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British Food Journal

Determining value in the food supply chain


Louise Manning
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Louise Manning , (2015),"Determining value in the food supply chain", British Food Journal, Vol. 117
Iss 11 pp. 2649 - 2663
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(2005),"Value chain analysis: an approach to supply chain improvement in agri-food chains",
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(2015),"Sustainability and strategic advantages using supply chain-based determinants in
pork production", British Food Journal, Vol. 117 Iss 11 pp. 2630-2648 http://dx.doi.org/10.1108/
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(2013),"Corporate and consumer social responsibility in the food supply chain", British Food Journal,
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Determining value in the food Value in the


food supply
supply chain chain
Louise Manning
Royal Agricultural University, Gloucestershire, UK 2649
Abstract Received 1 February 2015
Revised 16 June 2015
Purpose The purpose of this paper is to explore what the term value means to the multiple Accepted 23 June 2015
stakeholders interfacing and interacting with the food supply chain.
Design/methodology/approach The research included a literature review and the development of
a cost: reward (give: get) stakeholder interaction model.
Findings Perceptions of value are individualistic. Conflict of interest exists for business between
maintaining shareholder value and delivering value within the food offering to its customers and the
wider array of societal stakeholders. Shareholders are profit driven and price is the predominant factor
that influences consumer purchasing behaviour leading to a constantly negotiated interface between
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price and other reward factors. Reward factors such as financial, degree of utility, affordability,
hedonistic factors defining the emotional worth of food, acquirability and the ratio of price: volume of
food are explored.
Originality/value This research is of academic value and of value to policy makers and
practitioners in the food supply chain.
Keywords Value, Supply chain, Price, Brand, Food, Stakeholder
Paper type Conceptual paper

1. Introduction
Food price is inextricably linked to global agricultural and trade policy and in the wake
of concern over food-mountains, global food stocks have reduced over the last three
decades reducing the ability to smooth out price volatility. Prices of food commodities
on world markets, adjusted for inflation, declined substantially from the early 1960s to
the early 2000s, when they reached a historic low (FAO, 2011). Knutson et al. (1998)
cited by Miller and Coble (2006) proposed that governments have overtly pursued
cheap food policies to keep the price of food below the competitive equilibrium price.
This policy can be driven at market or governmental levels through the use of farmer
subsidies, incentives and disincentives to produce food, price controls and liquidating
food reserves to suppress prices. Factors that have an influence on food price include:
the impact of speculation and portfolio diversification on commodity future markets,
trade policies such as export bans and government buying policies, policies to divert
land into biofuel production including tariffs, subsidies and regulation, increasingly
scarce natural resources, depreciation of national currencies, emerging developing
economies that put upward pressure on the input costs of food production (fuel,
fertiliser) and the demand for a higher level of protein in the diet, slower growth in
yields of cereals, and a series of weather shocks such as drought, flooding etc. (FAO,
2011). These factors all influence the price: margin: profit interface.
Increasing food supply chain globalisation has led to consolidation to the evolution
of multi-national corporations (MNCs) through vertical or horizontal integration, or
indeed both in the development of business centres/clusters (Manning and Baines, British Food Journal
2004; Manning and Smith, 2015). This has driven economies of scale and the spreading Vol. 117 No. 11, 2015
pp. 2649-2663
of fixed costs over a larger volume base, improved purchasing power and greater Emerald Group Publishing Limited
0007-070X
intellectual, technological and production resources for organisations to draw upon DOI 10.1108/BFJ-02-2015-0049
BFJ (Manning and Smith, 2015). To remain viable MNCs have to consider the needs of their
117,11 corporate shareholders, including their financial expectations for a suitable return in
order to maintain investor confidence (Jaegar, 2006). George (2003) determined that the
pressure to increase stock prices and shareholder value in the short-term has ultimately
caused MNCs to lose sight of how lasting shareholder value is actually created. As a
business driver, it could be argued, maintaining shareholder value is as powerful a
2650 force as the requirement for the organisation to supply food to the ultimate consumer
that is safe, affordable and legally compliant.

