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Lesson 1: Overview of the Food System
Marketing Channels – Food at Home and Food Away from Home
The bread example shows that many economic agents are involved in the food system. The system provides food that we can purchase and take home in order to prepare meals (food at home). That part of the system involves supermarkets and other types of food stores. The system also provides meals that are ready to consume (food away from home). That part of the system involves various types of restaurants and other vendors of ready-to-eat food.
Many of the agents involved in each of these two components of the food system (these can also be called chains) in the food system are the same, but there are some differences.
| Food at home | Food away from home | Function |
|---|---|---|
| Farmer | Farmer | Producer of raw materials |
| Assembler | Assembler | Moves materials to processor |
| Processor | Processor | Processes materials |
| Wholesaler | Distributor | Supplies stores/restaurants |
| Retailer | Food service | Interfaces with consumers |
We shall take an in-depth look at both of these marketing channels in this course.
Each of the functional steps above requires an exchange of materials or products between economic agents through some type of market transaction (buying and selling). Markets provide a mechanism for bringing buyers and sellers together and in doing so they create utility. In other words, they contribute to the creation of something useful for satisfying the needs or wants of consumers. There are three major types of utility that are created through the marketing process:
Time utility
Consumers want to have access to food products when they need them. If they are hungry they expect to be able to obtain food from the supermarket to prepare a meal at home, or to find a food service operation that will be serve them a ready-to-eat meal. Consumers want a reliable supply of food – in other words they want to be able to purchase food when they need it. Making sure that food products are available consistently when consumers want them is a major function of marketing.
Form utility
Consumers want to have access to food products that are in the form that they desire. If I want to purchase bread I don’t expect to go to the supermarket, find that there is no bread to purchase, but be offered flour and other ingredients with instructions on how to turn these into bread. Making products available in the form that consumers want is a major function of marketing.
Place utility
Consumers want to have access to food products in locations that are convenient for them. If I go to a supermarket in New York City to purchase bread I don’t expect to receive an apology from the manager that they have no bread in the store today, but if I would like to go to the store in Philadelphia (95 miles or over 150 kilometers away) they are sure to have some.