American Egg Board

  • Category: Business
  • Words: 3023
  • Grade: 100
SITUATION ANALYSIS


The Product and Organization

As a consumer product, few products are as undifferentiated as eggs. Despite a few minor

variations in size and shell color the differences between all varieties of eggs is miniscule

compared to most products. The majority of consumers looking to purchase eggs would

think of eggs as a homogeneous product, with no differences in variety or quality.


The American Egg Board is the industry association responsible for marketing eggs on

behalf of all independent American egg farmers and producers. The key goal of the

American Egg Board is to stimulate increased demand for eggs among consumers,

particularly by increasing awareness of eggs, emphasizing the health benefits, combating

fears about inaccurate health risks, and combating indirect competitors like cereal

makers.


The Market and Competition

Who buys eggs? In terms of age demographics, consumers aged 18-54 are above average

consumers of eggs. Heavy use is found in the 18-54 age group, and is strongest among

the 35-54 age group. Light use is also common among the 18-34 age group. The 55+ age

group have below average egg consumption, especially for heavy use. Light use in this

group is slightly below average. Education demographics reveal that consumers with

some degree of college education are more often users of eggs than are consumers with

less education, although those lower educated consumers are more likely to be heavy

users. The college educated consumers more often fall into the light user category.

Occupational demographics indicate that Professional and Managerial/Administrative

consumers tend to be light users whereas Precision/Craft and Other Employed consumers

tend to be heavy users. Ethnic Group demographics show that Whites are more likely to

be light users of eggs whereas Blacks and Hispanics tend to be heavy users. I hesitate to

draw a conclusion about racial differences without more detailed information, including

income levels. Regionally, variation in egg consumption varies less than in other

categories, but consumers in the South tend to have the highest incidence of heavy use

and consumers in the west tend to have the highest incidence of light use. Consumers in

the West and Northeast seem to use eggs less frequently than those in the North Central

and South. In terms of household income, households with less than $10,000 annual

income are more likely to be light than heavy users. Households between $10,000 and

$30,000 annual income tend to be heavy users more often than light users. Households

above $30,000 are more frequent users of eggs and are equally likely to be light or heavy

users. In terms of household structure, the large the household the greater frequency of

egg consumption and the more likely the household is a heavy user. Households of only

one or two members are more likely to be light users than heavy users.


Eggs as a product faces no direct competition because eggs are generally homogeneous

and the American Egg Board represents the interests of all egg producers who are not in

competition with each other in the retail market. Competing brands of eggs do not exist.


Despite a lack of direct competition, eggs as a product faces fierce indirect competition

from products that serve as breakfast alternatives. The category giants are the cereal

makers who have stolen a great deal of the breakfast market away from eggs since 1945

when egg consumption was 402 per capita. Egg consumption has fallen down to 176 per

capita in 1999. Cereals, along with bagels, yogurt, toast, waffles, toaster pastries, cereal

bars, and a few other breakfast products have battered the market share of eggs due to

higher advertising budgets and greater convenience in the morning where families have

less time now than 50 years ago, when fewer women worked and commutes were shorter.

The progression away from eggs as a breakfast food has gotten to the point where many

consumers no longer think of eggs as a breakfast alternative, even if they do have the

time to cook them.


OPPORTUNITY AND ISSUE ANALYSIS


Strengths

-The egg is a healthy food for consumers. Concerns about cholesterol in eggs from the

1960's to the early 1990's are now known to be less severe.

-Egg production is below the national capacity for production. This in itself isn't good,

but the capacity to produce greater quantities of eggs is present if the demand can be

stimulated.

-The egg is an easily identifiable product and is truly unique. While sales have decreased

to breakfast alternatives, eggs are used for many other cooking purposes as ingredients in

a huge array of dishes, and generally cannot be substituted for.

