A. Assess what environmental factors have had the most impact on super-market and fast food in recent years in Hong Kong. (8 Marks)
Because of its growing population and its ever-booming tourism industry, Hong Kong is considered to be the next substantial market for all food products. Nonetheless, there are various factors – and the combination of these factors – that influence the supermarket and fast food businesses in the region. Yeung (1993) states that the hyper/supermarkets and department stores, the specialty stores and themed restaurants including fast food chains, the convenience stores and the traditional markets which include family-owned shops and wet markets are the four primary classification of food business in Hong Kong.
Chung (2007) describes supermarkets as the combination of Western supermarket and traditional wet market style which epitomizes the ‘one-stop-shop’ experience and with extensive product categories which reaches to over 20, 000. On the other hand, fast foods are food retailers which generally aimed at niche markets. While specialty stores usually sell a certain type of good, of the highest grade and quality, themed restaurants and fast food outlets are intended to bring other places’ flavors in Hong Kong. Stores and restaurants of this kind are known to be developed in order that the emerging food trend opportunities be captured and profit from such trends.
Of all the environmental factors which impact both food retail segments, the most notable are the food consumption trends such as food safety and increasing health consciousness, changing demographics, busy lifestyles and continuous arrival of tourists. Although there are many food products vying for the attention of nationals and tourists, it is clear that the consumers are increasingly demanding and preferring healthier, fresher and highly nutritional food choices.
Consumer preferences also shifting as people now favor chilled and frozen foods since these food products are believed to be safer and more hygienic although Hong Kong national generally prefer fresh foodstuffs. Functional foods are also in high demand because of its health benefits. Convenience foods, nonetheless, had been the most popular such as instant noodles, cup noodles, frozen and canned meals and instant soup because of the busy lifestyles. Such a trend is trickled down on major supermarket chains where retail space for these ready-made meals was extended as well as for restaurants which now offer neatly packaged food-to-go.
More specifically, convenience foods have also been in boom because of dual income families, smaller households, the ageing population and the busy lifestyles of Hong Kongers and migrants. Also, changing lifestyles and increasing average incomes are seen to be the reasons behind the boom in convenience food products in Hong Kong.
Consumer awareness, likewise, has also been raised particularly on the origin of the food and the ingredients of the products. Food safety is evident on the demand of the consumers to include information on labels specifically the composition of the products. Informations that the label should include are name or designation of the product, list of ingredients, special storage conditions or instructions for use, name and address of manufacturer, nutritional panel and expiry date of the product in English or Chinese or in both languages as well as the presence of allergic substances (Yuen, 2006).
Moreover, the last available statistics claim that over 21 million visited Hong Kong in 2006. Tourists’ spending on restaurants excluding hotel restaurants and including fast food restaurants is worth US.25 billion. Hong Kong has approximately 10,340 restaurants, as well as over 1,000 bars and other eating and drinking places. Chinese restaurants dominate the Hong Kong restaurant sector, accounting for 45% of the industry.
B. Using the consumer decision-making process as a guide, how would you go about to purchase at super-market? How applicable is this model for purchasing fast food? Please give examples to illustrate your answers. (17 Marks)
The consumer buying process is set in six stages: problem recognition, information search, alternatives evaluation, purchase decision, purchase and post-purchase evaluation. The first stage points to determining the difference between desired state and actual condition. Product information could stimulate this stage onward to gathering information. Searching happens internally and externally, the first through memory and the second through marketer dominated sources or comparison shopping aside from word of mouth. The success in this stage could lead to having an evoked set of alternatives whereby the consumer establishes criteria prior to weighing them. After the choice has been made, actual purchasing based on product availability will be considered. Whether the consumer makes the right decision or not in purchasing will be contemplated on the last stage (Parcon, 2007, pp. 95-96).
As a consumer, I have several commodities to purchase in the supermarket and so firstly, I have to determine for instance what or which among the commodities I need. Need recognition occurs when a perceived discrepancy exists between the actual and desired states of being. Needs could be innate or learned and are never fully satisfied. Expressive needs and utilitarian needs are the two basic consumer needs where the former involve desires by consumers to fulfill social or aesthetic requirements and the latter involve desires by consumers to solve basic problems (Mowen and Minor, 1997). In the supermarket, food and non-food product categories are there hence depending on my needs I can choose from these specific categories to purchase. Supposing, I need to purchase home cleaning tools.