2. Stakeholder theory
Stakeholder theory considers the primary role of organisations in terms of being profit
focused or value focused. Friedman (1962, p. 133) is often quoted for stating that there
is one and only one social responsibility of business to use its resources and engage in
activities designed to increase its profits. Friedman therefore proposes that the
greatest benefit to the public good is allowing businesses to operate with minimum
regulation in their continued pursuit of profit. This does not consider a need for
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organisations to comply with what is deemed morally correct by wider civic society.
Philips et al. (2003, p. 480) determine that stakeholder theory is a theory of both
organisational management and of ethics. Indeed they argue all theories of strategic
management have some moral content, though it is often implicit. Therefore
stakeholder management is more than simply managing shareholder wealth it is about
value maximisation. Stakeholders can be internal or external to the business and
include shareholders, employees, suppliers, customers, local community, government
(local, national), finance houses, civil society (external) and internal stakeholders such
as employees. The question in terms of developing value is whether all stakeholders
have equal equity? Philips et al. (2003) comment that stakeholder theory is not intended
to provide an answer to all moral questions and debate. Heath and Norman (2004,
p. 248) state that the organisation and its managers do have an obligation to ensure
that the shareholders receive a fair return on their investment; but the firm also has
special obligations to other stakeholders, which go above and beyond those required by
law. They argue that corporate social responsibility (CSR) strategies cannot be
pursued to the detriment of shareholder return. Amaeshi et al. (2007) conclude that CSR
can be at odds with a capitalist approach, as MNCs are challenged by the global
interaction of their supply chains and being able to demonstrate they assure the
practices of all the individuals and organisations involved and that such practices are
built on ethical foundations. Further, they suggest that a wish to protect brand value
drives organisations to take responsibility for defining and verifying supplier and
wider supply chain practice. This brings into focus the concept of sustainability as
providing value.
Sustainability has been defined in many ways, but can be described as offering, the
potential for reducing long-term risks associated with resource depletion, fluctuations
in energy costs, product liabilities, and pollution and waste management (Shrivastava,
1995). CSR encompasses many elements of sustainable development including
addressing minimal legislative compliance, for example, food safety, animal welfare,
environmental protection, employment law and employee health and safety (Lindgreen
and Hingley 2009; Lindgreen et al. 2009). Borregaard and Dufey (2005) defined
sustainable products as those products that generate greater positive or lower negative
social, environmental and economic impacts along the value chain from producer to
end user than conventional products, i.e. that sustainable products can be actively
differentiated in some way. Therefore within the current market environment, Value in the
sustainable products are seen as those products that can accrue value through each food supply
stage in the supply chain by product or process differentiation that drives marketing
and brand development.
chain
However, formalising supply chain compliance standards adds transactional cost in
a food retail environment where competition over the price consumers pay for food is
fierce. Therefore myriad perceptions of value influence food choices and have different 2651
meanings for the various stakeholders in the food chain. This begs the question this
research sought to answer, namely: what does the term value mean to the multiple
stakeholders interfacing with the food supply chain?

3. Brand value
Bowman et al. (2013) suggest meat products are important to consider in terms of their
being value products because meat is a key category where low price offers drive
footfall in retailers. Indeed, Bowman et al. (2013) assert that in the major supermarket
chains approximately 40 per cent of pig meat is sold on promotion. Therefore meat
products are often used as a loss leader to draw customers into the retail stores. When
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considering the perception of value it is important to consider leader pricing. Leader


