Cheese and the market of cheese

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Background

The background part will introduce previous research within the subject and further-more, introduce the theoretical framework
During the past 30 years the term “locally produced” has never been stronger than it is today (Adams & Salois, 2010). Local production has got a lot of attention, and consum-ers in Sweden regularly associate local production with high quality (Gustafsson & Ro-kotova, 2012). Globalization has made it harder for consumers to know the products country of origin (Okeckuku, 1994). It has got even more attention since there have been several meat scandals in Sweden last couple of years. The one that got biggest at-tention was when the well-known company IKEA used horse meat in food that was said to only contain beef (Svenska Dagbladet, 2013). But even if the demand for locally pro-duced seems to be high, the sales of Swedish produced cheese is declining while im-ported cheese sales is increasing. It is especially low-price cheese that is popular among Swedish consumers (Byström, 2013).
Previous studies made in the U.S. shows that locally produced food achieves a lot of at-tention. The value of locally produced did increase from 4 billion dollars 2002 to 5 bil-lion dollars in 2007, and is expected to increase even more (Tropp, 2008). Big corpora-tions have observed this trend, Wal-Mart have put more focus on locally produced now and offer ingredients from local farms (Guptill & Wilkins, 2002).
Furthermore, it is unclear what Swedish consumers consider as “local” in terms of pro-ducing and selling, it could be the area around the city as much as the province. Country of origin could be greater or equally important as locally produced. In Darby et al.’s (2008) study made in Ohio, U.S., it appears that locally produced is associated with the state that the consumer live in rather than the local community when speaking about ge-ographical limitations. By knowing what consumers in Jönköping understand as local and how much value they put in it, companies in the region could get an advantage in their marketing and branding. However, a study made in U.S. argue that consumers use the term “locally produced” as a value description, a value assurance, rather than an in-surance that the product is made within a certain area (Adams & Adams, 2011).
The project Miljösmart mat defines locally produced as “food, where the production, processing and distribution to consumers occur within a “delimited area” (Livsmedelssverie, 2008). They also state that the products can be produced far from the consumer, thus there is no distance-limitation regarding the range between the home lo-cation of the consumer and where the product is sold. Bondens egen Marknad, (n.d.) on the other hand defines locally produced as a grocery that has been produced within a ra-dius of 250 kilometers. These definitions differ a lot from each other. This may be be-cause people perceive locally produced in different ways. Since the interest and demand for locally produced food have increased past years a problem have occurred; people do not really know what locally produced is and which demands a locally produced prod-uct have to fulfil (Adams & Salois, 2010). Because of the uncertainty regarding the term, a study that clarifies locally produced is needed and justified (Wreting-Clarin, 2010).
Furthermore, it is hard to say how much locally produced is worth to consumers in terms of money, i.e. if they are willing to pay a premium price to get locally produced products and that is a way of seeing how consumers’ value it. There have been done some work regarding whether locally produced is an important term or not, and for whom it could be important to. Some main controversies within the area are the defini-tion of the term that is mainly essential. There is a need of defining it (Wreting-Clarin, 2010) and to find out how important it is for consumers in Jönköping and if they are willing to pay a premium price for it, that due to that many researchers have focused on the development of the American market. Adams and Salois (2010) describes that the development of the subject has increased successfully. A need for research about the question on a part of the Swedish market is justified.
In a previous research regarding willingness to pay for locally produced products re-searchers found out that the willingness to pay for locally produced is as big as the will-ingness to pay for a freshness guarantee (Darby et al., 2008).
Thus, they conclude that the term locally produced food is independent of other varia-bles. Darby et al.’s (2008) American study emphasizes that locally produced is associat-ed with freshness and “anti”-corporate image. A Swedish study, on the other hand, points out that less environmental impact, support for the local business and good hus-bandry is some of the main associations with local production (Gustafsson & Rokotova, 2012). This might indicate that locally produced in general is independent from other variables. But the previous research is at most very general. If consumers are willing to pay more for local food, companies can use it in their marketing by clarifying that their products is locally produced (Darby et al., 2008), and in that way increase their selling. Therefore, dairy businesses could take advantage of this term.
The following study will now focus on the Swedish city Jönköping, which is located in the southern part of the country. It will also focus on the dairy-product household cheese

