Challenges and Opportunities Launching New Canned Seafood Products to Danish Consumers

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Copenhagen Business School

Challenges and Opportunities Launching New Canned Seafood Products to Danish

Consumers

Name of Program: MSc in Brand and Communications Management  

Type of Paper: Master Thesis   Number of Pages: 77

Number of Characters: 172 937 Hand-in Date: 03.08.2015

Name of Supervisor: Jesper Clement

Name of Author: Vibeke Midttun

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Abstract

There is little research in the field of canned seafood and especially research is missing when it comes to product packaging cues and how these can influence the consumer’s decision-making process. The leading international consumer research company A.G Nielsen, has stated that consumers worldwide are likely to have similar responses to many FMCG products. Therefore, understanding issues that concern consumers motivation and attitudes in a highly competitive packaged food market should provide a useful guide for stakeholders working within this industry.

The objective of this research can be seen as two fold. First, it aims to understand the industry by describing challenges for new entrants in the Danish canned seafood market. Secondly, the study investigates consumer’s behavior towards low-involvements products, more specifically canned seafood products. By looking into the industry, this research addresses the linkage between these two angles, which is underrepresented in prior literature.

To obtain a profound and holistic understanding of the industry, mixed-methods of research have been applied, which include both qualitative and quantitative data collection. Moreover, to structure the overall methodology chapter the ‘Research Onion’ was followed as guidance. The findings may thus not fully reflect consumer responses in actual retail purchase situations, as research methods have been conducted outside an in-store environment. This may limit the applicability of the experimental findings to a real shopping situation.

The key findings from this research are as following: The canned seafood industry is a highly competitive market to enter, due to the challenges of Brand Differentiation and Product Familiarity. It will, therefore, be challenging for a new entrant to launch a product, unless it is superior in terms of taste, convenience and with an acceptable price. From consumers standpoint, several findings surfaced: Lack of Knowledge, Price Consciousness, Low Level of Brand Loyalty, Importance of Convenience, Product Involvement, Challenging to Distinguish Between Sensory Sspect of Price/Quality, and Importance of Product Packaging.

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Acknowledgments

In this section, I would like to give my warmest appreciation to the peorple who have made it possible for me to complete this thesis.

First, I would like to thank Geir-Arne Åsnes, representing King Oscar who have given me valuable knowladge about the canned seafood indsutry and the challenges to enter new markets.

Secondly, I would like to pay may gratitude to Kim Leisten, store manager at Irma, Vesterbro for sharing his knowledge about the grocery retailing industry.

I would like to acknowledge all the particpants in this study for taking their time to share their attitudes, opinions and knowledge about several topics.

Last but not least, I would like to thank my supervisor Jesper Clement, who has provided me with valuable guidance throughout the process.

Vibeke Midttun

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1. Introduction

This paper is a case study intended to determine and describe the challenges for potential new entrants seeking to penetrate the daily commodity industry in Denmark. More specifically, this paper will describe and analyze the special commodity sector of canned seafood with special reference to the Danish industry and consumers. The research will examine the characteristics of consumer behavior with regard to certain low-involvement products in an attempt to help new entrants break into this market.

To date, there is a dearth of research designed to understand the challenges for new brands trying to enter an established market in the canned seafood category. Likewise, few attempts have been made to explore the values that underlie consumer behavior and purchasing decisions in the low- involvement categories. Furthermore, the scholarship in the field seems to present conflicting interpretations of consumer behaviors in this industry. For example, according to the Nordic Market Report (2005) consumers have a tendency to remain loyal to well-known brands and products; yet Silayoi and Speece (2004) argue on the contrary, that consumers make purchase decisions for low involvement products often without carefully examining the brand and product information.

This study’s research objective is two-pronged: first, it aims to describe the challenges for new entrants in the canned seafood market; and secondly, it directly addresses the complex psychological forces determining consumer behavior in this market. Both areas are underrepresented and little existing research addresses the linkage between these two components.

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2. Problem Statement

2.1 Introduction

This case study will examine two facets of the canned fish consumer market. The first part seeks to elicit the industry structure in Denmark, which forms the first part of the research statement: “What challenges does new potential entrants face in the daily commodity industry”? By applying Porter’s (1979) Five Forces, the current situation of how attractive the canned seafood industry in Denmark is to enter will be analyzed. These holistic forces, driving the situation, will be assessed to determine how they are shaping the competitive environment. Since new entrants in a market often follow standard procedures, limited attention has been devoted to understand consumer’s behavior in the fast moving consumer good (FMCG) industry. This is a step that should not be overlooked and a challenging problem than the sparse research to date can clarify, which forms the second problem to be addressed “What characterizes the Danes consumer behavior towards low- involvement products”. Hence, what should be underpinned is that this particular research statement will be the primary focus throughout this paper, because consumer’s behavior is a more complex and challenging force to understand.

Arguably, the literature review in the upcoming section and various product stimuli experiments will, therefore, first and foremost be related to this area of research.

The present study then offers two contributions. First, from a theoretical standpoint, it extends the scope of the industry to include the different forces that determine its competitive environment.

Then, by reviewing the consumer behavior literature and conducting new investigations, it allows a more nuanced understanding of consumer behavior towards low-involvement products. From a practical perspective, the study provides potential market entrant’s information about the microenvironment in order to manage new product launches more effectively and consistently with respect to current consumer behavior. Both aspects will be of importance for companies seeking to understand consumer behavior towards low-involvement products and their barriers to new designs or innovative new products on an established market.

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2.2 Product Specifications

For ease of understanding, the product categories, as they appear in the terminology applied throughout the thesis, should be defined and explained. Canned seafood is defined as a kind of food using a “preservation method in which a cooked or uncooked food is sealed in a tin plated and lacquered steel can sterilized by heat treatment, sometimes under high pressure”(Businessdictionary,2015). The figure below illustrates the product categories within the canned seafood industry, which are the most common species, displayed on the supermarket shelves in Denmark.

