the individual; rather, the individual decides the society that one intends to be a part of!
Impact of Technology:
A significant measurement of technological advancement is the ability to perform any activity in a society to its utmost perfection and quality with minimum exertion and effort. The resultant sophistication of life has had its impact in the purchase mix of the consumers. The minimum members in a nuclear family empower eating outside or expect convenience foods that require just a finishing touch to become fit for consumption. The ease of access to information has effectively transferred the decision making authority to the youngest member of the family – the kids. No wonder a majority of advertisements related to processed foods and eateries appeal to the kids in the family – A vital reason for the companies and marketers to adhere to the highest ethical standards and moral values.
Consumption Pattern:
            The abundance of food service business set up substantiates the spending pattern of the consumers. However, there has been no marked chop down on the number of meals consumed at home. It implies that the change has been on the nature of food items procured. The fast food chain of stores providing a range of partially prepared food items have become a massive economic success due to nuclear families, women being an earning member; single parent households and the increased preference of the consumer for multi-cultural meals triggered by globalisation and business luncheons.
Marketing Playground:
            Marketing of processed food is a tricky game in a distorted market due to the enormous competition catering to a similar need. Also, the well informed consumer tends to be very specific in the choice of food consumed. Interacting with such prospective customers, enabling them perceive the desired value component is a staggering task. The fragmented market has minimized return on efforts invested by marketers due to fuzzy focus. The prospective customers belonging to varied life styles, becoming active participants in the value chain; powered by technology has necessitated food companies to establish and entertain a direct two way communication with the targeted segment; in their efforts to identify and gather real time information on their choice and preference.
Technical Issues:
            The opening up of economies has made the whole world a unified market for the manufacture of a company. In the case of a food product, value chain is extremely significant owing to its perishable nature. Cold storage and food additives are enabling factors that ensure availability of food products as desired. Food additives were initially used as colouring agents to improve the appearance of food products; but now shoulder a larger responsibility to minimize calories and fats. However; monitoring in real time, the toxicity or adverse impact of chemicals used as food additives is difficult.
            Population explosion that led to a demand-supply gap in food products has necessitated innovative techniques to be used in the production of food. Sophisticated farming techniques to minimize the resources needed; and the demand for a higher yield per hectare, triggered by research has led to genetically modified crops. Genetic engineering is a field of science which has not yet been harnessed to its complete potential. Hence uncertainty on the threats in consuming food items that contain ingredients prepared using genetically modified organisms or from animals bred upon genetically modified feed is still at large.
            However, one possible ethical performance of companies could be in labeling the food item thus prepared, appropriately. The genetically modified food is not new to the world; in fact more than a decade old. The high fructose corn syrup is a prominent stuff that has been genetically modified. The ethical stand in labeling gains importance in the wake of increased demand for partially prepared, packaged food.
Ethical Concerns:
            A host of ethical concerns can be listed in case of marketing food products –
The first and foremost shall be the need for proper and factual communication on the ingredients used in the production process of the food item. The focus here is to prevent threat of adverse reactions on consumers who are allergic to a particular ingredient might not consume it in its direct available form but would become susceptible when they consume a food product that use the ingredient.
            When genetically modified crops are cultivated using antibiotic resistance genes to enhance the yield per hectare, the consumer also might become resistance to the antibiotics in question; signaling for a much stronger dose when needed.
The growth hormones used to increase the flesh part of the meat are found to have an adverse impact on humans too; specifically characterized by the premature growth in young girls.
            For a long time now, genetic engineering is put to use in removing the toxic metals from soil by the plants and concentrating them on the non-edible parts. The issue here is the lack of complete control over genetic engineering as a tool. A childish and irresponsible misadventure would pose serious and phenomenal threat to human values on ethical grounds.
            In the pretext of producing healthy genetically modified foods, one might actually trample with the natural resistance of the crops to contamination. A classic example shall be the cultivation of decaffeinated coffee crop. The genes required to produce caffeine by the crop, when removed, results in coffee bean getting a coating of the toxic fungi – Aflatoxin. The reason being it is the caffeine that had so long prevented the fungi gaining over the coffee bean!
Role of Marketers:
            The changing preferences in the choice of foods propelled by convenience factors have altered the entire food marketing scenario become susceptible to ethical miscarriage for monetary profitability. The kids being the most prominent in influencing the purchase decision; and the junk foods not so directly harmful as alcoholic beverages, advertisements that lure them to consume junk foods have become the tool in the hands of marketers.
            However, some of the ethical practices that could be put to use by marketers are as follows –
  • A package of reasonable size and appropriate proportion that would keep the consumption of junk food to a rational limit.
  • Labeling food package in the most appropriate manner; with a list of entire contents of the package of food, with details on fatty acids, nutritional and calorie values.
  • A clear and unambiguous mention on the package if it contains genetically modified food or prepared from the produce of animals fed on genetically modified crops.
Conclusion:
            The labels on the package are extremely puzzling. This issue is sure to rock the industry for quite some time in the near future till a structured and universal practice is adopted. Obesity, a major issue among kids; and health conscious attitude due to changing life styles have become prime propellants behind the consumers’ choice of food. Vegetarianism is gaining ground in rapid strides due to continuous efforts of consumers from multiple segments to prevent diseases, manage weight and minimize calorie intake every serving.
            The ethical issues in the production and marketing of any food product rests on the fact that humans too have originated from the same DNA; hence our inherent similarity with other animals at the cellular and molecular levels that question our rights to experiment with them; to meddle with nature in our efforts to tackle hunger and increase yield. The ethical perplexity for a consumer could be one’s acceptance of tasty meat, in case of non-vegetarians; or succulent vegetables, in case of vegetarians; grown with the aid of animal or human genes!

