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Purchasing Food and Strategic Management

          Before creating a new product, we need to know what are the trends in the market and what the customers want. For any company, the study of consumer interests and behaviors is vital.
          People do not consume food only to meet their energy needs. Psychological aspects also affect food consumption. For example, some people may consume food because of experience, integration, or social status.
          Internal and external factors affect the decision-making process by the consumer. Internal factors include: individual factor - age, gender, place of residence, official and economic conditions, beliefs, etc. Psychological or social factors - motivation, perception/sensation, experience and knowledge, lifestyle.
         The decision-making process by the user includes the following stages:
◾️ Acknowledgment of needs;
◾️ Searching for information - searching for information related to consumer satisfaction and products;
◾️ Evaluation of alternatives - the consumer compares different products with each other before making a final decision;
◾️ Purchase - After evaluating the information and comparing the alternatives, the consumer makes the final decision regarding the purchase. It should be noted that at this stage the role of a qualified and experienced seller is very important;
◾️ consumption - the purchased product may be consumed immediately or after some time;
◾️ Post-purchase evaluation of alternatives - evaluation of the degree of satisfaction after consumption. This stage is essential for customer retention;
◾️ Release from product - removal of unused product or waste. The consumer is faced with the choice of getting rid of the product or recycling it as much as possible.
           Depending on the complexity of decision-making, the manufacturer has to segment the market.
           Demographic segmentation: age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality.
           Geographical segmentation: The market is divided into countries, regions, settlements, cities, villages, districts.
           Psychological segmentation: social class, lifestyle or personality characteristics.
           By Product Attitude: Consumers are segmented based on their knowledge of the product, consumer qualifications, and reaction to the product. The company should take into account the intensity of product consumption, willingness to purchase and degree of loyalty.
          There are 7 types of users:
◾️ knowledgeable about environmental protection;
◾️ hedonistic;
◾️ friendly to nature and animals;
◾️ profit oriented;
◾️ sensitive to price;
◾️ choice-oriented/seeking;
◾️ Health oriented.
            After taking into account the information available in the market and the interests of the customers, the company draws up a strategic plan. The plan should start with a detailed analysis of the organization's strengths, weaknesses, opportunities and threats, in which SWOT (strengths, weaknesses, opportunities, threats) analysis helps us. There are many forms of SWOT analysis. These forms focus on different assessment areas, functions and initiatives. Typically evaluates people, resources, ideas and innovations, marketing, operations, and finance.
            The importance of competition in the industry is determined by the number of competitors and their ability to create threats to the company. The level of competition is parallel to the status of the company in the market.
            The easier it is for a competitor to enter the market, the higher the risk that the business's market share will decline. The fewer resources a company needs to enter the market, the more opportunity there is to weaken the company's influence.
            Substantial importance is given to the supplier, which has a significant impact on the price of the product and service. The fewer suppliers in the market and the larger the company, the more power the supplier has.
            In addition to all the above, naturally, the power of the consumer is vital, on which the success or failure of the company depends. It is worth noting that the competitor has little power when the product provided by the company is not widely distributed in the market and there are no competing companies of a similar type.
            After the analysis, the strategy implementation process begins. Management must choose between two ways to increase the organization's profits: product differentiation by adding value or reducing production costs. It is also decided whether the company serves the entire market or a specific segment of the market.
            With a low-cost strategy, management tries to increase competitiveness by undercutting competitors' prices. Usually, managers who apply this strategy serve a relatively wider segment of the market. Differentiation strategy involves increasing competitiveness by distinguishing the product offered by the company from other similar products. Using this strategy, the company serves a specific market segment, as the organization focuses on making its product stand out.
            There is a functional level strategy, which is an action plan for improving the profit-making capabilities of the organization's departments. Management can use additional value. The price a buyer is willing to pay indicates how valuable the product is.
            When adding value or reducing production cost, all functional managers should have the following 4 objectives:
◾️ Determining the budget as rationally as possible - the lower the production costs, the more budgetary the production costs and the lower the cost of the product;
◾️ Achieving maximum quality - production of reliable, flawless and quality products. Production of a high-quality product creates a good reputation for the organization, which, in turn, allows the value of the product to increase;
◾️ achieving maximum innovation;
◾️ Achieving maximum responsiveness to customer demand.
Purchasing Food and Strategic Management