Value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing

Citation

Lindgreen, A. and Hingley, M. (2008), "Value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing", British Food Journal, Vol. 110 No. 1. https://doi.org/10.1108/bfj.2008.070110aaa.001

Value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing

Adam Lindgreen is Professor of Strategic Marketing at Hull University Business School. Adam Lindgreen has published in several journals including Industrial Marketing Management, Journal of Business Ethics, Journal of Business & Industrial Marketing, Business Horizons, Journal of Marketing Management, and Psychology & Marketing, among others. His research interests include business and industrial marketing, consumer behavior, experiential marketing, relationship and value management, and corporate social responsibility. He serves on the board of many journals including Journal of Business Ethics.

Martin Hingley is a Principal Lecturer in Marketing, based at Harper Adams University College in Shropshire, the leading university in the UK specializing in agri-business. His primary research interests are in marketing and in the applied areas of food industry marketing and supply chain relationship management. He has presented and published widely in these areas, and serves on the editorial boards of several academic journals.

Value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing

Value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing are of fundamental interest.

Two more or less distinct research streams can be identified in the literature on value (Lindgreen and Wynstra, 2005). The first of these streams deals with the value of products and services, while the second stream focuses on the value of buyer-seller relationships, networks, and interactions. Although value is essential in both business-to-business marketing and purchasing the literature remains scarce on studies examining how selling companies actually analyze, create, and deliver value to buying companies.

As well, significant resources are being directed towards developing closer relationships and interactions between companies and their customers (i.e. the marketing side) and suppliers (i.e. the purchasing side), and indeed networks with customers’ customers, suppliers’ suppliers, competitors, and other stakeholders. A recent issue of British Food Journal (Lindgreen et al., 2008) identifies that in food and agriculture business-to-business marketing and purchasing, the maintenance and enhancement of existing relationships, networks, and interactions (“relationship marketing”) with different stakeholders is as important as the attraction of new relationships, networks, and interactions (“transaction marketing”). A lack of empirical work, however, underpins the conceptual development of relationship marketing in food and agriculture; as well, articles are often characterized more by rhetoric than by publication effort on empirical findings.

Two main perspectives on the structure of business markets and their impact on the conceptualization of marketing and purchasing (including supply) processes can be identified (Lindgreen and Wynstra, 2005). The first perspective sees the market system as a fully functional market, based on perfect competition, with marketing and purchasing activities aim at relevant markets. The maneuvering room for actions is determined by the number of alternative buyers and sellers in a certain situation. To some extent, this depends on the offering’s level of standardization because a unique offering entails a lock-in. Also, if there is only one supplier (customer) then purchasing (marketing) acts in a different way than if there are several suppliers (customers). There are costs to terminate a relation, meaning that there are reasons to analyze whether any existing problems can be solved within the relation before other alternatives are explored. The market context in such a situation generally pushes the behavior towards using existing competition, and to exploit that opportunity. Basically, a market structure like this likely supports a transactional approach (i.e. 4Ps marketing: product, price, place, and promotion) to marketing and purchasing.

The second perspective sees markets as relatively well-organized connected networks (Lindgreen and Wynstra, 2005). A situation like this triggers efforts to create a more traditional market context, but also to act within the existing frame. It fosters practices in line with the relational approach to marketing and purchasing the activities of which are mainly concerned with the contents and relations between the two actors’ activities, the ties between resources, and the bonds between the actors. Also of concern are the functions of the relationship, including the customer’s resource supply system and significance for the company’s current and future position in the network. The activities of the selling (buying) company are aimed towards specific customers (suppliers) rather than towards large market segments. The contents and functions of the specific relationship are emphasized, but especially the relation’s function in the larger network is in focus much more here than in the type of market system previously discussed.

Following this discussion, there are two main avenues to guide future research: one focusing on the value of products and services and one dealing with the value of relationships (e.g. with customers on the marketing side and suppliers on the purchasing side) (Lindgreen and Wynstra, 2005). As well, three major themes within value can be identified: value analysis, value creation, and value delivery. When the two perspectives are crossed with the three themes, six potential areas for future research are obtained (Lindgreen and Wynstra, 2005).

This special issue of British Food Journal seeks to address research lacunae within food and agriculture business-to-business marketing and purchasing in each of the six research areas. After a rigorous review process, we selected eight articles. The selected articles provide an in-depth understanding of critical issues involved in dealing with value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing.