pricing is a pricing strategy in which retailers set very low prices, sometimes below
cost, for some products to lure customers into stores in the hope that they will also
purchase high-profit impulse goods (Hess and Gerstner, 1987). Below-cost pricing or
loss leading is a pricing strategy making (apparent) losses by selling some products
at a price below their cost, to attract consumers (Allain and Chambolle, 2007). Common
loss leading food and drink products include: alcohol, bakery and dairy products. Food
can be considered as a product in a race to cut unit costs and make profit, driven by
ruthless competition seeking greater market share to benefit their shareholders
(Hodges, 2005). The European Food and Farming Partnerships stated in 2005 that
price, or value for money, continue to be the major driver of consumer purchasing
habits and sales uplift. The English Food and Farming Partnerships (2005) argued that
retailers would continue to push to be top of the cheapest supermarket league as they
are well aware that for consumers the store that offers them the best value for money
attracts the greatest footfall. The number of product lines available will also influence
food choice. Dawson (2013) states that consumer sovereignty is an oversimplified
model of the reality of the relationship between consumers choice and retailers offer as
decisions on what is available to the consumer are made by the retailer. Kaltcheva et al.
(2013) propose that perceptions of a retailer's value proposition tend to become eroded
when consumers compare prices across stores and discover lower prices on very
similar (or even identical) merchandise at competitors. Building on this Dawson (2013)
puts forward that the decisions made by retailers on what to offer in which shop and
how to influence decisions on consumers choice reflect both the strategic and
operational aspects of a large retail firm, the nature of inter-firm competition and a
variety of socio-political, technological and situational factors. Built into this
relationship is the need to safeguard corporate reputation, minimise liability and
build supply chain partnerships. Trust in such partnerships can be challenged if all
partners do not feel they have had a representative retention of the value of the
overall business relationship.
Brand value contains both tangible and intangible elements. Davcik and da Silva
(2015, p. 4) state that these intangible values differentiate a product from its
competitors, influence consumer preferences, and enhance customer satisfaction levels,
BFJ often leading to greater customer loyalty. This is as true of the supplier: customer
117,11 interfaces in the supply chain as it is of the interaction with the final consumer.
By extension this means that product value extends beyond tangible financial return to
include other factors that are drawn together in customer, product and financial
markets and this accrued value can be determined as brand equity (Davcik and
da Silva, 2015). Aaker (1991; cited by Davcik and da Silva 2015) proposes that brand
2652 equity is a balance of brand assets and liabilities that add or detract from the overall
value of a product to both the organisation and also to customers. Taking this concept
further could mean that brand equity is differentiated separately by the organisation
itself, its suppliers and customers and by consumers. Indeed the separate constructs of
brand equity may be derived from a different perception of the balance between brand
assets and liabilities at each stage with the consumer derived sense of what is value
relating to a specific and discrete interaction of brand assets and liabilities. Davcik and
da Silva (2015) assert that whilst equity has a financial core especially for shareholders,
for manufacturers it can be seen as strategic worth, for retailers brand equity has a
marketing perspective and it also is a subjective construct that encompasses intangible
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cues that are valued by the consumer.


Aaker identified five brand equity components: (1) brand loyalty; (2) brand
awareness; (3) perceived quality; (4) brand associations; and (5) other proprietary
assets. These focus on brand assets, but brand liabilities also have impact, e.g. product
failure, reputation damage derived from supply chain partners, misleading corporate
communication etc. Thus with any consideration of value there also comes the concept
of financial and product risk. Mahon and Cowan (2004) in their study considered that
product performance risk had the highest correlation with overall risk. Poor
performance of food products will also have one of the highest impacts on perceived
value. Risk reduction methods translate from Mahon and Cowans study to considering
the key factors that influence risk to brand value (Table I).
The risk components include physical loss, performance loss, psychological loss,
financial loss, and time loss. The first three contributing most significantly to overall
perceived risk. Further Mahon and Cowan (2004) argue risk reduction mechanisms can
be adopted by MNCs such as quality assurance, traceability and labelling systems,
government statutory product testing, private product testing programmes, money
back guarantees, differentiation to either high quality products or special offers.
One approach would be to consider that risk management requires a multidisciplinary