Theoretical framework

The theoretical framework will analyse the data that is gathered. The theories that are going to be used in to analyze the empirical findings are brand awareness, country of origin, types of buying decision behavior, willingness to pay, packaging, characteristics affecting consumer behavior, demographic variables and consumer affecting variables

Brand awareness

Brand awareness is a big influencing factor for consumers’ when buying household cheese; it creates a picture in the mindset of the consumer and builds recognition. Ros-siter and Percy (1987) define brand awareness as the customers’ capacity to identify its logo or brand under different types of circumstances. Brand awareness consists of two parts: brand recall and brand recognition. Brand recall describes whether a consumer as-sociate to the brand when referring to a particular product category, and brand recogni-tion is whether the consumers is able to differentiate the brand that they have been ex-posed to earlier (Keller, 1993). Furthermore, Hoyer and Brown (1990) defines brand awareness as the rudimentary level of the brand awareness where the consumer should at least be able to recognize the brand name.
Aaker (1996, p.114) defines brand awareness as “the salience of the brand in the cus-tomers mind”, and he divides brand awareness into six different parts, and those are recognition, recall, top-of-mind, opinion, knowledge and dominance. Recognition is the consumers ability to recognise the company, recall is the proportion of brands a con-sumer can define in a sector and top-of-mind is the first brand it recognises within a sec-tor. Furthermore, brand opinion is when a consumer have an opinion about a brand. Brand knowledge is if a consumer know what the brand stands for in form of values, brand dominance implies if a consumer does only recall one company in a sector.
Companies that are offering low involvement products, such as household cheese, want to create brand awareness with the purpose to affect the consumer in the moment of purchase (McMahon, 1980). To accomplish that companies tend to use repetitive adver-tisements that creates a consciousness regarding the brand in the consumers mindset, and they become comfortable with the brand (Bogart, 1986). To show the importance of brand awareness when it comes to low involvement products such as household cheese, previous studies indicates that consumers in blind tests cannot determine their preferred product (Hoyer & Brown, 1990).
Brand awareness is certainly important when it comes to low involvement products, it is surely important for unexperienced consumers concerning to make a new decision, and consumers that are aware of one brand and chooses between several brands tends to choose the recognized brand independently from the quality (Hoyer & Brown, 1990). Consumers’ evaluation step changes when the consumer gets more experienced and to summarize, one can determine that brand awareness has big affect on consumers’ choice of low involvement product. An advertisement that focuses on increasing the brand awareness could be very effective (Hoyer & Brown, 1990).
One could argue that brand awareness could be a dominant factor when consumers are set to choose cheese, since it is a habitual buying it is easy for consumers to just choose a cheese that they are familiar with. Thus, factors like locally produced. might be side-lined

Country of origin

A marketer can create associations to a product in many ways, branding and marketing are the most consistent tools companies uses. But another factor that have a clear impact on consumers perception about the quality of the product is the nation that it is made or designed in (Ahmed, Johnson, Yang, Fatt, Teng & Boon, 2004). This factor is known as the country of origin effect. The COO factor has got even more attention since the globalization break through (Pecotich & Ward, 2007). This factor has its biggest impact on consumers when a judgement of the product has not, or cannot be made. Then the COO is used as a tool, the country’s reputition and image are the two elements that is valued (Lantz & Loeb, 1996).
According to previous studies consumers may use COO in one or two ways; the first way is when consumers perceive and value the product along of the experiences or perception of the country, if a consumer wants to buy a car, they may associate a car that are produced in Germany with good quality since Germans produces great cars in general. In this case the COO enhance the product, and works as a “halo” for the product. The second way is the opposite to the first one. If consumers have bad experience from the country that the products have been made in, the perception will be negative. In this case, the COO lower the perceived quality of the product. If this is the case, the COO can be called a summary of construct (Han, 1989). If a marketer is aware of how the country that the product is associated with is perceived, it can either be enhanced or minimized in order to get greatest effect (Ahmed et al., 2004).
It is also argued whether COO is more important for consumers with less knowledge and experience about the product (Pecotich & Ward, 2007). However, Pecotich and Ward (2007) found that country-of-origin is important for consumers with both much and less knowledge about the product, especially when they evaluate the price and qual-ity of the product.
Moreover, Pecotich and Ward’s study was made about high involvement products, such as computers. Since cheese cannot be considered as a high-involvement product, COO has to be described in a perspective of low-involvement products.
Ahmed et al. (2004) suggest that COO does affect the moment-of-purchase when buy-ing low-involvement products such as cheese in the same way as high-involvement does, but not to the same extent. The purchase decision is shorter regarding food and consumers tend to choose after experience, knowledge or recognition rather than after COO, i.e. a strong brand is more important. But it is also suggested that when a low-involvement product becomes more expensive, when the price gets higher, COO be-comes more important for consumers (Wall, Liefel & Heslop,1991). Moreover, if the country has a reputation of producing good quality the product may be preferred by cus-tomers (Wall et al., 1991).
The COO theory is used in this study since there is uncertainty if locally produced is equal or more equal important than COO when consumers buying household cheese