Figure 1: Own creation. Categories of canned fish species

2.3 National versus Private Label Brands

Today canned seafood is broken down into two sub groups: national brands and private label brands. The first mentioned is marketed through a national market and is usually owned and promoted by large manufacturers. Conversely, private labels are a brand that is owned by the retailer or the distributor, which is sold only in its own outlets. Private labels are also known “as store brands, retailer brands or own brands” (Abril and Partal, 2013: 337)

Figure 2. Private labels vs National brands. Derived from: Institute of European and Comparative Law (2013)

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2.4 Structure of the Thesis

The paper is structured as follows. This introduction describes the research area and addresses the theoretical background to provide a basis for examining the industry outlook and relevant consumer behavior theories. The next chapter outlines the research design and the methodology applied.

Then, the findings from the data collection and experiments conducted are presented. Subsequently, these findings are analyzed in relation to the theory and key findings are presented. The last chapter will describe the managerial implications, present the conclusion and make suggestions for further research. In the figure below, the structure is visualized for ease of understanding.

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3. Industry Outlook

3.1 Introduction

This section aims to provide an overview of the industry structure for canned seafood in Denmark, guiding the understanding of the current market and consumer trends, the competitive landscape and outlook. The purpose is to describe the canned seafood industry, and provide a basis for the examination of the two-folded research questions. Knowledge of the industry’s dynamic should give potential new entrants an indication of how to determine the barriers and opportunities within the daily commodity industry. First, the seafood category and consumption is presented, and subsequently, the industry's attractiveness for new entrants will be addressed.

3.2 Seafood Consumption in Denmark

According to Coop (2013), consumption of fish is prevalent amongst Danish consumers, and six out of ten of claim to eat fish once a week. The population living in the metropolitan area and Northsjælland is more likely to consume fish than the rest of population in Denmark (Coop, 2013).

Also, statistically, the older population with a higher educational background consumes the most fish. The Danish consumption of fresh fish is rising over previous years. In 2013, 1100 tons more fresh fish was sold to consumers than in 2012(Seafish, 2014). The annual increase goes back in 2006, when the ‘Eat fish twice a week’ campaign was launched by the Danish government. Overall consumption has increased with 1500 tons of fish and 800 tons of convenience meals with fish (Seafish, 2014). Generally, however, the sale of frozen and canned fish has fallen, due to the increased sales of fresh fish (Seafish, 2014). While the positive development within the category of fresh fish is well documented, little research has been devoted to the canned/preserved seafood industry, which will be addressed in the next section.

3.3 The Canned Seafood Market

Few reports exist in relation to the Danes seafood preferences and characteristics of the industry at present. However, Brunsø, Hansen & Scholderer (2009) investigated consumer attitudes and seafood consumption across European countries. According to their findings, Denmark was the country with the second highest level of fish consumption in Europe (Brunsø et al., 2009).

Additionally, the scholars identified which categories of fish most commonly purchased amongst Danes. As shown in the pie chart below, the most consumed fish categories were canned fish, followed by fish in glass.

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Figure 4. Own creation. Consumption of different product types: Shares in total consumption (percentage basis).

Numbers derived from the thefishsite.com (2009)

Furthermore, Brunsø et al. (2009) investigated the consumption frequency of eleven different species. In Denmark, herring was the most commonly consumed species and accounted for 21,9 percent of the total consumption followed by tuna with 18,6 percent.

Figure 5: Own creation. Consumption of fish species: Percentage shares in total consumption per country. Numbers derived from the thefishsite.com (2009)

A more recent study from Euromonitor in 2014, claim that Danes perceive canned seafood as having an inferior quality compared to frozen, chilled, processed, unprocessed and fresh fish. This might explain why the canned/preserved market has declined, while the percentage of fresh fish sold has been rising during recent years.

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Cod Salmon Sole Trout Tuna Plaicke Hake Mackarel Plaicke Eel Herring 9,8

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Whole fresh fish Filtered fresh fish Raw fresh fish Pre-packed fresh fish Deep frozen fish Ready to eat meals Canned fish Fish in glass

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Below, a model is compiled based on how the supply chain within the fish sector evolves from the initial start phase and to the end consumer. The model is based upon knowledge after reading several reports and after conducting interviews with central key persons, to obtain a comprehensive understanding of the industry’s value chain.

Figure 6. Own creation. Schematic presentation for a typical canned seafood value chain

3.4 Porters 5 Forces

Porter’s Five Forces (Porter, 1979) are applied to analyze how attractive it is to enter the canned seafood industry in Denmark. The five forces consists of 1) the threat of potential new entrants, 2) the bargaining power of customers, 3) the threat of substitute products, 4) The extent of competitive rivalry and, 5) The bargaining power of suppliers. The aim is to assess the forces that work in the industry and determine how they are shaping the competitive environment. This particular framework is argued to be a good analytical tool, however the model also assumes static market structures and is somewhat outdated. Furthermore, it does not account for the environment that affects complex industries, or other forces that are capable to influence consumers, (e.g., new product packaging, cues). These issues will be addressed more in depth in the literary review in section 4.

3.4.1 The Threat of Potential New Entrants

The threat of potential new entrants is largely driven by new product launches during a given period (Oraman, Azabagaoglu and Inan, 2011). According to Porter (1979) new entrants increase their chance of success in a new market by cooperating with a player already present in the industry.

Arguably, this may be suggested because the food industry is characterized as one of the most competitive and intense industries (OECD, 2014). The canned seafood industry accounted for a 58% share of retail value sales in the canned preserved food in 2014 (Euromonitor, 2014). The market experienced a stable retail value growth due to the presence of a number of strong branded suppliers. Looking at the category table below, from 2009-2014, there was a decline in sales volume of approximately 7.5% in the same period. Despite this decline, Euromonitors (2014) numbers portrays an increase in value of 7% when evaluating the category data. Furthermore, it has been claimed that this might be a consequence of a steady influx’s of new product launches during

Fishery/ fish

landing Process/Factory Retailer Consumer

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the period, which have stimulated consumer interests and the willingness to purchase the newest product extension at a higher price.

.