Perceived risk
component Implication

Physical loss Negative health impacts of consuming unsafe, poor quality food especially
where ingredients such as sugar, salt, saturated fat and caffeine are used
Performance loss The factor influences the performance of the food, e.g. taste, deterioration,
nutritional loss, failure to meet stated shelf-life, etc.
Financial loss The food can spoil meaning that it will cause a financial loss, medical treatment
may be required, food will need to be thrown away, e.g. as a result of a
Table I. performance loss
Components of Time loss Loss associated with lack of convenience, time spent cooking, time lost from
perceived risk work owing to illness
associated with Psychological loss Worries or concerns experienced by consumers that relate to the product
food value Sources: Adapted from Mahon and Cowan (2004); Yeung and Morris (2001)
approach from the senior management team and also a strategy of integrated Value in the
risk management through the supply chain that will lead to improved business food supply
sustainability, i.e. the formulated approach described by Mintzberg (1978).
If this approach is followed, internal risks associated with the organisation itself
chain
should be easier to quantify and thus mitigate than external risk especially where there
is a strong organisational operating system. Trench et al. (2011) identified four factors
that drive increasing risk, namely, an increase in urbanisation leading to more 2653
anonymous supply chains, a shift in consumption patterns, a higher demand for
cheap food and a reduction in supply chain agility due to the logistics of distributing
foods to urban areas. As many food-related health risks are chronic rather than acute,
they are less visible and have less priority (Trench et al. 2011). Examples of such
chronic diseases include obesity, type 2 diabetes, stroke, heart disease, and cancer and
such risk to brand value might not be seen as being worthy of consideration by
short-term investment shareholders during the timescale of their investment.
A potential risk that could influence short-term share price, however is an incident
of food crime, e.g. adulteration, mislabelling and so forth. Scally (2013) argues that
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modern food processing has created the opportunity to practice consumer fraud on a
truly massive and international scale. Thus MNCs need to consider this risk and take
mitigating action in order to maintain both shareholder and consumer confidence.
The European Parliamentary Research Service (2014) in their briefing document
Fighting Fraud highlight the reasons they believe led to the horsemeat incident,
namely, the 2008 financial crisis and rising food prices (and also feed prices) driving
a demand for cheap food, and more specifically cheap protein, the complexity of food
supply chains, pressure on control services, the low risk of detection, the lack of focus
on detecting food fraud and lastly the lack of a strong deterrent (Manning in press).
Czinkota et al. (2014) suggest, this can lead to a trade-off between reducing budgets and
reducing concerns over food integrity. The substitution of horsemeat for beef was
undertaken in products where there was a pressure on minimising product cost and
final price, where the substitution was least likely to be detected (composite foods) and
where tests were not being routinely done as part of quality assurance into the origin of
the meat source in these products.

4. Consumers perception of value


Data from the Defra Food Pocketbooks (FSP) (2011; 2012; 2013; 2014) suggests that
price is the primary factor influencing food purchase increasing from 30 per cent of
UK consumers naming it as the most important factor when purchasing food in 2010
to 39-41 per cent between 2012 and 2014. Price is listed as a top five influencer of
food purchase by 88-90 per cent of food purchasers (Table II). UK food spend
has risen as a percentage of household income between 2007 and 2013 from 10.5
to 11.4 per cent for all UK households but for those on a low income from 15.2
to 16.5 per cent of total spend (Table III). This was in an environment of increasing
housing and fuel costs as well.
Dangour et al. (2013) assert that despite changes in food prices having an impact on
the quantity and quality of food consumed, food price policies and the nutritional status
of a given population are separated by many lengthy pathways of influence. They
propose that a range of factors such as genetic predisposition, income level, urban or
rural residence, education of household head and womens control of income also
mediate the process. Nutrient-rich foods are associated with better health outcomes
tend to cost more per kilocalorie (kcal) than do refined grains, sweets and fats
BFJ (Monsivais et al. 2010). Gibson (2013) proposed that the scope for switching towards
117,11 cheaper sources of nutrients occurs because many aspects of what consumers consider
as value are largely independent of nutrition. Consumers are concerned not only with
the retail price of a food product/meal choice, but also with the time costs incurred (see
Table I) when purchasing and consuming the product ( Jekanowski et al. 2001). Osman
et al. (2014) found that time as a factor has significant positive impact on convenient
2654 food consumption. Time should be considered not only in terms of the physical element,
but also reflects the physical and mental effort required to produce a meal compared to
delegating the whole activity to others through the purchase of ready meals or fast
food. Dunn et al. (2011) determine that concern for long-term health may be over-ridden
by the short-term benefits of fast-food which include the meals being tasty,
satisfying, and convenient. Carrigan et al. (2006) link the concept of value associated
with food as reflecting the importance that mothers (as this was the focus of their
study) place upon convenience food as the UK family meal. The value perceived by the
respondents in the study was in terms of meeting the challenges of time shortages and
complex scheduling by buying time in terms of food preparation and also the ability
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to create autonomy of food choice amongst family members. Food purchasing decisions
were focused on four main goals, getting sufficient food to fill the family up, getting the
desired food items, getting sufficient food when money ran out and getting food to feel
good (Burns et al. 2013). They determined that decisions regarding the first three
objectives involved a tri-age process of weighing up available money against satiety
and value for money whilst acquiring comfort food occurred irrespective of whether
there was sufficient money for other items. Celnik et al. (2012) argue that there is no
simple relationship between wealth and diet quality highlighting too that other factors
are at play such as taste, habit, and the concept of being time scarce which has led to
the rise of the convenience food market. However Celnik et al. (2012) suggest that
another factor driving purchase of convenience foods is the food industry capitalising
on selling cheap food with perceived added value (convenience) at the maximum price
the market can support. The UK food and grocery market is set to be worth 206bn by
2018, which represents an increase of over a fifth (21 per cent) from its current value of