Following our own guest editorial, the first paper “Value innovation in the functional foods industry: Deviations from the industry recipe” by Paul Matthyssens, Koen Vandenbempt, and Liselore Berghman is the first application of value innovation in the functional food industry. The authors identify the industry recipe and the dimensions for categorizing value innovation efforts, and they suggest how to boost the value innovation propensity. The authors discuss contrasting business logics at different levels in the chain, which can block value innovation. Value innovation is undertaken through breaking the dominant chain logic through new forms of collaboration and/or by crossing existing industry boundaries or product focus through introducing original value concepts. Upstream companies, interestingly, also build competencies for value innovation. Finally, the study’s findings help managers to question their value creation processes, to identify value innovation “embryos”, and to highlight necessary competencies and pre-conditions to take up this challenge.

The second paper “Modes of qualities in development of speciality food” by Egil Fetter Streete uses new conceptual tools to analyze how food qualities are constructed in relations between food producers, processors, and consumers. The author argues that in food production and innovation systems certain sets of conventions and cultures influence innovation, and constitute a context for interaction and learning. The author explores the influence of sets of conventions and cultures on the ability to develop speciality food processing strategies, including the integration of actors in innovation systems. Drawing upon findings from the milk supply chains and the related infrastructure in Norway and Wales, the author argues that qualities of food are constructed in relations between participants along the supply chain.

The third paper “Assessment of innovation and performance in the fruit chain: the innovation-performance matrix” by Jacques H. Trienekens, Ruud van Uffelen, Jeremie Debaire, and Onno Omta seeks to design a conceptual framework underlying supply chain performance and innovation. The framework consists of a supply chain process model and an innovation-performance matrix. The exploratory and theory-building character of the research demands for a case study approach (here: an apple producer and co-operative). The framework can be used as a guide for analysis and improvement of European fruit chains. Relevant innovations and performance indicators can be identified. Also, the innovation-performance matrix can show whether there is a balance between the innovation strategy chosen and the performance aimed for. The link with the process model enables the manager to focus on specific company processes where improvements should take place.

The fourth paper “Differentiation strategies in vertical channels: a case study from the market for fresh produce” by Martin Hingley, Valeria Sodano, and Adam Lindgreen uses the industrial economic literature on the effects of differentiation strategies (horizontal and vertical differentiation) on market structure, companies’ performance, and welfare effects to analyze case findings from a dyadic study in the fresh produce industry in Italy. The primary producer is engaged in “partner” supply to a principal category management intermediary for channel leading multiple retailers. The authors find that equilibrium in differentiated markets is not stable, and a welfare assessment is difficult. Also, a differentiation strategy in the market for fresh produce might benefit retailers more than in other sectors, which seem to be consistent with the theoretical findings. Finally, when retailers engage in product differentiation it is more likely that channel relationships shift from collaborative to competitive types, with the power imbalance becoming the disciplinary means by which vertical coordination is achieved and maintained.

The fifth paper “Triggers and processes of value creation in Australia’s chicken meat industry” by Andrea Insch uses a historical perspective to identify chronologically and historically the triggers and patterns of value creation in Australia’s chicken meat supply chains. The suggested schema of phases of value creation can be potentially applied by practitioners in other industries to diagnose the possible outcomes of prior events and actions by supply chain members. The author identifies four major phases in the evolution of Australia’s chicken meat supply chains, each of which is characterized by a dominant form of value creation. As well, the author describes triggers that facilitated the transition between phases.

The sixth paper “Creating value through cooperation: an investigation of farmers’ markets in New Zealand” by Rob Lawson, John Guthrie, Alan Cameron, and Wolfgang Chr. Fischer adds to our knowledge of value creation and cooperation among farmers’ markets, thereby providing a potential base for working towards sustainable competitive advantage for farmers’ markets. Drawing upon a survey of farmers’ market members, the authors identify that more than 80 percent of the traders at markets are involved in some form of cooperative activity, a finding that supports the notation of markets as community-based activities with high levels of interdependence amongst participants. Cooperation is found in different categories and increases over the length of time; however, cooperation cannot be directly related to performance or the reasons traders offered for doing business at the market. The study’s findings allow traders to identify ways in which they might seek to more formally organize joint efforts. As well, monitoring the degree of cooperation between traders and linking to performance provide organizers with a potential way of managing aspects of competitive advantage against competing food retailers.