Figure 7. Own creation. Volume and value of the canned seafood industry. Numbers derived from Euromonitor (2014)

In the period from 2014-2017, questions have raised whether the potential market sizes for premium-canned products are big and profitable enough to justify the market investments that is required (Euromonitor, 2014). The reasoning is the challenges of the declining consumer interest, as Danish consumers tend to think of canned products as inferior quality in comparison to fresh or chilled alternatives. However, it has been claimed that canned beans and seafood are the two canned categories that have a better outlook compared to other canned product categories (ibid). Suppliers of these products are therefore likely to invest in new product developments to stimulate consumer interests, while other categories will focus more on improving existing product portfolios. In general, it has been claimed that the threat of new entrants into the FMCG industry is characterized as low, because high capital investments is required in order to be competitive, and to establish a brand name (Oraman et al., 2011).

3.4.2 The Bargaining Power of Consumers Consumer Loyalty

Consumers have a strong bargaining power if they are able to force down prices, demand higher quality, and play competitors up against each other (Porter, 1979). Furthermore, consumers can easily switch between various brands, if they perceive the products as standardized, with low level of differentiation (Oraman et al., 2011). This can imply that the switching costs in an industry are

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2009 2010 2011 2012 2013 2014

Volume Value

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low, which in turn entails low level of brand loyalty.

In light of this, Silayoi and Speece (2004) argue that consumers purchase decision of low involvement products is often done without carefully examining the brand and product information.

Likewise, McDonald et al. (2001) claim that within the fast moving consumer good (FMCG) industry, loyalty is hard to win and retain. Supporting this argument Kotler and Keller(2012) claim that consumers often do a lot of brand switching within the FMCG industry.

On the other hand, Hamlin and Wilson (2004) claim that FMCG branding relies heavily on responses to extrinsic cues. Insch and Florek (2009) claim that a country of origin (COO) is one of the extrinsic cues that consumers use to predict product quality. The argument by Inch and Florek (2009) supports a study conducted by Coop Denmark (2013) who claim that 68% of Danes look and prefer their own country of origin when they purchase grocery products. Contrary to this study, Arhmed et al. (2004) claim that COO is weak in the context of habitual grocery shopping, as consumers devote more attention to the brand and price. Scholars seem to have conflicting opinions on this matter; therefore, consumer’s brand loyalty within the canned seafood category will be examined in the upcoming research design.

Demand for Natural Products

In general, Danish consumers have strong preference for natural products (Euromonitor, 2014).

Thus, in 2006 it was predicted from Seafish (2006) that canned seafood would experience strong competition from chilled processed food, unprocessed food as well as fresh food. In 2014, this proved to be in accordance with the prospected outlook (Seafish, 2006; Euromonitor, 2014).

Consequently, manufactures are now in a slow pace of new product developments, as they strive to target the increasing demand for convenient products by launching new products within chilled processed food (Euromonitor, 2014). In this context, single household, represent a great opportunity, which has previously been underestimated. In 2014, the singles accounted for 1.5 million households. Therefore, food and drink suppliers have addressed this large target group by changing packaging and portion sizes to accommodate this market (Seafish, 2014). Accordingly, new product developments within canned seafood are expected displayed on the supermarket shelves in the forecast period.

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3.4.3 The Threat of Substitute Products

Consumers are able to substitute to other fish categories easily, and as stressed by Euromonitor (2014) consumers are especially shifting their interest towards, chilled, unprocessed and fresh fish products. Additionally, Denmark has the highest global per capita spending on organic packaged food (Euromonitor, 2014), which also poses a great threat in terms of substitutes products.

3.4.4 The Extent of Competitive Rivalry National Brands

Glyngøre and Amanda Seafood dominate the canned seafood market. Due to a high focus on chilled foods¹ and the launching of more advanced products (e.g spreadable cod roe aimed at children), the latter company, experienced a steady grow last year (Euromonitor,2014). This innovative approach resulted in increased retail prices in the review period. Similarly, Glyngøre successfully launched a new spreadable salmon product aimed at children (Glyngøre Laks) at the end of 2013. Their strategy focused on novelty, convenience and increased segmentation (Euromonitor, 2014).

Through their marketing strategy they have convinced the target audience that Glyngøre Laks is a preferable choice for school packed lunches. Despite these success stories, private labels threaten these national brands. As illustrated in figure eight, Glyngøre, has experienced a decrease while the private label brands have experienced an increase in retail value rsp brand.

Figure 8. Own creation. Value rsp brand (values derived from Euromonitor, 2014)

1See appendix 1 for pictures of chilled seafood products launced by Amanda seafood.

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Private Label

As demonstrated in the table above, private labels represent an alarming threat for the national branded players. Over the review period, private labels retail value shares increased by six- percentage point to reach 38% in 2014(Euromonitor, 2014). Although it has been argued that there is an ongoing retail sales growth for private labels, its market share within canned seafood is still lower in comparison to other canned categories. However, increased competition from fresh, frozen and chilled products is expected, and enhanced investments of private label in retail stores are expected to become even more prominent in the future (Phillipsen & Kollind, 2012; Euromonitor, 2014). This may imply that the retail value within the private label category will continue to increase on the expense of branded products.

Nevertheless, Euromonitor (2014) claim that to overcome these threats, a solution lies in the importance of launching new products with sufficient added value and better quality to justify higher prices than private labels. This can be most feasible in the canned seafood category, which includes products with a higher level of “processing”(ibid).

In light of this, madmagasinet DR in Denmark (2014) and bramat.no (2014) in Norway have conducted taste preference test with panels to determine the quality of canned seafood. In both of the experiments both private and national brand were represented. More specifically, the panels applied ranking tests where participant were asked to rate a number of products in ascending or descending order according to preference or liking (Lawless and Heymann, 2010).

In the upcoming research design, these experiments will be conducted to evaluate how consumers make decisions on preference, and to determine if they are able to distinguish between the sensory aspect of private and national brands.