Year 2010 2012 2013 2014

Price as a primary factor influencing purchase


(% of respondents) 30 41 39 41
Table II. Price in top five factors influencing purchase
Influence of price (% of respondents) 90 90 90 88
as a factor when Source FSP (2011) FSP (2012) FSP (2013) FSP (2014)
purchasing food Sources: Adapted from Manning and Smith (2015)

Year 2007 2011 2012 2013

Food as a percentage of household spend


Table III. (All UK households) 10.5 11.3 11.6 11.4
Influence of price Food as a percentage of household spend
as a factor when (UK low income households) 15.2 16.6 16.6 16.5
purchasing food Source FSP (2012) FSP (2012) FSP (2013) FSP (2014)
170bn (IGD, 2013). Convenience stores, along with discount stores are expected to see Value in the
the biggest growth in the time period. Convenience is not just about access to food food supply
whether at retail and food service level, but also ease of preparation (as Table I
highlights this perception of time and performance factors associated with foods).
chain
Zeithamal (1988) differentiated between four consumer definitions of value:
(1) Value is low price: this would include products believed to be on sale, where
vouchers can be used to purchase them, products that are on promotion or 2655
linked to special offers and products with a perceived low price. This definition
focuses on monetary factors.
(2) Value is whatever I want in a product: this consideration centres on value being
focused on whether the food is what the family will actually eat and drink, or if
the food as it is presented at the point of sale is considered convenient to the
purchaser e.g. easy to prepare, correct portion size. This definition focuses on
the utility elements of a food product.
(3) Value is the quality I get for the price I pay: this statement suggests that value is a
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tradeoff between price (first) and quality or utility second. This could mean being
able to purchase a branded food product at one food store in preference to another
because it is sold at the lowest price. This definition focuses on the affordability of
the specific quality criteria in a food product. Quality criteria in this regard can be
intrinsic i.e. integral to the nature, taste and behaviour of the food or extrinsic and
relate to the method of production and/or the ethical factors that support the
methods of production e.g. free range or organic production.
(4) Value is what I get for what I give: this definition focuses on the ratio of price to
quantity. That is how much is purchased for my money in terms of portion size,
or volume, i.e. acquirability.
These four separate definitions were synthesised by Zeithamal (1988, p. 14) to give an
overall definition of value, namely: The consumers overall assessment of the utility of a
product based on the perceptions of what is received and what is given. Thus the author
argues value is different from quality in that value is more personal to an individual and
it involves a trade-off between the components of give and get. The characteristic
nature of value added in the wider supply chain may relate to quality (in terms of
intrinsic and extrinsic criteria), cost, delivery times, delivery flexibility, innovativeness,
etc. Therefore, value is created at specific stages and by different actors throughout the
supply chain and the magnitude of overall value that is added is ultimately decided by
the end-customers willingness to pay (Trienekens, 2011). Value perceptions are
situational and are influenced by the context in which the consumers evaluation
judgement is made and therefore consumers are open to the use of value triggers
(Holbrook and Corfman, 1985 cited by Zeithamal, 1988). Perceived value is dynamic
(San chez-Fernan dez and Iniesta-Bonillo, 2007). Further, perceived value is a subjective
construct that varies between customers, between cultures and at different times and as
such is a dynamic variable, experienced before purchase, at the moment of purchase, at
the time of use, and after use (San chez et al., 2006). The headline definitions of value have
been drawn together (Table IV). The challenge when demonstrating value to consumers
and also to other stakeholders is the individualistic characterisation of what value
actually is. Whilst terms such as hedonic and perceived values are subjective, utilitarian
values are easier to functionally characterise. Functionality is key when considering the
development of value chains and analysing product, materials and information flow.
BFJ Term Definition Source
117,11
Hedonic value Reflecting the entertainment and emotional worth of Babin et al. (1994)
shopping, non-instrumental, experiential and affective
Perceived value A subjective construct that varies between customers, San chez et al. (2006)
between cultures and at different times and as such is a
dynamic variable, experienced before purchase, at the
2656 moment of purchase, at the time of use, and after use
Utilitarian value Instrumental, task related, rational, functional, cognitive, Babin et al. (1994)
and a means to an end
Value The consumers overall assessment of the utility of a Zeithamal (1988)
product based on the perceptions of what is received and
what is given
Value chain A chain of activities and services required to bring a Kaplinsky and Morris
product or service from its conception to final customers, (2000),
and final disposal after use. Actors include input suppliers,Hellin and Meijer
producers, processors and buyers (2006),
El-Sayed et al. (2015)
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Value chain Multi-dimensional assessment of the performance of value Taylor (2005) cited by
analysis (VCA) chains, including the analysis of product flows, information El-Sayed et al. (2015),
flows and the management and control of the value chain. Trienekens (2011)
Table IV. VCA focuses on the position of the lead firm in value chains
Value terms and and power relationships between developing country
their definitions producers and Western markets or MNCs