Tuesday, 18 June 2013

Business Ethics

Business Ethics
© Sabari Ganesh; “All Rights Reserved” 
authorsabariganesh@zohomail.in
  https://sarahah.top/u/authorsabariganesh
 
            Since time immemorial, there has been a constant and continuous oscillation between right and wrong; good and evil in the human mind. The ability of the human mind to distinguish between these two, has kept the tag – ‘Human Being’ intact. Ethics is the buzz word today; be it a common man, or a millionaire or a MNC; for the Id among the ego and superego, never changes.
Ethics constitute all those actions that are performed by us rightfully dictated by conscience. Generally, in any business set up, though the procedural compliance is achieved due to compulsion; the ethical stance of a company is the much tweaked and debated aspect. Any business set up rests on the following check list parameters –
·         The law abiding nature of the business venture;
·         The profitability of the business based on market forces;
·         Upon achieving the above; the ethical carriage of the business venture might arise.
Aspiring professionals in B-Schools are conditioned to believe that growth and profitability are the bottom-line of sustaining any business. This throws up the question – Growth and profitability at what cost! The ethical mind set of a company lies in its effective decision making ability when there arise a situation to choose between which is correct and that which is seemingly advantageous.
An unethical decision of a company that focus on immediate monetary gains is seemingly advantageous because, any business set up is dependent on the society for its inputs in terms of resources; and the final produce is also focused on satisfying the needs and wants of the people of the society. Any misadventure of the company that focuses on profitability in just monetary terms; and fails to meet the ethical standards and betterment of the society at large is a classic short sighted approach that is convinced to damage the reputation and in turn question the existence of the company itself.
The opening up of economies, and free trade under the auspices of World Trade Organisation (WTO), has effectively blurred the physical borders of nations. The free movement of labour, capital and goods has unified the whole world as a single market for the company. The resultant intense competition among companies has forced them to focus attentively on their core competency. Superior products; and services of better quality that aptly satisfy the customers’ needs and wants is the result. Today’s customers are more self-actualised – well informed, basic need set easily met; hence are on the lookout for brands and products that deliver more than the tangible; and effectively sync with their personality, providing positive enhancement!
In the present scenario, every human being walks around as an individual brand; positioning themselves as unique as possible in their efforts to gain social and professional value and respect! Companies, in their efforts to capture the mind share of the customer, have been into aggressive marketing and differentiation. However; the maturation of differentiation of products based on tangible features; followed by commoditisation of services, has forced companies to associate themselves and their produce with intangible values that sync with the projected personality of the target segment. Also, the employees becoming the first and foremost customers of the company and pertinent opinion makers on the image of the company; the ethical perspective of the company has gained critical significance.
Ethics, profitability and sustenance of business are no longer conflicting ideas; rather have become inevitable, successive rungs of the corporate ladder. Ethics has become the core and vital factor of differentiation for companies to effectively position themselves in a superior plane of perception than its competitors in their efforts to capture the mind-share and eventually the wallet-share of the prospective customers. However, implementation of ethics and the success of the companies to reap the desired benefit out of their ethical angle has never been a cake walk.
Implementation of ethics was found to be just impossible as an unconnected terminal activity of the value chain. It was through hard and real experience, companies realized that the success in implementing ethics as a differentiating tool begins with a revised vision, mission and objective parameters that redefined even the day-to-day operations of the company. Ideally, implementation of ethics should start at the top most ladder of the organisation structure with a redefined vision, mission and objectives; and every activity identified with what it believes; allowed to cascade down till the grass roots of the organisation to the ultimate customer.
Implementation of ethics was found to be more of an art than science. It requires dynamic initiatives and astute activities with minimum turnaround time; hence demanded an able and effective leadership than process orientation. More than positioning the products of the companies; implementation of ethics had a more humane touch to it that focused on managing and maintaining a human resource value chain that propagated the ethical perspective of the company to the outside world through ‘word of mouth’.
In the international business scenario, generally the talks among member nations revolve around policy matters and removal of trade restrictions. Ethics has been the latest entry among these traditional topics of discussions in the multilateral trade talks. The comparative advantage of nations is under the ethical scanner. Are the companies of the developed countries exploiting developing and lesser developed countries making use of their weak environmental and labour laws to manufacture products that are labour and pollution intensive; as they are no longer allowed in their home countries; or are the developing and lesser developed countries luring the companies of the developed countries with the ‘beauty’ of their natural resources for their economic development? What and where is the trade off? The debate continues…
Finally, in practical terms, ethics could be result oriented with absolutely no tolerance to an unethical activity at any level; or process oriented with occasional pitfalls considered acceptable, depends on the sagacious, sapient and shrewd leadership of the company.