Weaknesses

-Eggs have not been able to recover from the stigma that they contain a dangerous

amount of cholesterol and are unhealthy in moderate quantities. The public is becoming

more aware that eggs are healthier than recently believed, but market share has not seen

substantial gains.

-While healthier than previously believed, eggs still contain more cholesterol than any

other food, and consuming too many eggs could contribute to cholesterol related heart

problems.

-The American Egg Board has a significantly lower advertising budget than many

important indirect competitors. Some individual leading cereal brands have five times the

advertising budget that the Egg Board has.

-Eggs generally cannot be prepared as quickly and as easily as Pop Tarts, Corn Flakes, or

bagels. Eggs will likely never be able to compete directly against convenient products

based upon convenience, which is an important concern with breakfast foods.

Opportunities

- There exists the opportunity to diversify egg products through niche marketing of new

and innovative package sizes and varieties, and stimulate demand.

-Current egg consumption is less than half its level in 1945. That market for eggs once

existed and some of it could be reclaimed through skillful marketing and promotion.

However, consumption will probably never again reach its 1945 levels due to the variety

of indirect competition in the market that did not exist 50 years ago.

-There are many demographic groups that have lower egg consumption rates. Marketing

strategies could be directly targeted at these groups to stimulate demand where there is

room for market growth. Some of these groups, particularly young, well-educated singles

and couples, without children are excellent long-term prospects for consumers. These

consumers could be acquired as long-term consumers with demand expanding as these

individuals start families.

-The unhealthy label has been shed from eggs and there is now the opportunity to reclaim

some health conscious consumers lost due to high cholesterol fears. Eggs also possess

other nutritional benefits including high protein content that can be emphasized. This

could be a selling point to vegetarians.

Threats

-The overall change in the lifestyle of Americans now favors convenience foods more

strongly than in the past. People have less time than ever to prepare meals, especially

with greater numbers of women in the workforce. Eggs generally take longer to prepare

in the morning than bagels, cold cereal, yogurt, toaster pastries, or toast. These foods

have gained huge favor as quick and easy breakfast solutions at the expense of the egg.

This trend has progressed to the point that many consumers no longer even think of eggs

as a breakfast alternative. Some of these competing products, particularly cereal, have

such strong brand identity, market share, and advertising budgets, that the American Egg

Board is facing an serious challenge to even dent that market share.

-Eggs as a breakfast food traditionally accompanied bacon. With greater emphasis on

living and eating healthier, bacon, like eggs, has fallen from favor as a breakfast staple.

Because it is not a convenience food, bacon is unlikely to make a big comeback as a

breakfast food.

-Limited retail space for promotional activities and heavy competition for prime shelf

space reduces egg visibility in supermarkets and reduces the probability of impulse

purchase.

-The egg as a product still faces some negative press and the stigma of being an

unhealthy food still lingers to a degree. Many consumers still worry about cholesterol

content, not understanding new research vindicating dietary cholesterol as a serious

health danger.

Problems/Issues

-Maintaining current market share and increasing consumption in the face of ever

increasing competition from convenience foods, not only in the breakfast food market.

-Competing with huge multinational corporations with deep pockets for advertising and

promotion of already strong recognizable brands.

-Solving the problem of convenience of preparation compared to more convenient

products.

-Communicating to, and convincing the public that eggs are much healthier than

previously believed.


CONSUMER BEHAVIOR ANALYSIS


Situational Influences and & Decision Making Process

External influences affect the consumption level of eggs. The culture of the United States

placed greater importance on health issues than in the past, as people become more health

conscious and the population ages. This is particularly strong among some subcultures,

for example groups engaging in a broad range of physical activities and a growing

population of vegetarians. These groups could impact upon egg sales positively or

negatively. This depends on whether these groups views eggs as a healthy or unhealthy

food. The vegetarian population presents an interesting opportunity where these

individuals usually forgo red meat and often all kinds of meat. They need a source of

protein that could be supplied by eggs. On the flipside, many vegetarians boycott all

products derived from animals, which would exclude eggs from their diet. Opinion

leaders may be important among these types of subcultures and often have tremendous

influence on product usage. Strong preferences or dislikes for eggs by influential

individuals can have far reaching effects, although this occurrence is unlikely for eggs.

