Managing a company in the food and beverage industry is a fascinating task. Food and beverage products are so deeply rooted in the culture of most countries that making and selling them is not only a matter of making and selling good and tasty products, but products that nurture people's body, soul, and heart. Given this, it's not difficult to see that the task quickly becomes complex. The objective of this course is twofold: first, we will focus on contemporary challenges that managers and entrepreneurs in food and beverage businesses should be able to face; and second, we will provide models and tools to design and implement appropriate courses of action to satisfy customers and build an advantage over the competition. This course is made up of four modules and an introduction, each exploring one dilemma that food and beverage companies face. You will be presented with a set of video lectures and guest speakers. These lectures combine an accessible introduction to specific topics integrated with interviews of managers and experts that will give precious insights and examples to the participants. To enhance your learning experience with us, we will make a Documentary on the Excellences of the Modena District available for you, which is in a format that we have developed specifically for this course in order to give you the chance to experience first-hand the territory as our on-campus students usually do. Each module is paired with an evaluated quiz and weekly discussion forums to reflect on the variety of the F&B world, its complexity, and the power of the network that we will build together during the course. Successful completion of the quizzes is required for a course certificate as explained in the Grading Policy. Below the guest speakers of the course: Masterchef Italia Sky – Nils Hartmann, Head of Movie Channels at Sky Italia – www.masterchef.sky.it Eataly - Paolo Bongiovanni, Marketing Director Italy – www.eataly.net Berlucchi – Paolo Ziliani, Owner – www.berlucchi.it Joia Restaurant – Alta Cucina Naturale – Pietro Leemann, Owner and Chef – www.joia.it Branca – Nicolò Branca, Owner – www.branca.it Barilla – Giuseppe Morici, President Region Europe – www.barilla.com Proyecto Expo 2015 Chile – Guillermo Ariztia, Chile Pavillon Director – www.expomilan.cl Winery Il Cavallante, Milano – Sergio Morpurgo, Owner Heineken – Floris Cobelens, Marketing Director – www.heineken.com TRDN – Martin Oetting, Managing Director – www.trnd.com GROM – Federico Grom, Owner and Founder – www.grom.it/en Tetra Pak – Matthew Hatton, Director Competitor Intelligence – www.tetrapak.com BioHombre – Matteo Panini, CEO – www.hombre.it Acetaia Maletti – Carmen & Claudio Maletti Cantine Riunite & CIV – Vanni Lusetti, CEO; Francesca Benini, Sales & Marketing Manager; Elena Lottici, Export Manager; Mario Vandi, Brand Manager – www.riunite.it GlemGas – Marco Guerzoni, Program Product Manager – www.glemgas.com Bibendum Catering – LaFranceschetta58 – Sabrina Lazzereschi & Marta Pulini, Owners and Founders – www.bibendumcatering.it , www.franceschetta58.it DISCLAIMER - Since most of the videos are conducted with those whose native language is not English, we have decided to sometimes preserve their more emphatic speech to keep a tighter match between the audio and the subtitles.
3. Innovating Value Propositions
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From the course by Università Bocconi
Food & Beverage Management
837 ratings
From the lesson
Tradition vs. Innovation
The role of tradition and innovation along the customer experience in the food and beverage industry. The value of brands in the tradition and innovation dilemma.
Meet the Instructors
Gabriele TroiloAssociate Professor
Department of Marketing
When talking about innovation with food and beverage companies, there is
this tendency of managers and entrepreneurs on focusing only on product innovation.
Product innovation is very important by definition.
Product innovation can be applied, it can be deployed in many different ways,
But what is important to me is that companies tend to focus a bit more on
value proposition innovation.
Innovation in the value proposition.
Because what customers buy is a combination of benefits and
benefits are always related to sacrifices.
This is the concept of value proposition:
a set of benefits related to a number of sacrifices the consumers have to make in
order to get those benefits.
If we consider value proposition as a ratio,
the innovation can be pursued in many different ways: by increasing the number of
benefits, by decreasing the sacrifices, or by a combination of the two.
Or, you can consider a different way of decreasing the benefits and
with more than proportional decrease of the sacrifices.
Because another tendency of many companies is to consider innovation as
adding something.
Adding benefits.
Innovating on benefits.
But sometimes, if a company is able to simplify the value proposition, for
some consumers into the market, it can be very valuable.
In any case, thinking of the value proposition and
how to innovate the value proposition basically means
how to innovate the ratio between the benefits and the sacrifices.
A good example of simplification is in the wine industry.
Wine is a very old traditional product especially in European countries
where it has been consumed since centuries ago, or maybe thousands of years ago.
In this case, wine should be considered very easy, very traditional,
very habitual in the consumption patterns and practices of many consumers,
but the evolution of the competition in wine industry
has made this product very complicated sometimes.
Many consumers perceive wine as a broad category to be consumed only
by competent consumers, which basically means many consumers think
that they need a competence in order to understand and appreciate wine.