Saturday, 8 June 2013

Sanitary & Phyto-Sanitary Measures as Barriers to International Trade


Sanitary & Phytosanitary Measures as Barriers to International Trade
© Sabari Ganesh; “All Rights Reserved” 
authorsabariganesh@zohomail.in
  https://sarahah.top/u/authorsabariganesh
 
Introduction:
            The World Trade Organisation (WTO) was established on January 1, 1995 with the sole prime objective of promoting free and fair trade among nations of the world. The direct impact of a free trade is the blurring and unification of markets, for any given product or service. The whole world becoming the market for a product manufactured by a company, and the natural tendency of people – consumers preferring quality products at competitive price has eventually made survival of the fittest the rule of the game.
            The companies started focusing on their core competency and thereby became the market leaders across the world for their produce. This resulted in the domestic companies losing their markets to the global players. The prime reason is the domestic players lacking the requisite professionalism and resources needed to compete on an even ground at par with their global counterparts. The political and business economics arising thereof resulted in protectionist measures in the form of tariffs to save the infant industries and domestic ventures of the land. However, WTO with a strong focus of promoting free trade among nations was successful in eliminating direct barriers to trade – Tariffs; and non-tariff barriers like Quantitative Restrictions, Quotas, Subsidies, and Voluntary Export Restraints.
            However, the push and pull factors of nations to protect their domestic industries has forced them to discover new arena that could be tweaked to become a barrier to free trade thereby protecting their domestic industry. The Sanitary and Phyto-Sanitary (SPS) measures is one such glitch in the hands of nations.
SPS Measures – Foundation:
            It is well justified that any consumer, when out for a purchase of a product would try to be sure that the product being purchased is of the requisite quality. This justification is the foundation of enacting the SPS measures under the WTO trade rules. In a trade between companies of different nations, the consumer gets to see the actual product only after import; and when it reaches the destination port. In the event of the quality of the product found to be unsatisfactory and dangerously contaminated, would naturally lead to intense disputes among companies and nations. Also, the product of a bad quality, with contaminants might cause potential threat to the plant, animal and human health of the importing country. To prevent this WTO has set up certain basic laws that intend to protect the plant, animal and human life and health, of the importing country.
SPS Measures – Definition & Issue:
            SPS measures are a set of regulations that aim to protect the plant, animal and human health of the importing country. The Sanitary measures focus on protecting human and animal health while the Phyto-Sanitary measures focus on protecting plant health. These measures on the face of it are very genuine necessity for any nation in its endeavour to protect its plant, animal and human resources from the entry of pests, contaminants and diseases arising out of trade among nations.
The implementation of SPS measures and the level of protection required by the member countries on their imports are based on scientific evidence. WTO has granted its member countries freedom to determine at their individual discretion the level of quality of the product that is imported by their country. The result is a vast variance in the demand of the quality requirement of a specific product across markets.
SPS Measures Tweaked:
Generally demand for quality is relative to the purchasing power of the consumers. Higher our purchasing power, greater is our demand for quality. The people of developed nations possessing relatively higher purchasing power than their counterparts in developing and lesser developed nations; have forced their governments to import only products that conform to the highest quality standards.
The developing and lesser developed countries are found to be lacking heavily in maintaining the minimum reasonable quality expectations. Seizing this opportunity as an excuse, with the intention of protecting their domestic industry; the governments of developed countries have raised the bar of quality requirement to an extent, which can never be met by the developing and lesser developed nations in practical terms. Hence export of their produce to these countries becomes impossible for those countries that fail to conform to the quality requirement.
This is when a genuine, essential, quality standard becomes a trade barrier; chosen and implemented jealously by member nations; in an era of the Tariffs and Non-Tariff Barriers (NTB) removed. The irony is that, even the WTO has been left to its wits end in curbing the misuse of an essential quality standard as a trade barrier.
Argument of Developed Countries:
            Demand for safety and quality is highly individualistic and is directly proportional to the purchasing power of the people of the country. The locally produced product found to be of a better quality than the imported product serves ample justification for the level of quality conformance stipulated by the developed country on its imports. The countries though developed also possess infant industries that need to be protected from the onslaught of cheaper products from member nations. The SPS measure comes handy to the rescue of the developed countries to protect their infant industry.
            The foundation of stipulating a certain level of quality should rest on scientific evidence. The developed countries that have access to advanced technology to test and qualify the products overpower the developing and lesser developed countries that are yet to develop or gain access to the technological development.
Argument of Developing Countries:
            The developing countries face quality requirements from their developed counterparts such that they can never be possibly met in any practical terms. For instance; An Australian quality demand stipulates that for chicken meat to be imported from Thailand, it should be heated at 70 degree Celsius for 143 minutes to prevent the entry of certain disease via chicken meat. It is reportedly found that this treatment converts chicken to paper!
            The Japanese Vapour Heat Treatment (VHT) of fruits is another instance of SPS measure becoming a prime barrier to free trade among nations. The enormous investment demand for technological up gradation and the time associated with it for compliance; coupled with the risk of losing the market to competitors, has made this quality standard a potential NTB.
Role of WTO:
            WTO plays a vital role in fostering and promoting free and fair trade among member nations. When a member nation proposes a specific level of quality standard in the forum, ample opportunity is always provided for a reasonable debate for & against the proposed quality standard prior to its approval. The developing countries have miserably failed to participate and actively get involved in discussions pertaining to the implementation of a quality standard by a member nation.
            Also, since the developing and lesser developed nations have negligible or no access to technological support and knowledge on the implications of a specific standard proposed at the forum by a developed nation for implementation, they have a weak argument that fail to sustain. Also, it has always been a practice of the developing and lesser developed countries to raise alarm only upon material damage done to their exports to developed countries on the front of SPS standards.
Solution – Harmonisation of SPS Measures:
            History evidences that most of the detentions of imports from developing countries are for insanitariness; and most of the detentions from developed countries are for labeling and packaging requirements. The latter is easily corrected than the former; adds to the malice of the developing countries towards their developed counterparts.  
It has been found that both the developing countries and the developed countries have been misusing the very essential quality standard to their advantage, to protect their domestic industry. No wonder cases relating to SPS and resulting trade restrictions are piling in the Dispute Settlement Board (DSB) of the WTO. The ongoing events call for an urgent need, to harmonize the SPS measures uniformly for all the member nations, which could hope to prevent the misuse of a very essential quality standard.
            Most of the developing countries do not possess the technical, scientific and legal competency required to defend a case filed against them under the SPS measure in the DSB of the WTO. Also, the time period granted to implement a SPS quality standard that is notified is found to be insufficient. The developing countries also have no proper representation in the forum of international trade talks that revolve around policy and trade measures.
            As the SPS measures remarkably address market failures; implementation by mere legislative declarations is not viable. An active and vibrant transnational framework that focuses on enabling the capacity building of nations is necessary. It is also imperative that the efforts have to be genuine, meaningful and positive even outside the discussion table. Capacity building of nations to meet the requisite standard is an ongoing process that demands the nation’s intent to develop itself to compete at par on global trade grounds.
Conclusion:
            The developed countries must be ethical in imposing a quality standard and ensure it does not hinder free and fair trade. The developing countries must implement SPS standards as an integral process to the overall development of their competitiveness in the international business scenario. It is imperative on the developing countries to keep a check on the developed countries not to impose the standard beyond the necessary levels; by way of active participation during talks and debates. Active participation of both the developed and developing countries during the proposal, discussion and implementation of standards; supported and opposed by logical scientific evidence is the need of the hour to minimize post implementation dissonance and an amicable way to free trade among nations, under the auspices of WTO.