Value chain analysis (VCA) is often driven by margin-based approaches through the
specification of processes and the standards to be used by the organisations that have
overarching control of the supply chain i.e. the lead organisation.
Babin and James (2009) discuss Zeithamals four elements of value approach and
consider that consumers and producers actually co-create value. Babin and James (2009)
develop a framework based on get and give components arguing that value equals
get components minus give components. This is based on the assumption that there is
a mutually exclusive set of get and give components and further that there are a set of
corporate and consumer components, and that they are co-created in order to deliver value.
This is in contrast to the profit based theory of Friedman (1962). In their construction,
give elements require investment from either or both parties and such resources or
investment can encompass the engagement of financial, physical or human assets. The
co-creation of such value can have a low involvement give construct where limited
money, limited time and energy are involved in the interaction through a spectrum of
engagement to high-involvement constructs. This approach does not on the surface seem
to address the interaction of assets and liabilities, enablers and risks. The get
components derive a benefit, as corporate or consumer or collectively, that also can be high
or low involvement. Utilitarian and hedonic values (see Table IV) may appeal to the
consumer and are often of an interacting nature and not necessarily mutually exclusive.
Babin and James (2009) argue that as the consumer becomes more engaged then the give
and get elements become more blurred thus value and worth are two separate constructs.
Iglesias et al. (2013) argue that brand value is co-created by different stakeholders
as a result of negotiation in a social process. These stakeholders they contend
include customers, employees, investors, suppliers and citizens and the power balances
that flow between them. This interface between corporation and consumer that
Inglesias et al. term the conversational space that builds brand value is where Value in the
information, control, influence, alignment, and involvement affect the interaction. This food supply
suggests that the identity of value is not controlled by the corporate, rather it is flexible
and fluid. Mahon and Cowan (2004) considered consumer perception of risk and how it
chain
affects behaviour. Consumers when considering the elements of give and get will also
consider risk and associated with risk is the element of loss, i.e. the alternative end to
the spectrum of get. Mahon and Cowan (2004) building on the work of Yeung and 2657
Morris (2001) distinguished between consumer perception of risk and how it affects
behaviour. Consumers when considering the elements of give and get will also
consider risk and associated with risk is the inverse of get the element of loss. Babin
and James (2009) argue that evaluation of worth occurs only after the fact. Worth can
have both financial and ethical elements. Net worth in financial terms is the sum of the
assets minus the liabilities i.e. it is wider than the concept of value which is what you
get minus what you give in return for that asset (Figure 1). If the give elements
outweigh the get elements then something represents negative value. Worth is thus a
latent factor that may affect satisfaction, and the potential to repeat the purchase.
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The literature reviewed in this research highlights a number of factors that influence
consumer perception of value. Further these factors can be differentiated between cost and
reward (Sanchez et al. 2006; Zeithamal, 1988; Babin et al., 1994). Factors that influence
perception of cost monetary factors include price, promotional activity and the use of
loss leader products to draw customers into retail stores or food service. Burns et al. (2013)
suggest that absolute price is the primary metric against which value is assessed
especially by low income families. Thus absolute price will influence food choice in terms