If that is the case,
this basically prevents many consumers from consuming wine.
The idea is, “How can I simplify the wine?”
One example which is now a very traditional and
very powerful case study is Yellow Tail.
Yellow Tail is considered one of the best examples in how to simplify wine,
how to make it easies to drink for consumers.
The story says that Yellow Tail is a brand
owned by an Australian company called Casella which has been very successful
especially in the U.S. market which is the second largest market for
wine consumption in the world because they tended to simplify the product,
not the product in itself,
but basically the way consumers perceive the product.
If you think of a label on a wine bottle,
there is a concentration of information which is impressive.
Usually, this information is what prevents consumers from
approaching the wine, because to understand many parts of this information,
the consumer requires some competence.
So Yellow Tail basically took most of this information away,
simplifying the assortment, and making the wine very easy to appreciate and
drink, which basically means it’s very easy to choose.
Because by simplifying the information you give to your consumers,
your consumers can find it easier to make a choice.
So the point is, what are the components of the valuable proposition that I can
innovate in order to give more value to consumers than competitors do.
There are many different ways.
The typical one is product innovation.
So, when we talk about product innovation in food, it basically means ingredients,
methods of production, so a very technical innovation;
But we can’t to forget that consumers
consume products in specific occasions of usage.
That basically means that a great innovation which is a market innovation
is to persuade consumers to consume the product in a different occasion of usage,
different from the one they are used to.
Let me give you an example, the beer industry.
In the beer industry, maybe the two most important product innovations
in the last decades are non-alcoholic beer,
which has become in many countries the most drunk beer.
Think about the U.S., one of the most important markets in the world,
the market share of non-alcoholic beer is larger than that of alcoholic beer.
The second one is Craft beer.
Obviously Craft beers are very traditional, so where is the innovation?
Craft beer is basically beer as it was made in the past.
But again, it's a market innovation,
a market innovation because these beers that usually
are produced by microbreweries, very small breweries, very local breweries.
It's a matter of lifestyle. If you drink a craft beer,
you basically share the same values of the producer.
It's much more to do with the values, obviously also the taste, but
it's sharing some values with the producers which make these kinds of beers.
This is product innovation in beer, but
let's focus on a more recent innovation.
Let's focus on one company which is Heineken.
The two latest innovations of Heineken has been the keg and the sub.
The keg is a small barrel of beer which is five liters and
basically the idea here is not an innovation in the product,
because the product is always the same, but innovation in consumption of usage.
Many people have parties at home and
the parties at home they buy a lot of bottles of beer.
Now, they can buy only a few kegs and
this is a way to help them in getting the benefits they want to get.
The second innovation is the sub.
The idea of the sub is the exact same as the idea of the espresso coffee machine;
that is to say, you buy an espresso machine, and
then you make coffee by using capsules or other ways of producing coffee.
The idea of the sub is you have your machine at home and
you buy the capsules, let's call them,
of beer that you can include in your machine to have your draft beer at home.
Even in this case, the innovation has not been a product innovation but
it’s an innovation in the occasion of usage.
You can have your own draft beer at home.
Then there is the distribution innovation.
You can innovate in the channels of distribution.
In this case, so again, the product is not changed in any of its features,
but what is changed is the way the product is provided to consumers.
For example, by selling online instead of offline, there is an innovation.
You can reach different customers.
You can reach customers in different ways, and
this is the real innovation that you can have.
Another innovation in the value proposition can be on pricing:
different ways of pricing your products.
For example, you can have different ways of pricing if you sell
your product in different outlets.
For example, if a mineral water is sold in a vending machine,
the water is exactly the same,
what is new is a combination of the channel of distribution and the pricing system.
Innovation can also be at the service level.
For example, service is very much linked to the package and the portion.
Again, the product in itself is still the same but if you sell it
with different packages, you can provide consumers with a different benefit.
For example, with the sparkling wine,
the traditional size of the bottle is seventy-five centiliters,
but if you sell smaller bottles, you can be more appropriate for
the target customers of singles.
If you are single and you want to consume sparkling wine at home,
you wouldn’t like to uncork a bottle of seventy-five centiliters,
because if you open it and you don't drink it, basically, you are wasting your wine.
If you can buy smaller bottles, thirty-three or fifty centiliters, it's much easier for
you to open it, and drink it, and enjoy it without wasting any part of that wine.
It's a matter of service.
The package helps a lot in servicing the consumer.
These are many different ways of innovating the value proposition.
The question is, “Which way I should prefer?”
As a company, “Why should I focus on the product?”
“Why should I focus on the price?”
Actually, there is no “best-off.”
You can choose the best way according to expectations of the target
customers you want to serve.
Again, by choosing the customers you want to serve you can understand what
are the specific
combination of benefits they want to get,
and what are the sacrifices that they want to make,
and by having this knowledge you can design an innovative value proposition.
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