Family may be the most important external influence on the consumption of eggs. People

tend to favor products that they used as children. Marketers often try to influence the

products used at a young age to try to create loyal long-term customers. Influencing

families to use eggs more frequently is important to stimulate demand for a younger

generation of consumers that will ultimately have families of their own. Their product

usage will probably reflect the products they were raised with. Targeting young families

with marketing can have effects reaching far into the future and can be more effective

than attempting to convert older consumers with multi-million dollar advertising. It

would be more efficient in the long term to try to convert the young generation.

Social class and reference groups shouldn't play a significant role in the marketing

strategy of the American Egg Board. Eggs are such a generic product that it defies the

boundaries of social class. Eggs also tend not to be controversial in nature and rarely gain

the attention of any forms of reference groups.


Internal influences also play roles in the consumption of eggs. Consumer perception is a

significant problem right now to increasing demand. The two main perception problems

currently are the lingering unhealthy perception, which is improving, and the failure of

consumers to perceive eggs as a legitimate breakfast alternative as consumers did in

previous decades. Changing these perceptions is the goal of marketing for the AEB.

Learning and memory are critical factors in creating stable, long-term demand for eggs.

Teaching children that eggs are nutritious and are an excellent meal alternative for

breakfast or any other time develops that attitude which stays with them for life. Children

learn that eggs are a good food, and remember it all their lives. Consumer attitudes relate

closely to consumer perception of eggs. Currently consumer attitudes are improving

about the nutritional value of eggs, but the attitude that eggs are not convenient enough to

be considered a breakfast food remains strong. Other consumer attitudes, particularly

those related to healthy lifestyle can be used as a basis from promoting eggs to

consumers. Living a healthy lifestyle and eating good foods is a more prevalent attitude

than ever before.


Eggs involve a low-involvement purchase and usually involve nominal or limited

decision-making. Long-time egg users recognize that they are running low on eggs and

almost automatically buy eggs when shopping. This involves little effort and minor

internal informational searching and is considered to be a nominal decision. Many other

consumers who use eggs regularly but less frequently, often in preparation of specific

meals will recognize that they need eggs for a particular use and purchase them.

Similarly, while shopping, some consumers ponder meals to prepare, and when meals

that involve eggs are chosen, eggs are purchased. This involves limited decision-making.

The consumer considers a limited group of alternatives and chooses one, with minor

informational searching. As a rule, purchasing eggs is generally not an involved decision.


EVALUATION OF CURRENT MARKETING EFFORTS

The "I Love Eggs" campaign was designed to combat the negative stigma associated with

the high level of dietary cholesterol in eggs and to improve the general consumer attitude

towards eggs. Consumer research studies conducted by the American Egg Board showed

that greater than one third of consumers now reported feeling better about eggs than two

years ago. Consumers are no longer as worried about the cholesterol content of eggs.

Clearly the campaign has had some success in reversing the image of eggs, but years of

bad press creates a challenge to reverse consumer attitudes, particularly over a brief

period of time. Strides are being made, but the healthy nature of eggs must continually be

advertised in order to return consumer attitudes to original levels.


Returning consumer attitudes to original levels will not reclaim the lost market share

once enjoyed by eggs. The proliferation of convenience foods provides fierce

competition, where eggs could never compete effectively based solely upon convenience

of preparation. Research indicates that convenience is a growing problem, particularly for

breakfast consumption. Eggs are no longer viewed as an alternative to cereal or bagels for

breakfast, a position that may never be effective reclaimed. The AEB has shown that ad

circulation has increased through television and magazine spots, indicating that

consumers are seeing the message more frequently, which is critical to a successful

campaign. The AEB spent $20 million on promotion and $11 million of that on

advertising, a sharp increase from previous years. Despite limited effectiveness at this

point, the willingness of the board to devote necessary funds to promotion and

advertising is an excellent indication for the long-term success of eggs marketing. Up to

this point, the marketing efforts have been moderately effective in changing some

attitudes, but more change is needed before demand will see significant increases.