3.4.5 The Bargaining Power of Suppliers

In this context, suppliers represent the retailers in this study. The Danish grocery market is characterized by high market concentration both amongst retailers and suppliers. Within the grocery retail sector, the three largest grocery chains have a combined market share of 89 percent (The Danish competition and consumer authority, 2011).² Nevertheless, at present, Coop Denmark is the dominant supermarket in canned/preserved seafood, and has especially benefitted from the increasing popularity of private label amongst price-sensitive Danish consumers (Euromonitor,2014) For now, Coop Denmark held a 15% share of retail value sales in 2014, and

2 See appendix 2 for an overview of the retailers in Denmark

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holds a strong private label portfolio from economy to premium products. The retailer chain has also developed an organic private label brand called Änglamark Dagrofa. Furthermore, the analysis of the trade and cooperation taking place between suppliers and retailers states that the high concentration among the retailers gives them a significant bargaining power over the suppliers (The Danish competition and consumer authority, 2011; Young and Nicholson, 2012; Euromonitor, 2014). Consequently, retailer’s pressure manufactures to keep prices low (Euromonitor, 2014) and it is expected that retailers will continue to use their negotiation power to push manufactures to cut their margins. Accordingly, unit prices within the canned food are expected to continue to decline over the forecasted periods (ibid)

Shelf Space Allocation

Due to retailers high bargaining power, producers access to the shelves, whereas, agreements between suppliers and retail chains have become more demanding (Nordic market report,2005).

For example, in 2013 the leading grocery retailers Coop Danmark and Dansk Supermarket were intensifying their fight against what they perceived as overpricing by leading packaged food and drinks manufacturers. Consequently, Coop Danmark reduced a large part of the shelf space given to Carlsberg Danmark’s beer and soft drinks products (The Danish competition and consumer

authority, 2011). However, there is no evidence that large suppliers can use their market position to keep competing suppliers out of the market (ibid), which implies that new entrants have

possibilities to enter the market. According to Underhill (2003) shelf placement at around eyelevel has been claimed to be the most effective. However, to obtain a desirable shelf space allocation, this is negotiated with manufacturers or distributors.

Figure 9. Shelf-space allocation. Derived from Young and Nicholson (2012)

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According to Reyes and Frazier, (2006) for the majority of products, the decision lies in the hand of the grocery store and is based on demand rates and profits. Furthermore, In a recent report conducted by Young and Nicholson (2012), it is claimed that branded goods are given limited shelf space, because these products are increasingly replaced by the retailer’s own brands. This is reflected in the picture above, which visualize how branded goods are replaced with retail chains own private labels.

To sum up, this chapter has emphasized on the various forces that can influence potential new entrants within the canned seafood category. In the upcoming section “empiric discussion” and

“key findings” this will be enlighten based on data collected from two central key stakeholders working within the industry: a retailer and suppliers point of view. In the next section, the aim is to understand consumer’s behavior by looking into prior literature within this field.

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4. Literary Review

4.1 Introduction

In the following section, the aim is to draw a nuanced picture over relevant consumer behavior theories, which are regarded most relevant for the second research aim “What characterizes the Danes consumer behavior towards low-involvement products”?

4.2 Consumer Behavior Studies

Understanding the consumer perspectives is imperative for analyzing consumer behavior in the canned seafood industry. Østergaard and Jantzen (2000) have studied consumers during the last 40 years, and throughout this period, interesting findings have been detected within the field of consumption behavior. The consuming individual can be understood through four different perspectives, namely: Buyer Behavior, Consumer Behavior, Consumer Research and Consumption Studies. The two latter perspectives became prominent after the interpretive turn in the 1980s.

These two perspectives contradict with the two first mentioned perspectives, were the consuming individuals were observed from a utilitarian point of view, and interpreted as a rational individual.

According to the Consumer Research perspective the consuming individual is assumed to be emotionally and narcissistically determined (Østergaard and Jantzen, 2000). Further, the scholars stresses that the individual is conceived as a tourist looking for new experience via consumption.

On the other hand, the Consumer Studies perspective states that the consuming individual should be conceived as a tribe member, where product symbolism creates a universe of the tribe (ibid).

In light of the perspectives, Consumer Research and Consumer Studies, does give a more nuanced and holistic view of the consuming individual. Accordingly, these perspectives should be undertaken to explore consumer behavior in the forthcoming sections.

4.3 The Decision-Making Process

The decision-making theories and models serves well to understand consumer’s purchasing and consumption behavior, and will be used as a holistic framework to explore the factors that guides consumer’s behavior and subsequently the final decision.

In the past, multiple studies of consumer behavior have been conducted, resulting in traditional neoclassical theories and models of the decision-making processes. Traditional decision models such as the cue utilization model (Olson and Jacoby, 1972), theory of planned behavior (Ajzen, 1991) and the decision-making process (Kotler & Keller, 2006; Schiffman, Kanuk, and Hansen,

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2012) have certain similarities in their interpretations; consumers make rational purchasing decisions. These models suggest that the consumers will formulate a set of personal criteria’s, explore several options, evaluate brand and products and then select the best among alternatives (Clement et al., 2013). The buying behavior literature as emphasized in the section above, describes a complex process with internal and external factors and their impact on a decision process.

The rational decision-making models have therefore been repeatedly criticized for assuming that the outcome of the process commences in the initial phase when the subject feels an unmet need.

Further, the models are also perceived as cognitive judgments evaluations of various options attributes or on a detailed listing of the pros and cons. Accordingly, the models indicate ”we retain control of our actions and thoughtfully evaluate options, arriving at sensible conclusions, by reaching an optimal decision” (Chartrand, Huber, Shiv & Tanner, 2008: 197). Further Chartrand et al. (2008) also states that evaluations of the objects in ones environment often are made in an immediate and automatic way, upon the mere presence or occurrence of that object. This is also supported by Verbeke (2005) who claim that food-related decisions often are relied on heuristics or follow peripheral routes of information processing³. Such findings are in line with, Ramsøy (2014) who stated that our choices typically are done in competition with other options. The consumer confronts each possibility on the supermarket shelf against the consideration set until one brand is preferred (Santos et al., 2011)

In recent literature, this has been illustrated in a conducted study of choice, using food stimuli as an example. The researchers found that participants typically make these types of decisions in 500- 2000 ms (Milosavljevic et al., 2011), whereas Brunsø et al. (2009) claim that shopping for fish often can be described as semi-impulsive. Grocery decisions are commonly relied on fast and clear interpretation of the information and cues at the Point-of-Purchase (Clement, Aastrup & Forsberg, 2015).

