(i) Environmental Analysis – External Opportunities and Threats
The demographic, economic and the socio-cultural segments would be the most relevant segments to Whole Foods Market. These segments have a direct impact on the profitability, sustainability and survivability of Whole Foods Market, and the organic food industry. The relevance of the demographic segment stems from the fact that the age structure, income distribution and population size are important factors which will influence the demand for organic products. The economic segment is relevant, as an affluent population will continue to drive and sustain demand for organic products. The socio-cultural segment is another relevant segment, where attitudes about quality of life,
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Given that the organic foods industry is a rapidly flourishing one with a huge potential for profits, this would be an attractive industry to compete in. The high entry barriers, lack of substitute products and the huge pool of potential consumers will certainly mean an immense potential of opportunities in an industry that has just started to grow. Whole Foods Markets is in an excellent position to capture these opportunities and this will be explained below.
(iv) Responses to Wal-Mart’s foray into the organic foods industry
Focus strategy on market penetration, using existing stores situated in prime locations
Whole Foods Markets has been able to reach out to its target markets through the prime geographical locations of its stores. By further leveraging on these locations through the offering of more customized organic products, Whole Foods will be able to penetrate the market deeper. Given that fact that it has established the Whole Foods Brand in affluent communities, it will be in a better position than Wal-mart to widen its target market and to reach out to potential customers.
Increasing brand awareness, appeal and loyalty though a more aggressive advertising and public relations campaign
By increasing brand awareness and image, the reputation of Whole Foods will be enhanced. This would be critical in reaching out to potential customers, as well as retaining current customers. As mentioned in the case, Whole Foods does minimal
Whole Foods’ dilemma centers on its pricing strategy. If substitute markets exist that serve a similar purpose to these organic stores, customers may switch loyalties purely due to price. According to Bells (2015), “…For more than three years, Whole Foods has been working hard to shed its image as an overpriced grocer and has been aiming to offer better deals at lower prices.”. In any supermarket, organic products will always be more costly than the non-organic offerings, but in a purely organic setting, many customers simply cannot afford to pay more for everything they
The organic food industry has seen a huge spike in growth that is expected to continue into the future due to an increase in consumption. This will provide Whole Foods Market with huge opportunities. In addition, a wave of ethical and responsible consumption has swept across America. Whole Foods’ decision to pursue sustainable activities will certainly give consumers an added incentive to purchase its organic products.
Whole Foods Market is one of the biggest organic and natural whole food suppliers in the world. They provide a wide variety of select foods that are without hormones or antibiotics and are stamped with the U.S. Department of Agriculture’s stamp of approval. They value the fact that they can provide people with access to healthy food and be identified with being socially and environmentally responsible.
Whole Foods is a retailer that specializes in organic foods and it has done an excellent job of determining its target market and how to position itself. Instead of going head to head with large food retailers such as Wal-Mart, Whole Foods has found a niche market that works perfectly for itself. This niche market is one that prides itself on being health conscious and environmentally responsible and Whole Foods has done a great job of positioning itself in the same way through its environmentally safe actions and its use of the local community to stock its stores. However, as Whole Foods grows and expands, a person has to wonder if the company will be able to maintain this same position or will have to make
Whole Foods will need to research and figure out marketing strategies to keep the customers loyal to Whole Foods. One of the main reasons customers will go to different supermarkets that have organic foods is because of the different department stores inside the grocery market. For instance, some grocery stores sell organic vegetables, but also have regular vegetables. Some of the larger grocery stores have banks, photo stores, insurance companies that make your stop at the larger grocery store
On averaged their stores are roughly 38,000 square feet and their locations typically carried 21,000 SKUs. They make two-thirds of its revenue by selling bakery, perishable items, and prepared foods. (Ager & Roberto, 2014). Peoples tend to shop at Whole Food Market because of their high-quality natural and organic food. In today’s world peoples are more concern about health concise and effect of pesticide products, more people choose to have organic fruits and vegetables. Whole Foods get most of their produces from local people which are natural and organic, which will help them gain more customer than other company because of increasing demand of organic food (Whole Foods Market History, n.d). They also have a strong brand image and they were the first supermarket who commit to completely eliminating disposable plastic grocery bags to help protect the environment. They also sell many USDA-certified organic