Types of buying decision behaviour

Consumer behaviour differs dependently on which type of product the consumer is buying (Assael, 1998). Complex buying indicates that the consumer is involved on a high level, since the product is generally expensive and there are a big difference between different brands. It could for example be “purchasing of a car”, the consumer want to learn about different features of the product and create beliefs and in that way procure an attitude, and thereafter make a decision (Assael, 1988). This part is not relevant for this study since household cheese is not considered as a high involvement product.
Dissonance-reducing buying behaviour means that the consumer is involved at a high level. But unlike complex buying behaviour, there are not many differences between company’s offerings. Even though there is a small difference between companies, consumers tend to search around to be able to evaluate the choices available, it is a fast process. The post-service from companies is very important here, the consumers may perceive dissonance and then the companies need to be prepared to support the consumer. Regarding household cheese, consumers is faced by many different choices from different producers in the store. So one can conclude that this buying behavior is not applicibale on householde cheese.
Habitual buying behaviour is the third type of buying behaviour where there is a low level of involvement, and there is also a tiny difference between company’s offerings. These purchases works more as a habit rather than brand loyalty, the consumer just walks to a store and purchases the product habitually, but the brand awareness factor cannot be denied. In comparison to the complex-buying behaviour, the consumer does not search actively for information or evaluate the purchase before buying. The consumer and the brand does not form a relationship, instead the consumer just chooses the chosen brand since it is familiar. To create a competitive advantage when it comes to low-involvement products one must emphasize the price in ads, or actively work with sales promotion (Assael, 1988).
The last type of buying behaviour is the variety-seeking buying behaviour. The consumer acts with a low level of involvement but unlike the habitual buying behaviour, there are differences between the companies offerings. The consumer may buy a product, and thereafter evaluate. Next time when the person will buy the same product, one might choose another type because of simply boredom. The trading of type must not depend on dissonance; the consumer just might want to seek for variety. Companies want to make it to a habitual buying behaviour, by using repetitive commercials for example. The respond from competitors usually is lower prices and free samples. Due to this one could argue that brand awareness should be raised.
There is a lack of literature that states whether household cheese is a low- or high involvement product. However, low involvement products are characterized as being bought frequently and that little effort is put into the choice of product, since it does not have any effect on the consumers lifestyle. High involvement products are on the other hand associated with high capital value and is psycological important to the buyer, cars and jewelries are typical high involvement products (StudyMode.com, 2010). In this study, household cheese is defined as closer to a low involvement product since it matches better with its description, rather than a high involvement product. Furthermore, the fact that household cheese is a low involvement product means that consumers does not put a lot of engangement in the choice of product, but there are many other factors influencing the consumers.
To be even more specific, household cheese can be seen as a variety-seeking behaviour product (Arora, 1982). This means that the consumers involvement and engagement in the purchase is not high high, since the price is low. Generarly, this also means that consumers does not have a plan about exactly which cheese they are going to buy before entering the store, the decision is taken in front of the shelves. Therefore, brand awareness is an important factor that affect consuemrs choice of cheese (McMahon, 1980).
Due to that consumers make a quick decision when purchasing cheese, it is normal that the consumer picks a product habitually and then the choice tends to fall on a product that they know about or has a tempting price. Therefore brand awareness should be raised and companies could more clearly try to create a local touch in the mindset of the consumers. Furthermore, consumers value locally produced differently and a measurement of the importance of locally produced could be pronounced through their willingness to pay.

