Functional food: health care or profitable business?

Table of Contents

Executive Summary

Table of Contents

List of Figures

Introduction

Basic Key Elements of Business Research
Theoretical Foundation
The Scientific Method
The Meaning of Theory and Research
Secondary Research
Advantages and disadvantages of secondary data

Functional food - taste for health?
The Industry

The Market
Consumer acceptance of functional food

Conclusion

References

Executive Summary

Nowadays, the process of aging is becoming more and more unpopular. The market is full of remedies against the signs of aging, some of dubitable worth. In a more scientific approach, “anti-aging” researchers have examined the effects of nutrients on pathologic metabolism.

After the first discoveries of significant effects, the impact of this new discipline was extraordinary. Researchers and the pharmaceutical industry as well as nutritional and retail companies enthusiastically started to develop frameworks to combine clinical expertise with the new concept of private health prevention. In the late 1980’s, the term “functional food” was coined in Japan.

High customer acceptance from the beginning has brought on an expansion of the “functional food” market segment from the early 1990’s on, rendering the market more and more competitive. For competing enterprises, identifying the determining factors of customer acceptance is therefore of great importance.

List of Figures

Figure 1: Three main forms of applied research

Figure 2: The hourglass notion of research

Figure 3: Process of basic and applied research

Figure 4: Primary and secondary research

Figure 5: Expand of knowledge in the field of secondary research

Figure 6: *Advantages and ^# disadvantagesof complex desk research

Figure 7: Prominent types of functional food

Figure 8: Main Markets in Europe estimated value sales (2006)

Figure 9: Functional food consumer in USA and in Europe as described by different socio-demographic parameters²²

Figure 10: Major influences in development of functional food

„Knowing others is intelligence; knowing yourself is true wisdom. Mastering others is strength; mastering yourself is true power. “

Lao Tzu

Introduction

Aging is a natural, but in our western society unpopular part of life. Biologically speaking, aging is caused by chemical or physical damage to tissue, cells and macromolecules. An accumulation of lipid peroxides, denaturated proteins, and carbonyl compounds in the cell leads to damage of DNA^[1] in the nucleus and thus to malfunction of the cell or even cell death, in turn leading to tissue or organ malfunction.

As recently as two or three decades ago, clinical nutrition and dietary supplements was treated stepmotherly in the medical and biochemical community. After the socio-economic impact of so-called prosperity diseases like the metabolic syndrome (a combination of arterial hypertension, hyperlipidemia, obesity, and diabetes mellitus; often accompanied by nicotine abuse) or gout has become apparent, clinical scientists started exploring this field.

Soon, promising results were obtained, and public and private research programmes were launched. In Japan, the world’s second largest regional market, with estimated value sales of US$11.7 billion in 2003^[2][3], the term “functional food (ff)” was coined in the late 1980’s.

The newly de-veloped products met the needs of the growing anti-aging movement. Main components are substances known as metabolic effectors (e.g. omega 3 fatty acids, pro- and prebiotic dairy products etc.). From the early 1990’s on, these dietary supplements or functional food became widely available, a fact which may be due to business interests of competing companies.

Based on these considerations, this assignment addresses the issue of to what extent the success of functional food in the market is due to consumer acceptance and persuasiveness.

One of the challenges a producing company faces is to identify the factors that determine the acceptance of functional food, as consumer acceptance has been recognized as a key to successful negotiation of market opportunities, leading to success in the market^[4].

The assignment will give a short overview of popular types and brands of functional food currently in the market and review professional opinions on functional food and its future potential.

Additionally, the assignment will outline the basic elements of business research.

Basic Key Elements of Business Research

Theoretical Foundation

In a business pyramid model, a business system is directed from the top^[5]. Business managers strive to direct the company towards meeting its predefined goals. For this, there are several methodic approaches which shall be explained briefly.

The Scientific Method

The scientific method employs a bundle of predefined procedures for building up and linking theoretic statements and events, thereby predicting events yet totally unknown. The scientific method enables researchers to investigate an unproven hypothesis for explaining certain findings. The precondition is that a proposition should be empirically investigable^[6].

The Meaning of Theory and Research

“A theory is a set of propositions used as principles of explanation of the apparent relationships of certain observed phenomena. They allow generalizations beyond individual facts or situations”^[7]. The structure that is observed is called a concept or a construct. A concept in turn comprises a group of objects and their interrelations with the outside world. Propositions are statements on relationships between concepts³.

The term “research” is used to describe an exhaustive collection of information on a particular subject. The primary intention of research is to discover, interpret, and develop methods and systematics for individual knowledge in a wide range of scientific matters, generating new knowledge. There are three main forms of research (fig.1):

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Figure 1: Three main forms of applied research

Basic research may combine scientific methods (for generating new data) and exploitation of historic data^[8]. The process of basic research is described by the hourglass model (fig.2):

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Figure 2: The hourglass notion of research

Source: www.socialresearchmethods.net

Most research studies, both basic and applied, consist of the following components (fig.3):

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Figure 3: Process of basic and applied research

Basically, there are two main research methods that can be used when collecting data^[9], primary and secondary research (fig.4). The assignment presented here has been compiled using secondary research.

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Figure 4: Primary and secondary research

Secondary Research

Secondary research is also known as desk research, and consists of the compilation of data which has already been investigated and analyzed. Sources may be internal (e.g. customer key figures, sales figures, field service etc.) or external (e.g. federal offices, chamber of crafts, trade association, banks, universities etc.). Data may also be extracted from pre-existent research studies as an external source.

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^[1] See: Partridge L et. al (2002), p.165

^[2] See:Stanton C et.al p.476s (2001)

^[3] See: www.euromonitor.com (2004)

^[4] See: Siro I et.al p.457 (2008)

^[5] See: Manager's Toolkit: The 13 Skills Managers Need to Succeed, p. xiii (2004)

^[6] See: www.skopos.de/strategic research [accessed 15.01.09]

^[7] See: Zikmund W:Business Research Methods, p.22, 24, 25 (1997)

^[8] See: Zikmund W:Business Research Methods, p.22, 24, 25 (1997)

^[9] See: http://www.socialresearchmethods.net/kb/design.php[accessed 21.02.2009)