Contrary to what rational choice models predicts, these examples indicates that a consumer not necessarily need to go through traditional and complex processes. Consequently, “these models do not explore how the visual field influences the decision” (Clement et al., 2013: 235) as “consumers look too short and decide too fast in order to make a full-informed decision” (Clement et al., 2013:

235). This view is consistent with, Verbeke (2005) who argue that attention influences consumers decision-making process that result from communication and marketing. Further, Verbeke (2005)

3 ”The heuristic mode involves the use of simple decision rules or rules of thumb to reach judgment’s, whereas peripheral route are postulated to be relatively temporary” (Wim Verbeke, 2005: 350)

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argue that the information-processing concept should be included in the decision-making models. Ramsøy (2014: 22) further states that "decisions are often influenced without our knowledge, and we rarely if ever decide after considering all options".

The scholars (Olson and Jacoby, 1972; Ajzen, 1991; Kotler & Keller, 2006; Schiffman et al., 2012) framework of the traditional decisions models can therefore be argued to be static and linear, and envisage the consumer as rational and adaptive. In the context of consumers food decision- making, Hoegg and Alba (2007) claim that multiple of past food research involving consumer- decision making has neglected sensory discriminating. Further, they underpin the complex interaction of food such as, taste, scent, flavor, texture, color, brand, packaging and other visual elements. Consequently, Garber, Hyatt, and Starr, (2003) stresses that it is necessary to conduct sensory research integrating these variables to understand consumer’s decision-making process in the context of food. Accordingly, to better comprehend how consumers make decisions, sensory research will be conducted in the upcoming research design. Lastly, to better understand how decisions are made, scholars usually distinguish between high and low involvement decisions, which will be elaborated in the section below.

4.4 Product Involvement

Product involvement is associated with the perceived importance of a product to consumers and the complexity of the product category (Koleysnikova et al., 2009; Reimann et al., 2010).

Accordingly, the extensiveness of the purchase intention is determined by whether it is a high or low involvement purchase decision. When a decision requires extensive information prior to deciding, and a greater deal of conviction is needed before making the right decision, this is referred to as high involvement (Percy & Elliott, 2012; Lada, Sidin & Gheng, 2014). Conversely, when a decision is of low involvement, these hold little relevance and perceived risk, which is often a simply habitual purchase behavior, without elaborating clearly on the relationship between these constructs (Quester & Lim, 2003; Lada, Sidin, & Gheng, 2014).

In the context of daily commodities, Verbeke (2008) and Nordfalt (2011) claim that these are characterized as low involvement purchases, that carry little emotional content, low perceived risks and limited cognitive efforts (Nordfalt, 2011). Further, Hamiln and Wilson (2004) state that low- involvement decisions processes are challenging to research, due to the fast decisions that take place in a few seconds. Additionally, Hamiln and Wilson (2004) claim that marketing research and existing literature have not portrayed a developed model of low involvement decision-making.

Thus, Hamiln and Wilson (2004) claim that most research is based on asking the consumer to

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provide comment on "the nature of their decisions and the impact of product cues on them"

(Hamiln and Wilson, 2004: 668)

Arguably, little attention has been devoted to understand the key components of the low- involvement decision process, also within the canned seafood category. In the few literature found within this field, researchers argue that consumers are more likely to personally evaluate the quality or authenticity when it comes to food (KPMG International Cooperative, 2012). For example, Verbeke et al. (2007) and Brunsø (2009) found that an individual who does not attach great importance to quality and consumption, might base the decisions on attributes such as the price, expiry date and convenience. These consumers may use less information cues, in contrary, to a subject who evaluates quality as important, determining the appearance of the fish, control certificate or the possible presence of harmful ingredients (Verbeke et al., 2007).

Conclusively, Verbeke et al. (2007) argue that consumers differ in terms of food involvement, health awareness, fish consumption behavior, risk and benefit beliefs and interest in fish information. The product involvement aspect is found to play a predominant role among different segments and reflects the perceived relevance for the individual subject when evaluating fish consumption and quality (ibid). In the next section, “motivation and attitudes” will be emphasized to understand how consumers perceive the industry and their degree of involvement and knowledge.

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4.5 Motivation and Attitudes

According to Schiffman et al. (2008) studying attitude is crucial in order to understand what drives consumers behavior, whereas motivation defines the level of desire to take the action (Eyal, 2014).

Arguably, the conceptual framework of the theory of planned behavior composed by Ajzen (1991) alongside with Olsen (2003) structured framework of antecedents of seafood, will be applied to understand the determinants of fish consumption behavior. In short, Ajzen and Fishbein (1991) argue that behavior is determined by the intentions of individuals, which is further described as the cognitive representation of a person’s readiness to perform a given behavior. They explain that the intentions are determined by three factors: the first is the attitude toward the specific behavior, which link the behavior of interest to expected outcome. The second predictor is the subjective norms, which refers to their beliefs about how people they care about will view the behavior.

Lastly, the perceived behavioral control refers to people's perceptions of their ability to perform a given behavior.

This framework has received considerable attention in the literature, but has also received criticism. For example, Armitage & Conner (1998; 2001) and Brunsø (2002) have criticized the theory of planned behavior (TPB), wheras Armitage and Conner (1998, 2001) also extended the model with additional predictors to explain a broader factor of the variance in behavioral intention and behavior. The scholars claim that the model gives an overview of which attitudes and beliefs that determine behavior, however, the model does not take the process into account, whereby other variables internal (e.g. personality, confidence) and external (e.g. availability) influence components of the TPB.

In light of these statements the model can to some extent be argued to be traditional and provide limited insights, in terms of how other influences, such as design elements, subtle environmental cues and claims can affect the unconscious aspects of motivation and attitude. Despite the underlined weaknesses, Armitage & Conner (2001) state that evidence from narrative and meta analytic reviews suggest that the TPB is a useful conceptual framework predicting a wide range of behavior’s, and will therefore be applied in the upcoming section to understand the antecedents of seafood consumption.

4.5.1 Attitudes and Preferences

In literature attitude is defined as "a learned predisposition to behave in a consistently favorably or unfavorably way with respect to a given object" (Schiffman et al., 2008: 248).