Value = Co-created (co-agency) minus Co-created (co-agency)


Benefits or Resources or
Get components Give components

Corporate Consumer Corporate Consumer

Efficiency Function / performance Time Time


Economic/Shareholder wealth Economic Money Money
Intrinsic quality Equipment Equipment
Extrinsic quality Energy Energy
Convenience in supply Convenience Knowledge Knowledge
Enhanced corporate reputation Personal prestige Creativity Creativity
CSR Socialisation Opportunity Opportunity
Experience Emotions Emotions
Ability to charge a premium Uniqueness/scarcity Image Image
Nostalgia

Worth: evaluation is latent and can only occur after purchase, use or both.
A financial construct, but can also have ethical and moral elements. Figure 1.
The co-production
of value and worth
Source: Adapted from Babin and James (2009)
BFJ of available weekly income and how it is allocated to food purchases. Cost will outweigh
117,11 the reward get factors for those on low incomes. The reward factors against which low-
income families are negotiating value can be categorised as:
(1) Acquirability factors consideration of what is physically obtained for the ratio
of price e.g. size of portion, pack size, the number of meals the food will provide
for the money. Burns et al. (2013, p. 212) suggest this mindset is about getting
2658 enough to fill you up. The challenge with this concept of value is that it focuses
on energy dense rather than nutrient dense foods by meeting hunger needs
rather than health needs.
(2) Affordability factors perception of quality in terms of intrinsic factors such as
taste, freshness etc. and extrinsic attributes such as method of production,
ethical factors surrounding the supply of the food, e.g. Fair Trade, animal
welfare standards and so forth. Burns et al. (2013) define this as getting the food
you want which requires the purchaser to negotiate the value of a food against
the additional money required to purchase that product;
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(3) Hedonistic factors the emotional worth of the food to the individual, family or
community. Burns et al. (2013) suggest that this is a spontaneous psychological
response to food often aligned with stress i.e. individuals on a low income find
the fact they are in poverty as stressful therefore they purchase food to
compensate for that psychological stress so called comfort foods. Often if this
puts further strain on the household budget this action in itself can perpetuate
the stress that results in such hedonistic behaviour; and
(4) Utility factors these factors include issues such as convenience, delivery times,
location of restaurant or shop, ease of access can also include opening times
such as 24 hour opening.
Individuals on low incomes cannot afford to risk purchasing food products that do not
live up to their perceptions of value so are less likely to be innovative in their food
choices or be willing to divert from existing behaviour and practice.

5. Developing a conceptual stakeholder interaction model


Ultimately shareholders will want senior management executives and executive boards
to address the degree of risk to shareholders financial investment in their strategic
planning and thus deliver value to them too. The interaction between shareholder risk
and consumer risk and its impact on the characterisation of organisational strategy
and operational activity is worthy of further consideration. However the co-creation of
value by multiple stakeholders is more than just a focus on shareholder value. Figure 2
outlines that there are four elements to consider in the co-creation of value, shareholder
value, product value, customer value and strategic worth. There is, through co-creation,
a mutual interface between the different stakeholder(s) and the cost and reward
elements (give and get) of the perception of value. External factors also have a role that
may only be of relevance to particular stakeholders e.g. shareholder equity, ease of
physical purchase, value of certification of the product etc.
The element that defines value to manufacturers and retailers is strategic worth.
Net worth is derived from an equity calculation on a balance sheet. Strategic worth
extends beyond tangible financial parameters. Strategic worth also encompasses the
intangible assets and liabilities of a business. Strategic assets have traditionally been
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Trademark or
product Brand name
value Get minus Give
certification
interaction
value