In 1998, the AEB shifted its marketing focus to the "If It Ain't Eggs, It Ain't Breakfast"

slogan, emphasizing the nutritional benefits of eggs and that it is a healthier alternative to

breakfast, moving away from combating negative publicity. The goal is to make people

feel better about eating eggs and to get them to consider eggs as a legitimate breakfast

alternative. Television ads spots were slotted during breakfast hours to strengthen the

association. The AEB's 1999 advertising campaign reached 96% of its target audience,

women aged 25-54, with families at home, an average of 16.5 times with the intended

message. Clearly the AEB has been very successful in reaching its intended audience

with its message, but what remains to be seen is if the campaign is successful in

increasing demand for eggs.


RECOMMENDATION FOR MARKETING INITIATIVES

Marketing efforts for eggs should be designed to position eggs in new product categories

to create new demand. Traditional positioning as a breakfast food is lost and will never be

effectively reclaimed from convenience foods in today's fast paced society. Time

management is now key, consumers spend less time at breakfast than ever before, and

eggs cannot compete based upon convenience. Egg marketing cannot change prevailing

attitudes and behavior about breakfast. The marketing campaign will not be successful in

making consumers spend more time at breakfast, and will therefore not be able to reclaim

a significant portion of its traditional breakfast market, which is now dominated by

convenience. The AEB must chart a new direction to sustain and grow the long-term

market share of its product. Marketers must emphasize other aspects of eggs including

the healthy nature and the versatility of eggs. Eggs are an important ingredient in many

foods and can be prepared in an endless array of forms and varieties. The AEB needs to

advertise clearly the nutritional benefits of eggs, and promote eggs as a versatile food for

all occasions. By focusing on the breakfast market, the AEB may be ignoring its other

important consumption markets. It should instead focus on these, where market share

gains can be realized, and that increased usage might spill over and create minor

increases in breakfast consumption too, as eggs become widely accepted for any use at

any time. The AEB should continue to promote eggs as a part of the weekend breakfast, a

strong market segment and continue to promote the nutritional benefits very strongly.

One final note on the advertising strategy is that the AEB should not make light of

convenience issues, which illuminates the disparity between eggs and other more

convenient foods. Drawing attention to lower convenience in comparison to many foods

will not efforts to increase demand.


An important target market for the long-term growth of demand is young independent

singles and couples with no children or very young children. Particularly the 20-30 age

group where demand is currently low, which indicates potential growth opportunities.

The key here is that this demographic is young, with a generally busy and active lifestyle.

Nutritional concerns are important so eggs can be promoted as a healthy and versatile

alternative. This segment is important because if marketers can gain this young segment

as loyal consumers, they can create long-term consumers who continue to consume eggs

when they raise children. Children tend to continue to use products that they were raised

with, which creates long-term consumers. Investing advertising and promotional dollars

on this target segment could potentially create a self-replicating market segment and

lower the necessary advertising expenditures in the future.


The AEB should additionally increase point of purchase promotions and encourage

retailers to prominently display eggs. This effort combined with aggressive advertising

message will reinforce the idea and create an incentive to purchase. The AEB should

continue to price and package eggs in the same manner as they have always done. Pricing

issues and quality positioning are irrelevant to egg marketing because of the non-

existence of direct competition.





































References



        www.canadaegg.ca

        www.aeb.com

Consumer Behavior, Building Marketing Strategy, (2001) Hawkins, Best, and Coney. Irvin McGraw-Hill, Toronto


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