Prior attitude research has found four favorable attitude factors of seafood consumption that seems

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to be important for the majority of consumers: health benefits, taste, convenience and process characteristics (Brunsø et al., 2002; Verbeke et al., 2005). To fully understand how consumers determine the seafood category, Olsen (2003) argues that the researcher must include several of constructs that affect different facets of attitude towards seafood consumption.

Figure 10 visualized and created by Olsen (2003), will be applied to structure prior literature related to consumer’s motivation and attitude.

Figure 10. Antecedents of seafood consumption behavior. Model derived from Olsen (2003)

Taste and Negative Effect

Prior studies prove that taste is among the most important factors in explaining general attitudes and motivation for purchasing and consuming seafood (Olsen, 2001). The expectation of taste is often formed based on appearance, price, packaging, or other cues (Brunsø, 2003). Several researchers also claim that attitudes to the health and nutritional characteristics influence consumers’ choice of foods more than the actual taste of the product (Carillo et al., 2011). The appearance of smell thus influences a central dimension of quality for consumers (Leek et al., 2000). Collectively, most researchers agree (Vanhonacker et al., 2013; Olesen et al., 2013; Seafish, 2014) that smell often is a strong barrier to consume fish in general. On the other hand, Garber et al. (2003) state that color frames an in individual’s expectations of the sensory properties of foods before they are tasted.

In a more recent study conducted by Euromonitor (2014) it was stressed that Danes to some extent

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were reluctant to forsake experimentation in terms of taste and product curiosity. Further, the Danes have a preconception against industrial and processed food, often associating it being unhealthy and of poor taste. In light of this, Genco et al. (2013) states that taste are important in the context with food, especially when the purchase can be challenged by lack of familiarity. Thus, in-store testing is proven to reduce risk and activate goals, which may lead to trial purchase (ibid).

Nutrition

Health is an important aspect of consumer’s food perception and choice (Brunsø et al., 2009). In the context of nutrition, research has demonstrated that many types of canned food are justified as more nutritious than frozen, and in some cases, even more nutritious than fresh (Rickman, Barrett and Bruhn, 2007). For example, a survey conducted in the U.S found that nearly 40% of consumers believe canned food are less nutritious than frozen, and nearly 60% believe they are not as nutritious as fresh foods (Preparedfoods, 2011). Furthermore, most empirical studies indicate that elderly people in general have a stronger positive attitude towards fish consumption and healthy eating than the younger generation (Olsen, 2003). Similarly, Verbeke et al. (2004) found that fish consumption in compliance with health recommendations is higher among elderly women and increased accordingly with age. The researchers also argue that women in general have a higher health consciousness than men (Scholderer et al., 2003; Verbeke et al., 2004). Another study conducted by Sveinsdóttir et al. (2009) studying consumer preferences and attitudes towards fish consumption, found that young Danish consumers have negative attitudes towards fish, resulting in low fish consumption, health and food involvement.

Quality/Freshness

As stressed in the industry outlook (chapter 3), Danish consumers associate canned seafood with inferior quality in comparison with fresh, frozen and chilled alternatives. According to Olsen (2003) consumers feel more confident in their evaluation of fresh seafood because of “easy access to cues such as smell, texture and appearance, conversely, frozen alternatives is “associated with “non- fresh”, “bad-quality”, “tasteless”, “watery” and other negative evaluations” (Olsen, 2003:

4). Nevertheless, the British Nutrition Foundation (BNF) conducted a research looking at the benefits of canned food and found that canned fish provides more calcium than fresh fish.

Surprisingly, this is because fresh fish has to be de-boned, whereas, during the canning process small bones are soften up, which allows them to be eaten (Dailymail, 2015).

Furthermore, Brunsø (2002) claim that during the last 10-15 years, consumers have attached increasing importance in the way food is consumed. Further, the researcher explains that consumers

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have become more interested in the process characteristics in terms of organic production, animal welfare and production without the use of GMO⁴. Moreover, Brunsø et al. (2002: 12) argue “much of consumer interest in the production process focuses on naturalness”. In light of this statement, Couste, Martos-Partal and Martinez-Ros (2012) claim that consumers environmental, health and nutrition concerns imply that firms should utilize claims on packages to improve firm value.

4.5.2 Norms

Social Expectations

Ajzen (1991) found that the subjective norm is which degree the purchaser takes reference groups into account. More specifically, when looking into the seafood industry, Verbeke (2005) argue that the subjective norm consists of an external social norm (e.g., government, food industry, advertising, doctors and nutritionists), whereas the internal social norm consists of (e.g. family, partner and friends) and personal norm (moral obligation). In light of the influence by subjective norm, Scholderer and Grunert (2001) investigated the determinants of fish consumption in Denmark, before and after a conducted advertising campaign. In the post-campaign period, the social norm was revealed as a prominent factor, whereas the family contributed to the explanation to increased interest of eating fish. This is in line with Verbeke et al. (2005) findings, where the researcher argue that the social pressure to consume fish finds its origin within the internal social norm, whereas influences from the external social norm (food industry and advertising) are stated to be less prominent in consumer’s fish consumption decisions. Arguably, the researcher further claim that promoting fish consumption could possibly fail because of the reluctance of consumers to comply with the opinion expressed by the industry, advertising or public health campaigns.

Conversely, the scholar states that experts such as doctors and nutritionists could possibly contribute to fish promotion effectiveness, as consumers have a stronger intention to comply with these references.

The arguments by Verbeke et al. (2005) may be in compliance, after determining the increase of consumption of fresh fish in Denmark the year 2013. This was a result of the launch of a campaign where the aim was to encourage Danish consumers to “eat fish twice a week” by the Danish Government. The campaign ran from 2006-2009 and efforts were coordinated between the players within the seafood industry, Denmarks Technical University, the heart foundation and lastly the

4GMO is a genetically modified organism is a organism whose genetic material has been altered using genetic engineering techniques (Wikipedia,2015)

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retail segment (Seafish, 2014). Nevertheless, after the campaign, sales of fish increased by 1,4000 tons and by EUR 21.5m compared with the year 2005. The statements underpinned by Verbeke et al. (2005) claiming that doctors and nutritionists could be stronger influencers to consume fish, may be in compliance, when evaluating the successful outcome of the campaign.