From observation and research, we determined the target market for each store. Overall, Whole Foods targets the wealthier segment of the population who focuses on healthy, fresh, and organic choices when grocery shopping. They satisfy the
Whole Foods Market is an industry giant and the benchmark against which all other natural grocery stores are in competition. Given its stronghold on the industry, it would be exceedingly difficult for a new business to try to establish itself in the natural and organic foods market on a large scale in North America (Whole Foods Market, Inc. has over 360 stores in North America and the United Kingdom) . Any natural or niche groceries in the same vein as Whole Foods, Inc. that experience any sort of fruition seem to eventually wind up merging with them, so our group does not anticipate any
Within the foods retail industry Whole Foods largest competitors are Wal-Mart, and Kroger. Within the organic foods retail industry, the competition is Trader Joe 's and smaller localized organic grocery stores. Whole Foods also competes with GNC 's dietary products and nutritional supplements. Most of the relationships are not equally balanced but industry growth in the organic market is increasing and this will raise the strategic stakes. There are no significant exit barriers so a moderately intense rivalry among the larger competitors will exist.
Recommendation Whole Foods Market was the pioneer and leader of the organic and natural food sector for many years. The company had established their initial success due to a broad differentiation strategy. Unfortunately, large conglomerates consisting of Kroger “a best-cost provider” and Wal-Mart “a low-cost provider” have been able to provide the same unique goods and service as Whole Foods Market, while staying true to their respective competitive strategies. In result, making the organic and natural food sector a possibility for people of all socioeconomic classes. Due to the emergence of competition, Whole Foods Market is under extreme pressure from outside forces and will seemingly never return to their once prominent position.
1. Whole Foods philosophy states a value in education and an informed society. They market themselves to a buyer with a slightly higher income and education level because they feel that these people are more conscious of their overall health. The demographics of an area guide’s Whole Foods in the selection process of each location. They seek out highly dense, urban areas that have high foot traffic, where at least 40% of the residents have a college degree. 2. Overall demand for natural and organic products has increased and with that rise in demand, came a rise in competition. As a result of the competition, Whole foods became the first “Certified Organic” grocer by a third party inspector. As many of their competitors continued to follow the guidelines of the USDA’s Organic Rule, Whole Foods was willing to take the extra step to become certified and have their products authenticated. Their hope is to deter consumers from buying the competitor’s products that are not certified and may not even be labeled “USDA Organic.”
Whole Foods' utilizes a differentiated strategy, focused on organic and natural foods. This distinguishes them from mainstream grocery competitors, and puts them into competition with other specialized grocery outlets (Urani, 2008). This differentiation, combined with more traditional grocery industry size and operations, gives the company an advantage over most of its competitors.
Although, Whole Foods is an All-Natural, Organic chain, they are in a position to have a high competitive strength and the market is
Whole Foods Market has expanded by a mixture of opening its own new stores and acquiring already existing stores. Today WFM does not follow this strategy, instead their motivation is to open its own large stores. This is due to noticeable sales differences in larger stores as opposed to smaller stores. WFM locates these newer stores in upscale areas of urban metropolitan centers and high-traffic shopping locations. Not all WFMs are isolated structures; some are located in strip malls. WFM offers a larger selection of natural and organic foods than any other grocery store. WFMs marketing expenditure is extremely small. They spend a measly 0.5% of their revenues on advertising. Their chief marketing strategy relies on word-of-mouth. WFM strives to meet or exceed customer expectations. This is so customers receive competent, knowledgeable, and friendly service and become advocates of WFM. The employees here have a decentralized team approach for store operations. This is so some personnel, merchandising, and operating
Does your local grocery store have a section dedicated to natural or organic foods? I bet it does. That probably wasn't the case in 1980, when Whole Foods Market opened their first store in Austin, Texas. In the past 30 years, Whole Foods Market grocery chain has become the worldwide leader in natural and organic foods.