Pasini’s Rice Value Propositions Study

Pasini’s Rice Value Propositions

Roberto Garrone

University of the People

Author Note

        This paper is being submitted on November 21, 2018, for Roberto Garrone’s BUS5112 Marketing Management course.

Pasini’s Rice Value Propositions

Within the firm’s objectives and core strategy, the value proposition represents the customer and competitor targets, delimits the product category, and proposes a statement of how Pasini’s rice is differentiated in the market (Winer & Dhar, 2010, p. 36).

Business Environmental Forces and Outlook

The Italian Food Industry has begun its recovery (Italianfood.net, 2018) after 10-12 years of decline caused by the loss of competitiveness of the Italian manufacturing; however, such decline has been generally softened (-1.9% against an average -4%) by the consistent growth of exports. The industry has seen structural changes with the consolidation of major industrial groups and the concentration of small firms in agri food districts (Brasili & Fanfani, 2004, pp. 113-118). The Rice Industry is characterized by increasing quality and quantities produced with growing average volumes stocked, but prices per tons are declining up to -10% with respect to the previous seasons; notwithstanding, EU exports grow 2%, Non-EU 14.3%, and internal consumption 6.4% (ENR, 2017, pp. 1-14). Other aspects include seasonal patterns, climate changes, policies and laws regulating  prices and the use of pesticides that may affect the quality and quantity produced (agromagazine.it, 2018).

Demand Drivers

Rice is considered an anti cyclical commodity because consumers during crisis rely on it to save on food expenditure. Notwithstanding, increasing consciousness of the properties of rice on human health has generated some structural demand; indeed, organic farming and geographical indications have seen growing sales in the EU, Non-EU, and internal markets with very high demand for specific local varieties. Finally, most exports are directed towards countries with growing economies and dynamic demand like Bulgaria, Latvia, and Romania.

Competitors’ Targets

In general, successful stories share the transformation of handcraft farms into industrial enterprises not only to face increasing competition, but also to accommodate with the European agricultural policy on producers’ prices; indeed, to survive and compete every component of the value chain must increase its productivity and quality. In general, attempts to directly target consumers reflect associations’ purposes to promote a specific variety (Arborio, for instance) without favoring one producer over the other.  

Pasini’s Rice Core Strategy: Differentiation and Perceptions

Pasini asks a +20% premium over the average price per Kg relying on the brand’s reputation for the quality and safety of the product and processes; in general, the strategy is consistent with the characteristics of the market (increasing competition and production, capital intensive). A commodity as rice is differentiated by highlighting the nutrition facts of the product, which are strongly influenced by the refinement and sterilization processes,  by relying on traditional images of the product, which remind environmentally friendly cropping techniques, and by offering specific lines of product for other uses of their targeted customers. Thus, the core strategy is highly dependent on the effectiveness of the internal manufacturing processes and on the customer’s perceptions of the impact of such processes to obtain a healthy and quality product.  

Target Market and Customer’s Profiles

Specifically, three customer’s types are considered by varying the perception of the product: quality/safety attracted, price conscious/conservatives, and price conscious/experimenter. The first type perceives the product as healthy and of high quality because of the firm’s investment in refinement technology, the second type prefers a traditional cropping and processing technique, the third type prefers to use of exotic varieties at home substituting consumption at the restaurant. The first is a penetration strategy based on the competitive advantage given by the new refining technology and leveraging the perception of the positive properties of rice on human health; instead, the other two are market development strategies based on the competitive advantage given by the vertical integration of the firm and the sterilization technology relying on the anti cyclical character of rice as a commodity and leveraging the power of organic farming and geographical indications in the consumers’ mind. The firm offers multiple product’s options (refined, integral, parboiled, gold, Antica Riseria Padana), packaging (500g, 800g, 1Kg, and 5Kg in a box or bag, in plastic or paper, with and without reinforced bottom and packed in 4 and 6) varieties (Arborio, Roma, Carnaroli, Basmati, Vialone Nano, Nero, Ribe, Sushi, Originario, Thaibonnet), and prices. As a consequence, the product can be bought for everyday consumption by single and families, as well as tried in specific events like dinners with friends; furthermore, the multiple formats allow for the efficient distribution to small shops, super and hyper markets, and to firms repackaging it in Christmas presents sold as business gifts.