Moral Obligations and Health Involvement

Fish consumption has been promoted heavily as "healthy eating" by governments and retailers for some three decades (Maddock and Foxall, 2000). Arguably, the nutritional value is an important factor in explaining seafood-buying behavior in combination with moral obligation and involvement in consuming healthy food (Olsen, 2003). In a recent study conducted by Couste, Martos-Partal and Martinez-Ros (2012) looked into how various claims on product packages vary across sectors. Conclusively, they found that nutrition and production claims exerted positive influences for food, whereas within the canned food category only production claims revealed a positive influence on health involvement.

4.5.3 Control Barriers Price

Consumer’s attitudes towards the price, value and quality of foods influence choice; therefore prices have a large impact on people’s food purchase in the stores (Olsen, 2003). The following section therefore serves as a starting point to explore the existing literature in conjunction with the Danes consumer behavior and price perception theories.

Previous Research In Relation to Danes and Price Perception

There exist few conducted studies in relation to Danes grocery shopping and price perception theories. However, one experiment has been carried out in Denmark where a study on consumer’s price awareness was completed in two large supermarkets in Aarhus (Jensen, 2001). After the consumers had placed products in the shopping basket, they were approached immediately. An open-ended price recall test was carried out, with a subsequent price recognition test (Brunsø, Fjord and Grunert, 2002). The results show that 68,6% of the Danish respondents were able to recall the exact price of the brand just chosen, whereas 71,7% were able to recognize the exact price from the recognition scale. Surprisingly, 92.7% of the respondents knew whether the brand they had just chosen was on offer, whereas only 35% reported that they actively searched for offers in the product category (ibid). According to Brunsø et al. (2002) these results suggest that many Danish

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consumers are more “low-priced” involved.

Similarly with Jensen (2001) studies, a recent experiment undertaken by the poll company Epinion for DR news, found that the Danes consume 54 million cans of tuna annually, and that 49%

of Danish consumers always choose to purchase the cheapest alternatives within the tuna category (Thyrring-Kristiansen, 2015). Therefore, Brunsø et al. (2002) stresses that earlier studies have suggested that price involvement is generally low in the case of grocery items. However, the researchers claim that these assumptions should be further questioned after reviewing the studies conducted in Aarhus, which gives a conflicting price-perception understanding of Danes.

Conclusively, the scholar argues that the high percentage implies that there is a strong degree of price awareness at the point of purchase (Brunsø et al., 2002).

Associations Between Price and Quality The strong degree of price awareness emphasized by Brunsø et al. (2003) can be in accordance with the Danes increased preferences for private label products (Euromonitor, 2014). Derived from the Porters Five Forces analysis, it was stressed that private labels poses a great threat for branded manufacturers. Consequently, the trade-off between expected quality and expected costs, and its impact on intention to buy, is commonly examined (Phillipsen & Kolind, 2012). Recently, Ravaja, Somervuori and Salmien (2012) conducted a study related to the deviations from the reference price on purchase behavior to explore if it was different for premium brands and private-label products.

The study revealed that consumers tend to perceive brands in the high-quality level (e.g., national brands) as offering “comfort, security and value”, whereas brands in the low quality tier (e.g., private label brands) offer lower prices and therefore are perceived as low quality products (ibid).

These findings are in accordance with Ramsøy (2014) who argue that products associated with a high price are associated as being better and more enjoyable than lower priced products. However, Lethola et al. (2008) claim that high price does not necessarily lead to higher product expectations.

Looking more specifically into Danish consumers, Euromonitor (2014) claim that their shopping basket consisted of a mixture of value priced options, such as mid-priced alternatives on price promotion and private label products. Conversely, a smaller selection of premium, such as organic, certified labeled or inherent healthy products was visible. Arguably, this is because consumers are characterized as highly price sensitive, which altered during the economic downturn from 2008- 2013 (ibid).

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Commoditized Industry

Euromonitor (2014) claim that the Danes price sensitiveness mainly has evolved as a consequence due to the economic downturn. On the other hand, Reimann, Schilke & Thomas (2010) claim that high price sensitivity can result from the fact that consumers are searching for the best price for a standard product. This is based on the assumption that products with essentially similar quality and features will continue to be available on the market, which is usual in commoditized industries.

Furthermore Reimann et al. (2010) stresses that such an industry is characterized of four distinctive aspects: product homogeneity, price sensitivity, switching cost and industry stabilization. These characteristics of a commoditized industry are in accordance with the findings from Euromonitor (2014) claiming that canned seafood is characterized as a product homogeneity industry, due to the inherent simplicity of these products. Consequently, this makes it challenging for branded manufacturers to distinguish themselves from each other.

Conclusively, after reviewing prior literature in the context of price, Brunsø (2002) stated that there is a strong degree of price awareness at the point of purchase after reviewing the conducted studies in Aarhus. Further, Ravaja et al. (2012) theories in the context of national brands versus private label brands may be contradicting to the Danes perception of private labels, due to the remarkable increase within this category. Lastly, Reimann et al. (2010) argue that consumers become increasingly price sensitive in commoditized industries. In the upcoming research design the aim is therefore to gain a deeper knowledge to see whether the outlined theories are in compliance with the Danes price perception theories.

Convenience and Availability

According to Brunsø et al. (2002) convenience focus on the interplay of shopping, meal preparation and products, in addition to how the external constraints on consumers affect the importance of convenience. Further, the scholar states that in terms of functional qualities of foods, consumers are also concerned about safety and risk-related issues. Convenience usually requires a higher degree of processing, which in turn may be perceived to be of inferior quality in the process dimension (ibid).

This is also in compliance with Bech-Larsen & Grunert (2003) view who argue that the higher degree of processing, the lower degree of consumer expectation and interest. Furthermore, Brunsø (2003) claim that convenience purchasers tend to be less price-conscious, accepting more expensive prices in convenience stores.

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Knowledge

Brunsø (2003) argue that in many cases, consumers know very little about the potential functional ingredients in food products. Other studies argue that knowledge of the nutritional effects of foods influences the trust and beliefs in functional foods both positively and negatively (Verbeke, 2005).