Willingness-to-pay

Consumers’ valuing of locally produced could be measured in different ways, and the willingness to pay is a way of seeing how consumers’ value locally produced.
When a company is about to set a price for a product there are two concepts that can be used to measure how much a consumer would pay for the product. The concepts are reservation price and maximum price. The reservation price is the line where the con-sumer is neutral to buying the product or not. The maximum price on the other hand is the price difference between the product that the consumer primary wants and the se-cond best alternative. Maximum and reservation price togheter stands for willingness-to-pay, which is the maximum price the consumer will pay (Breider, 2005). For marketers, willingness-to-pay mainly is about understanding how consumers make choices between different products with different prices. However, consumers repeatedly has a maximum price that they have valued the product to in their mind, this is known as the reservation price. To decide what to buy consumer then compare the actual price to the reference price (the imaginary price) and buy the one with the most favourable difference (Kalish & Nelson, 1991).
When talking in terms of cheese, willingness-to-pay could also be described as consumers willingness to pay a premium price for specific products in order to get certain qualities (Darby et al., 2008). In Sweden it is known that locally produced is linked to a higher price in comparison to a regular price (Gustavsson & Rokotova. 2012). There are a lack of studies about the subject in the area of Jönköping, which makes it uncertain regarding how high consumers in Jönköping value locally produced and if they are willing to pay a premium price in order to get it, there are many competetive brands with lower prices which local products compete with. Jekanowski, Williams & Shiek (2000) concludes that if consumers have a specific relationship or bond to an area, province or city, they are repeatedly more willing to pay a premium price for locally produce food. This could be to support the local business (Adams & Salois, 2010).
In a study made 2011 in Florida Adams and Adams (2011) found that 68 % of the people they asked were willing to pay extra for locally produced food. Many previous studies have enlightened that the willingness to pay a premium price for locally produced food has increased past decades (Adams, Salois. 2010). Thus, one have to consider the price differences regarding locally produced in the U.S. and Sweden.

Packaging

Consumers entering a store have generally not yet decided which product they will de-termine to purchase. Especially not when it comes to low involvement products such as household cheese and other food products (Silayoi & Speece, 2004). One of the main communication tools between the consumer and the brand is the product package, and companies in the low involvement businesses need to put a lot of work with their pack-age to attract the consumer in the moment of purchase. The fact is that packaging is the most important factor when it comes to convince the consumer in the moment of pur-chase (Prendergast & Pitt, 1996). Cheese is considered as a low involvement product and many companies within this business try to catch the consumers’ attention in the moment of purchase. Thus, the package is really important.
One can argue that packaging could be particularly important for locally produced cheese, if it is communicated on the package which farm the milk of the cheese comes from, the consumer might have some personal relation to it and that could play a role.
When it comes to the decision-making the package have four purposes to fulfil, which could be separated into two different parts; informational aspects and visual aspects. The informational elements consist of product information and product technology (Si-layoi & Speece, 2004)

1 Introduction 
1.1 Cheese and the market of cheese
1.2  Locally produced
1.3,Delimitations
1.4 Disposition
2 Specification of problem 
3 Purpose 
3.1.1 Research questions
4 Background 
4.1 Theoretical framework
5 Methodology 
5.1 Time planning of method
5.2 Semi-structured interview
5.3 Focus group
5.4 Conjoint Analysis
6 Empirical findings 
6.1 Structure
6.2 What does consumers associate to locally produced, and what is important in the purchase decision?
6.3 What are the limitations in terms of geography?
6.4 Is country of origin (Sweden) more important than locally produced for consumers in Jönköping?
7 Analysis 
7.1 Demographics
7.2 What does consumers associate to locally produced, and what is important in the purchase decision?
7.3 What are the limitations in terms of geography?
7.4 Is country of origin (Sweden) more important than locally produced for consumers in Jönköping?
8 Conclusions 
9 Discussion 
List of references
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