Research

Study of the Source of Origin of food products and its use as a brand has identified an opportunity for value creation in the commodity driven salmon aquaculture industry.

Branding Farmed Salmon: Development and customisation of a Source of Origin co-branding strategy
Master of International Business Thesis, NHH
Together with my Icelandic colleague Brynjólfur Eyjólfsson, I researched the value adding potential of using the Source of Origin of farmed salmon products as part of a co-branding strategy. Here is a summary of the work.

Does it matter where our food comes from?

The Country or Source of Origin (SofO) of food products is becoming more important due to food safety concerns and raised awareness of the need to protect intellectual property rights. A move towards greater specificity and traceability of product origins is being driven by both legislation and consumer demands. Regulations regarding food products in most developed markets now require firms to clearly identify the Source of Origin for their products at the point of sale. Although viewed by many firms as a burden, this actually provides opportunities for firms to develop competitive advantage.

Food products would appear to embody strong associations with places as they have a geographic origin by nature, and this can be used to create value through differentiation and marketing. Within the EU it is now possible for groups of producers to gain intellectual property rights to a specific Source of Origin via the Protection of Designated Origin (PDO) and Protection of Geographic Indication (PGI) schemes.

There is a growing demand from consumers in developed markets for cultural identification and value-added food products that carry a strong identification with a particular geographic place or region. Labelling of foods with their Source of Origin offers a method of differentiation through branding in response to consumer needs. Despite this, there is not a great wealth of literature on the topic, with most research examining manufactured goods.

Consumers are not all the same

The work of Hofstede and Trompenaars has illustrated that national markets are not all the same, and in fact can be very different. The recognition of differences between markets and the consumers within these markets, has lead to an increasing realisation amongst researchers of the importance to marketing of these differences.

This leads to the logical conclusion that an SofO may have a different effect or influence on a product from one market to another, and that this effect may also differ between SofOs within a market. It is therefore important to understand the relative position of an SofO within a market compared to competing SofOs and also to consider differences for the SofO across different markets.

Who is the king, salmon or the customer?

The salmon aquaculture industry has developed rapidly over the past 20 years, evolving a global presence in both production and consumption. The industry is characterised by multinational firms operating across several production countries and multiple target markets. Salmon farming is now an important export industry for many smaller countries, providing a valuable source of employment in rural and peripheral areas.

As it has grown, the focus of the industry has been largely on increasing production volumes, standardising products and reducing costs, rather than on marketing or branding. This approach has led to over supply, price reductions and for a once high-margin symbolic product to move towards becoming a lower-margin functional good, despite indications suggesting that salmon would be better treated as an experiential or symbolic product.

The Country of Origin is already stated on farmed salmon at point of sale due to legislative requirements, but more use could be made of this information for branding and marketing purposes. An SofO branding strategy, linked to an Experiential or Symbolic product concept for salmon, is one way that aquaculture companies could create value in an increasingly competitive, commoditising market.

Source of Origin has the potential to add value

The thesis provided new insight into the SofO of a product by arguing that it can be treated as a brand and that an SofO brand could be used by firms to create value as part of a co-branding branding strategy. It also proposed a sequential model for the development and customisation of a multi-country Source of Origin co-branding strategy. Data from a multi-source country, multi-target country study was used to explore an SofO brand assessment model developed in the thesis. The data was also used to demonstrate that SofO has an effect on competitive advantage, and that this effect varies both between SofOs within a target market and across target markets for the same SofO.

The case of farmed salmon was used to illustrate the relevance and applicability of this model to a real case situation, and demonstrated that a customer focused SofO co-branding strategy can add value to what is currently treated largely as a commodity product.