Contact us
[email protected] | |
3275638434 | |
Paper Publishing WeChat |
Useful Links
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
The U.S. Shredded/Grated Cheese Market: A Competitive Profile
Author(s)
Y. Datta
Full-Text PDF XML 5727 Views
DOI:10.17265/1537-1514/2018.08.001
Affiliation(s)
Northern Kentucky University, Highland Heights, KY, USA
ABSTRACT
Porter links high market-share with cost leadership strategy which is based
on the idea of competing on a price that is lower than that of the competition.
But, customer-perceived quality—not low cost—should be the foundation of competitive strategy,
because it is far more vital to long-term competitive position and
profitability than any other factor. So, a superior alternative is to offer
better quality vs. the competition. In most consumer markets, a business seeking market-share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality
better than that of the competition: at a price somewhat higher to signify an image of
quality, and to ensure that the strategy is both profitable and sustainable in the long run. Quality, however, is an intricate concept consumers generally
find difficult to understand. So, they often use relative price and a brand’s reputation as a symbol of quality. The origin of the U.S. Dairy Industry goes back to
family farms where cows
grazed on grass. But today milk is produced in factories where cows are raised
on corn feedlots which can make them prone to disease. Total
U.S. shredded/grated cheese retail sales for 2008 were $3 billion. There were 17 package sizes ranging all the way from 1 oz to 80 oz. Of these, the 8-oz size
captured about two-thirds of the market at 66%: the segment our statistical analysis is centered on. The shredded cheese
segment accounted for the lion’s share of the market at 88.5%, with grated
cheese way behind at 11.5%. It is a very competitive market with 509 brands in
2008. However, we have focused analysis on 28 brands whose 8 oz-pack sales were
over $1 million. We
tested two hypotheses: (1) That a market leader is likely to compete in the mid-price segment; and (2) that the unit price of
the market leader is likely to be somewhat higher than that of the nearest competition. Employing U.S. retail sales data for 2008
and 2007, we found that the results supported both
hypotheses for 2008, as well as 2007. We also found strong support for the idea, that relative price is a strategic variable. We compared the results of this project with similar
studies: the U.S. Men’s Shaving Cream Market, the U.S. Beer Market, and the
U.S. Shampoo Market. We found the results to be very similar, indicating a
pattern emerging for consumer markets. Finally,
we discovered four strategic groups
in the industry.
KEYWORDS
U.S. Shredded/Grated Cheese Market, cost leadership, price-quality segmentation, market-share leadership, relative price a strategic variable, strategic groups
Cite this paper
References