Product Development and Conduct in a Competitive Food Market: The Case of the Greek Sausage Industry

Summary

Product development has been one of the most important strategies of the Greek sausage industry over the period 1983–92. Its study reveals interesting characteristics between large and small firms. Firms from both groups have successfully applied this strategy. The orientation of the firms to the consumer or to the competition determines the implementation either of the product innovation or the product imitation approach. A trend towards increasing consumption, which however is still lower than the EU average, took place simultaneously with an increasing variety of different products that meet new consumer pattern requirements. The incentives from the successful product development that motivated the firms were the strengthening of the market position of these firms and the “packing of the product space”.

The results of our analysis, showed both that the average number of products per firm is large and only few products contribute to a great proportion of the sales. Moreover, the consumer oriented firms of the sector in many cases were not marketing oriented and produced products with negative cost-benefit relation.

The results show that the increase in concentration-as it is measured by the aggregate share of the four leading firms which were the main innovators- is mainly determined by the strategy of the product development. However, the dynamic measures indicate that the latter did not eliminate competition and took place with a substantial improvement of all performance indicators.