Product
value

Monetary
Ease of physical Promotional activity
access / purchase Seasonality
Brand loyalty
Location Hedonistic Price
Distance of travel Emotion
Nostalgia
Acquirability
Relaxation
Portion size for
Culture price paid
Prestige Pack size

Customer Shareholder
value Co-creation value
of value

Affordability
Extrinsic
Utilitarian Method of
Convenience production
Usefulness Animal welfare
Storage, Shelf-life Shareholder
Environmental
Affordability equity
Ease of preparation issues
Intrinsic
Previous experience Efficiency/Time saved
Flavour/Taste
with purchasing Simplicity Freshness
Functionality Shape
Smell
Visual
Strategic
worth

Manufacturer Retailer

Sources: Adapted from Zeithamal (1988); Babin and James (2009); Burns et al. (2013)

get) stakeholder
interaction model
2659
food supply
Value in the

Cost: reward (give:


Figure 2.
chain
BFJ focused on a description of goodwill, trademarks and copyright, but they extend far
117,11 beyond this capturing hedonistic values, utilitarian and affordability factors too. Harvey
and Lusch (1999) define intangible liabilities as weak strategic planning processes, risk of
environmental damage, dangerous work conditions such as in subcontractors factories,
potential for crime and fraud associated with the product and so forth. This could be
extended in the food context to consider factors such as the intangible liabilities
2660 associated with chronic health issues associated with the food products, poor animal
welfare conditions driven by the monetary aspects of what can be termed as cheap food
etc. Businesses need to consider these intangible assets and liabilities and the impact on
their strategic worth especially in the context of the co-creation of value.

6. Conclusion
This research has reviewed the evolving nature of what represents value in the food
supply chain. Value is a term that is constructed by individuals and communities as a
combination of factors that revolve around cost and reward. Zeithamal (1988) focused
on consumers considering what is received and what is given against the wider concept
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of utility. Price is the prime factor that influences purchasing behaviour for a major
proportion of food purchasers in the UK (30-40 per cent). As a result there is a
constantly negotiated interface between price and those factors that suggest reward
through the degree of utility that reflects the price paid, the concept of affordability in
terms of intrinsic and extrinsic quality, hedonistic factors defining the emotional worth
of the food and acquirability, the ratio of price to volume of food purchased. The
concept of convenience not just in terms of time, but also in its wider social context has
been discussed. This model of consumer value cost (price): reward (acquirability,
affordability, hedonism and utility) is of importance. Further this internal focus is
influenced by the external factors of ease of access, previous history and experience of
the products, and cultural factors. These factors enable a negotiated approach to food
purchase that is dynamic and fluid as the influence of factors can be ever changing.
Stakeholder perceptions of value are always an interface between reward and risk.
Manufacturers and food retailers need to consider both what represents value to their
customers and equally what represents value to the shareholders who invest in them. This
risk assessment needs to address food quality, food crime, food-related health and the need
for adequate financial reward and price at the point of purchase. There are conflicts of
interest between maintaining shareholder value and delivering this kind of value within
the food supply chain offering especially where there is an ongoing race to the bottom with
price. How this challenge is mediated sits with the executives that run private companies
and their supply base. Pressure to increase shareholder value in the short term can
ultimately lead to long term losses if the foundations for how shareholder value is created in
the first place are eroded through the loss of consumer confidence in a brand or
organisation. Strategic worth is about ensuring that in the co-creation of value both
intangible assets and liabilities are considered too and further that such intangible liabilities
that present a risk to the organisation and the wider supply chain are suitably mitigated.

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Further reading
Cameron, A.J., Waterlander, W.E. and Svastisalee, C.M. (2014), The correlation between
supermarket size and national obesity prevalence, BMC Obesity, Vol. 1, 4pp. doi:10.1186/
s40608-014-0027-z.

Corresponding author
Dr Louise Manning can be contacted at: louise.manning@rac.ac.uk

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