Further, the scholar claim that knowledge is an important construct in terms of how consumers gather and organize information and, ultimately, what products they buy and how they use them (Verbeke, 2008).

Many consumers are aware of ethical and sustainable issues relating to the fish products they purchase (SeaHealth, 2013). However, this contradicts with the retail company Coop (2013) studies where they found that 80% of the Danes don’t take into consideration how and where the fish is produced. Consequently, they are not well familiar with the Marine Stewardship Council (MSC) labeling, which accounts for sustainable fish (Coop, 2013). Despite this, many supermarket chains have started to use the blue MSC eco-label and consumers are slowly becoming aware of this label (ibid).

Another label, which is portrayed on the canned seafood products, is a dolphin logo.

This is supposed to ensure the consumer that the tuna is “dolphin-safe”. However, Thygesen (2015) claim that the label is not being controlled, and it cannot be used as a guarantee that the tuna is fished sustainable without harming other marine animals.

In light of this, Landstrøm (2008) claims that the contradicting media and science reports, makes many consumers skeptical towards additive and processed food.

To sum up, Brunsø et al. (2003) claim that knowledge is suggested to be an important factor in explaining choice of seafood. The prior literature exploring consumer’s motivation and attitudes can give an indication that there can be a misalignment of trust towards the canned seafood category.

Consumers may have difficulties in performing an appropriate evaluation of this particular product category. Arguably, consumer’s attitudes towards the industry should therefore be explored in the upcoming research design. In the next section, visual attention will be emphasized, as visual stimuli influence the decision process (Clement et al., 2013)

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4.6 Visual Attention

According to Chandon et al. (2002) visual attention can be exploited to stimuli such as supermarket shelf displays inferred from the eye movements of consumers. This can be valuable for marketers, given that today’s grocery stores have plenty of products in the same category from different manufacturers, with relatively low extents of differentiation (Verbeke, 2008; Milosavljevic & Cerf, 2008; Clement, Kristensen & Grønhaug, 2013). Accordingly, not all of the information can be processed, allowing only a selected part of sensory input to reach visual attention (Milosavljevic &

Cerf, 2008). This can explain why 85% of daily commodities are specifically chosen in front of the shelf, and these decisions are largely described as unplanned (Clement, Aastrup & Forsberg, 2015).

Furthermore, to fully understand how attention is known to influence behavior and the Point-of- Purchase (POP) situation, attention is distinguished between bottom-up and top down processes (Milosavljevic & Cerf, 2008; Ramsøy, 2014).

The first mentioned is an unselective pre-attentive search process, working rapid and enables lots of inputs to be processes simultaneously (Ramsøy, 2014). Thus, as the outset of early attention, the decision maker is biased toward salient stimuli (van Zoest, Donk & Theeuwes, 2004) that depends on the intrinsic properties of the input, such as its colors, luminance, orientation, size, shape movement etc (Wolfe & Horowitz, 2004).

Conversely, top-down processes refer to sustained attention, which is voluntary allocation of attention to certain features, objects, or regions in shelves (Koch, 2004; Clement et al., 2013).

Further, Ramsøy (2014) states that top-down attention occurs when you are engaging in a focused, mobilized and effortless use of your attention to search for particular kinds of information and when you rule over your senses (ibid).

Consumers do not use the two systems separately, hence, the two concepts, bottom-up and top- down attention is therefore viewed as a two-step process as consumers both switch fast and easily towards an object (Cerf, Frady & Koch, 2008).

In the supermarket shelves, the subject will therefore search for a specific product in the initial phase and be exposed towards several vision impressions, such as shape, contrast, size and orientation, which are typically basic visual features that affect bottom-up attention (Wolfe, 1994).

Therefore, Genco et al. (2013) argue that an important element for on-shelf standout is distinctiveness. Subsequently, as a particular object catches the subject’s visual attention, the consumer shifts to serial search and slows down the visual search (Clement et al., 2013). These are cues that consists more of text and semantic loaded features, hence, brand colors, which are basic

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visual features that typically related to a top-down process (Ramsøy, 2014)

Researchers within neuroscience (Mormann, Navalpakkam, Koch & Rangel, 2012; Ramsøy, 2014) agree on the fact that the more salient an object is, meaning its color, shape, contrast, the higher probability of it being noticed. Thus, making use of design features stimulating a bottom-up process might even reduce the risk of the product being neglected on the supermarket shelves (Clement et al., 2013).

In the context of what determines consumer attention to nutrition labels, which is apparent on canned seafood products, Bialkova and Trjip (2010) conducted a visual search experiment.

Conclusively, the researchers found that label characteristics (e.g.,display size, position of the label and color scheme) have a huge impact on consumer attention. In the upcoming research design, visual attention will therefore be examined more in depth. In the section below, the application of the physiological measurement of studying the emotional and cognitive processes in the context of visual attention is presented.

4.6.1 Eye Tracking

Eye tracking experiments, can be applied to address visual attention, because it provides precise record of where and when visual attention is directed (Genco et al., 2013). It is a device for measuring eye positions and eye movements and involves the use of infrared cameras that record the position of each pupil (Ramsøy, 2014). The tool allows the measurement of pupil dilation, which according to Genco et al., (2013) can be a good indicator of emotional arousal while viewing an object. The utilization of eye tracking has made it possible to study consumer’s decision-making process. For instance, the effects of time pressure during brand choice, the saliency of package in terms of top-down and bottom-up processes, and how placement and the number of facings affect attention (Wästlund et al., 2010). Furthermore, new entrants, introducing a product on the supermarket shelves can use eye tracking to measure the attractiveness of the product and can further evaluate how the packaging design is perceived against competitors (Tobii, 2015).

Noteworthy, there are validity problems, which should be taken into consideration. These experiments are often carried out in laboratories and not stimulating real-world conditions as in a supermarket (Rettie & Brewer, 2000). Nevertheless, potential new entrants can utilize eye-tracking experiment to explore visual attention in relation to the package design and competitors on canned seafood.

Challenges and Opportunities Launching New Canned Seafood Products to Danish Consumers

Copenhagen Business School