The seventh paper “Value creation in new product development within converging value chains: an analysis in the functional foods and nutraceutical industry” by Stefanie Broring and L. Martin Cloutier provides a unique insight into value creation in new product development in the emerging functional foods and nutraceuticals sector in particular and converging industries in general. The paper also explores different types of projects characterized by different buyer-seller relationships. In the context of convergence, a new value chain is emerging between two formerly separated sectors. Value creation networks spread across industries and reinforce trends of convergence. Subsequently, different actors from different industries are not yet sure about their ideal position in these emerging value chains. Firms who strive to develop so-called “hybrid” products face competence gaps and seek to close these by different forms of collaboration. Subsequently, different types of new product development projects in convergence involving different forms of seller-buyer relationships are identified and their particular approach of value creation is analyzed.

Finally, the eighth paper “Business relationships the Morrissey way” by Martin Hingley, Sheena Leek, and Adam Lindgreen underpins the important theme of value of business relationships with the novel treatment of using song lyrics, thereby highlighting that prior and somewhat formulaic templates for business success are not always appropriate, as business relationships are governed by a human factor that is not always positive in outlook. The authors identify that concepts key to business relationships (the need to enter relationships, power and dependency, and relationship break-up) are not always in the realms of corporate rational thinking. Alternatively, business decisions owe much to the less rational and more emotional world of interpersonal relations. The practical implication of the study is that even incrementally successful business relationships can break down, and gains can be quickly reversed, thereby hurting the value of the business relationships.

Specific issues not dealt with in this issue include:

1. 1.

   How do buying companies analyze information about a product’s value and price in order to make purchase decisions?

2. 2.

   Is it important for selling companies to demonstrate the worth of their products to buying companies?

3. 3.

   How do companies measure the value they realize from buying products?

4. 4.

   How is it possible to capture the value of buyer-seller relationships?

5. 5.

   How do companies organize for and manage their new product development process?

6. 6.

   What is the role of the supplier, focal company, and buyer in the new product development process?

7. 7.

   Are some parties more important in certain stages of the process than in other stages?

8. 8.

   Should contacts between the different parties be promoted and arranged?

9. 9.

   What are the benefits and what are the risks?

10. 10.

    How does the demand for a certain value trigger new product development?

11. 11.

    How should, and how does, companies’ value proposition of their products develop along the product life cycle?

12. 12.

    To what extent do different interaction processes between buyers and sellers exist for the development of different products?

13. 13.

    What are the critical buyer and seller capabilities in developing, delivering, and sustaining value?

14. 14.

    How is technology helping companies to enhance intrafirm and interfirm coordination?

15. 15.

    How can companies use new technology to strengthen existing relationships or to develop new relationships?

16. 16.

    How can companies use new technology to redefine their position with regard to receiving and delivering value to other parties?

17. 17.

    Is purchasing of business services essentially different from purchasing of products?

18. 18.

    What characterizes buyer-seller interaction in the development of valuable business services?

We would like to take the opportunity of thanking all those who have contributed towards this special issue of British Food Journal. First, we thank the reviewers who have taken time to provide timely feedback to the authors, thereby helping them to improve their manuscripts. The reviewing was a double-blind reviewing process. We thank the following reviewers: Nicholas Alexander, Sean Beer, Jos Bijman, Michael Bourlakis, Paul Custance, Rachel Duffy, Andrew Fearne, John Fernie, Melanie Fritz, David Grant, Geoffrey Hagelaar, Gertjan Hofstede, Paul Ingenbleek, Angus Laing, Sheena Leek, Kevin Nield, Onno Omta, Sjoukje Osinga, Roger Palmer, Veronica freitas de Paula, Brian Revell, Mike Rimmington, Terry Robinson, Aad van Tilburg, Keith Walley, Max Winchester, and Len Tiu Wright.

Second, we would like to extend special thanks to the editor Chris Griffith for giving us the opportunity of guest editing a special issue of British Food Journal. Last, but not least, we warmly thank all of the authors who submitted their manuscripts for consideration of inclusion in British Food Journal. We appreciate and are grateful for the authors’ desire of wanting to share their knowledge and experience with the journal’s readers – and for having their views put forward for possible challenge by their peers. We are confident that the articles in this special issue contribute to our understanding of value analysis, creation, and delivery in food and agriculture business-to-business marketing and purchasing. As well, we hope the selected articles will generate the kind of dialogue, which is necessary to furthering our understanding in this important area.

Adam Lindgreen, Martin HingleyGuest Editors