Demand, challenges, and marketing strategies in the retail promotion of local brand milk

Abstract

This article addresses the demand and challenges for local brand milk and focuses on the marketing strategies for retail promotion. While federal and state government make efforts to promote local food purchases and consumption at the farm level, local foods face significant distribution challenges in grocers, especially in larger retail stores. Limited shelf space and high pricing by retailers impedes consumers’ purchases and results in weak competitiveness for local brands. Therefore, it is essential for local producers and “buy local” programs to understand what types of promotion and marketing strategies might be more effective in stimulating demand in retail outlets. Using 2010‐2011 Nielsen Retail Scanner data in the Northeast region, we estimate a random‐coefficient discrete choice model of demand to determine the effects of nutritional characteristics, price, packaging, and distribution strategies on the consumers’ choice to purchase locally branded milk. Results show that local brand milk faces significant demand challenges in addition to high prices and limited outlets in competing with lower‐priced products. Marketing strategies, such as price cut, one‐gallon package offering, and expanded presence in retail stores, can significantly stimulate the demand for locally branded milk, with one‐gallon package offering being the most effective strategy.

Who buys regional fresh milk brands? An analysis of German household data

“…The brands were classified into one of the following categories: (i) FDB, (ii) private label (e.g., belonging to a supermarket chain), or (iii) manufacturer's brand. This distinction between FDB and other milk brands was in line with the approach taken in the study by Liu et al (2020), where FDB were called “local brands,” distinguishing them from “private labels” and “national brands.” “Local brands” are produced by smaller local farms, processed, distributed in the local market, and often use the local label on their packaging (Liu et al, 2020, p. 657). For each of the 213 milk brands, an online search was conducted to obtain information from the firm's websites or other websites.…”

“…Farmstead dairy brands (FDB) are characterized by the following four elements: (i) milk originates from one farm or a small number of farms, (ii) it is branded local/regional on its package, (iii) it is processed locally, most often by the farm itself (i.e., not sent a large distance for further processing), and (iv) is sold in retail stores where it competes for space in shelves against other milk brands from large, industrial dairy processors. This definition is in line with Liu et al (2020), who define local dairy brands as brands of small local farms that process their own milk and sell their products on the local market.…”

“…These studies were based on consumer surveys and investigated consumers' WTP or preferences for additional ethical attributes. One study used retail scanner data and focused on marketing strategies for retail promotion (Liu et al, 2020). Survey results enable consumer characteristics to be analyzed, but frequently do not reflect true purchasing behavior.…”

“…There have been few studies on local milk (Burchardi et al, 2005; Harwood & Drake, 2018; Hasselbach & Roosen, 2015; Schröder et al, 2005; Tempesta & Vecchiato, 2013; Zander & Hamm, 2010) and only one on milk from farmstead dairies (Liu et al, 2020). These studies were based on consumer surveys and investigated consumers' WTP or preferences for additional ethical attributes.…”