The step would be to search for information such as in which supermarkets are these supplies and/or commodities are available and which brands would be most reliable. Two of the most reliable supermarkets for me are Park ‘n’ Shop and Wellcome Supermarket. In searching for information, it would be worthy to mention that consumers evaluate a product or a service. The necessity to recognize their motivations influencing customers is therefore apparent. There are several advertisements that could aid me in deciding which among the various products would be most suitable for my need. This leads me to alternative evaluation wherein I could ask my neighbors or rely on Internet forums which among the available brands will fulfill their promises in actuality. I could also do some canvassing in local supermarkets to compare and contrast their products depending on price range, features and efficiency of the tools I intend to buy. These processes would be necessary so that I can put value on my money to spend.
Next, decision-making comes when I have conducted all of these procedures. I need to know first if the brands I have chosen to buy are available and on-stock on Park ‘n’ Shop and Wellcome supermarkets, choose the supermarket from which to buy from and then buy the products. In the purchasing process, I could ask the supermarket representatives (sales staff) if there are warranties and if ever I chose to return the products for some reasons, will I be able to get my money back. These are informations that are often overlooked by the typical consumer. During post-purchase stage, I can contact the company of the brands to determine if they are additional informations that I could get from them or just give them my feedback about the product probably after the first month of use.
Such consumer buying model when applied in the fast food restaurant purchasing could be haphazardly used. I say this because problem recognition is always evident that is hunger. Nevertheless, eating in fast food establishments will depend on price level, service level and product offerings or cuisine or menu. What makes fast food purchases plausible are because of the amount of disposable income allotted for food spending (Davies, Lockwood and Stone, 1998). Information search, and also alternatives evaluation, could be also carried out through advertisements that have most appeal since they have the recall.
Basham (2007) maintains that the quality of the food, the quantity of the food and the prices of the food as well as the range of products being offered should be considered when searching and evaluating choices for fast food. For instance, the choices of food will depend on the budget and the time of the day. While also, the subsequent purchase decisions will be based on the health factors. Wendy’s and Burger King, for example, are extending their menu offerings especially the breakfast menu, for the purpose of competing with McDonalds. The decision of dining or eating out, even so, depends on the choice of the buyers, making them powerful in this sense. Since they can do without the products from fast food restaurants, we can say that buyers have a relatively strong influence on the strategies of restaurants. Other restaurants of my choice would be Fairwood and De Carol Café. From the stage of purchase decision onwards the post-purchase; these are the processes that I as a food buyer will dwell into.
What we should remember is the fact that if the consumers are not satisfied with anyone of the key elements identified above they can easily switch their fast food provider. Leaving the fast food restaurant operators at the disadvantaged position especially when they have limitations in their food choices offerings and that consumers could always refer to other fast food chains since their current fast food does not provide anything unique for them. As such, the fast food have no power to keep the restaurant business going when consumers’ requirements and expectations are not met (Price, 2007).
Nonetheless, the consumers will attempt to find best prices for a meal as well, and will settle for restaurants which offer promotions and price cuts. Fast food chains like McDonalds, Starbucks, Burger King, etc. are examples of these restaurants apart from catering to on-the-go people through drive thrus (Eagle and Brennan, 2007). In sum, provided that taste, palatability, cost, convenience, diversity and availability are the key elements in the consumption, it would be necessary for the restaurant industry to localized product offerings as well as diversify them. KFC’s menu was limited to fried foods. During the 1980s, people demanded for much healthier food consumption. Because of this, KFC changed its menu and added offerings which satisfied the craving for healthier eating habits. In addition, it would be also highly appreciated if food will be offered at the least possible time and place. The quality of the taste must not be compromised despite this, with relation to reasonable pricing and high levels of customer servicing.
References
Basham, M., 2007. Industry Surveys Restaurants. Standard and Poor’s, pp. 1-42.
Chung, K 2007, Hong Kong Food Market Trends, Department of Primary Industries.
Davis, B., Lockwood, A. and Stone, S., 1998. Food and Beverage Management. Butterworth-Heinemann.
Eagle, L. and Brennan, R., 2007. Beyond advertising: in-home promotion of ‘fast food’. Young Consumers: Insight and Ideas for Responsible Marketers, 8(4), pp. 278-288.
Mowen, J C and Minor, M 1997, Consumer Behavior, Prentice Hall.
Parcon, P 2007, Develop Your Decision Making Skills, Lotus Press.
Price, S., 2007. The new faces of the food market? The potential for consortia in pizza home delivery. British Food Journal, 99(11), pp. 436-446.
Yeung, L Y 1993, Time for change: fresh food retailing in Hong Kong. AgExporter.
Yuen, C 2006, Hong Kong Retail Food Sector, Global Agriculture Information Network Report.
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