Executive Summary
Whole Food Market is a supermarket chain company headquartered in United States which offers organic and natural foods. The company was founded back in 1980 by john Mackey, Renee Lawson, Craig Weller and Mark Skiles after borrowing $45,000 from their families (Whole Foods Market, 5). By the time, the business opened as SaferWay Supermarket with only 19 employees. The supermarket developed successfully and swiftly since there were less than ten natural foods supermarkets in US. However, in the first fiscal year, the business experienced a history making event when its inventory was wiped out by the floods that devastated Austin city. The supermarket recorded losses of approximately $400,000 in terms of property. By this time, the supermarket had no insurance to cover the losses which obligated the owners of the business to look for help from the customers and neighbors. Whole Foods Market recovered by the help of vendors, creditors and investors who made contributions within 28 days after the floods to reopen the supermarket. By 1984, Whole Foods Market had expanded to other markets out of Austin including Dallas, Houston and New Orleans (Whole Foods Market, 5). By 1989, continued to extent their customer base by opening more stores in West Coast which started with Palo Alto, California. As the supermarket was enduring enormous growth, it started the new millennium by mergers and acquisition where it merged with Harry’s Farmers Market and Food for Thought in 2001. In the next year, Whole Foods Market decided to go overseas and expanded to Canada. Furthermore, the supermarket chain entered United Kingdom in 2004 and made acquisition with Seven Fresh & Wild Stores. Currently, the corporation has employed more than 90,000 workers both locally and internationally (Whole Foods Market, 5). More than 27,000 employees work part time whereas more than 2,000 are seasonal employees. For the year ended September 2015, the company generated approximately $15,389 in terms of revenues. Though the company generated more revenues in 2015 than in 2014, it was exhibited that the net profit and operating profit had decreased by 7.8% and 7.4% respectively (Whole Foods Market, n.p). This can be cited from the fact that the corporation implemented more marketing strategies in 2015 as an approach of adopt current market trends. Whole Foods Market obtains its raw materials from local, national and international suppliers who deal with wholesale services. Some of the products offered by Whole Foods Market include meat, coffee, seafood, beer, tea, bakery products, pet foods, body care products, and nutritional supplements among others. Since 2007, Whole Foods Market has been at the top 10 best companies to work for as listed by Fortune Magazine. Generally, by the turn of the millennial era, the company has dominated the natural foods industry among other companies such as The Kruger Co., Wal-Mart Stores, Weis Markets, Asda Stores Limited, Costco Wholesale Corporation and Winn-Dixie Stores, Inc.
Table of Contents
7Ps of Marketing Mix Analysis. 4
Whole Foods Market
IntroductionTo start with, marketing can be delineated as a management process that involves identifying, anticipating and persuading target customers to their satisfaction. In the contemporary world of business, marketing plays an integral role in both small and large enterprises. It helps in understanding the prerequisites of a competitive market together with reaching out to the potential target customers. As a result, the company ought to understand the trends and demands in the market and employ strategic planning on the product, price, time and place. It is factual that technology development has contributed significantly to the change of marketing strategies for modern businesses. With the rise of digital and mobile technology, organizations are able to achieve marketing objectives swiftly and effectively. Technology advancement has also resulted to tremendous increase in competitive pressures in the market thus making marketing skills more important. Previously, marketing was regarded as a departmental issue and concern but in the modern world, it is regarded as a principle business attitude up to the employee level. The major objective of marketing is based on understanding the customers and their demands which is used to improve the operations of the business towards satisfying the target market. Application of effective marketing strategies is integral to the overall success of the business as it defines what the enterprise will produce, how to charge, deliver and tell the customers about the product and services. Thus, the applicable framework of marketing strategies is known as 7Ps of marketing mix which is composed of Product, Packaging, Promotion, Publicity, Place, Partnership, and People targeted by products and services of a company. The company has to relate the seven elements with its operation practices that will conform to the needs and preferences of the target market. In this case, the organization is obligate to analyze factors that will potentially influence the purchasing habit of the customers by persuading them to prioritize its products and services over those of the competitors. For effective planning on marketing strategies, the company should be updated on the current market trends which increase the competitive advantage of the organization in every aspect.
Generally, in this case, Whole Foods Market strategies are compatible with the growth strategies that have promoted its competitiveness in the natural foods industry. Basically, this means that the marketing strategies of the supermarket are intrinsic in generic growth strategies that the company implements in its organizational culture. As a result, this paper will assess the 7Ps of marketing mix implemented by Whole Foods Market and recommend some improvements from the strategies executed by similar but unrelated organizations.
7Ps of Marketing Mix AnalysisIn general, it is exhibited that Whole Foods Market expends less on marketing plan than other supermarkets in the natural foods industry. The company relies more on verbal recommendations and testaments made by their customers. For the past ten years, the Whole Foods Market has been spending less than 0.5% of their annual sales revenue (Bells, n.p). Basically, the supermarket chain focuses on engaging their customers by offering unique and additional products and services. However, this does not mean that the company does not connect with the target consumers using internet and social media. As a matter of fact, Whole Foods Market connects with its target market through its website, social media and e-newsletters. On the other hand, the company uses brand campaign to create brand recognition in both local and international markets. For example, back in 2014, Whole Foods Market invested more than $15 million in their first brand campaign by the name “Values Matter” (Whole Foods Market, n.p). The objective of the company’s campaign was to restore its customer’s trust with regard to the values, ethics and prices of its products and services. The campaign highlighted sustainability standards, importance of healthy diets and animal welfare which indicated that Whole Foods Market was not only concerned in maximizing profits but also in its corporate social responsibility to the society. It is noteworthy that, Whole Foods Market implements the 7Ps of marketing mix as an approach of keeping up with the current market trends that enhance its competitiveness.
1) Product
It is undeniable that the product line of the company is imperative in the overall success of the enterprise. Therefore, introducing new products in the market is one of the effective approaches that promote differentiation and retail identity which is vital in the retail market. However, regardless of the fact that the purchasing habit of the customers is determined by the quality and prices of the products, it is recommendable for a company to give its customers variety of products to select. In this case, Whole Foods Market has embraced product innovation towards attracting and retaining their customers. The product line of the company is composed of meat, bakery, pastries, coffee, seafood, beer, tea, bakery products, pet foods, body care products, and nutritional supplements (Whole Foods Market, n.p). Through these products, Whole Foods Market benefits from bulky buying because they subject their customers to hard purchasing decision for the variety products. In order to ensure that the products have satisfied the demands and preferences of the customers, the supermarket chain has a consumer response team that is readily available for the customers (Whole Foods Market, n.p). The success of Whole Foods Market is based mainly on its products as a retail company. The wide variety of products by the supermarket determines the competitive advantage of the organization.
2) Price
The market pricing strategy is implemented as an approach for market environment improvement with an objective of increasing or decreasing the supplies to the market. There are several motivations that obligate the companies to adopt pricing approach as one of the marketing strategies. One of the major reasons includes the increasing costs of offering customers services together with production. Instead of making unproductive sales calls to the target customers, companies are forced to believe that establishing long-term relationships with the consumers is the more effective than sales calls. It is factual that though customers demand for high quality products, they expect low manufacturing costs which will lower the market prices. Therefore, the company ought to outsource activities and practices that increase production and distribution costs in order to meet these customer demands. Whole Foods Market’s pricing is valued with regard to the quality of the product (Whole Foods Market, n.p). The clients of the supermarket are aware that this pricing strategy focuses on offering products with the best quality equivalent to their prices. Generally, provided that the company maintains the prices of their products, it is guaranteed that quality and durability is maintained. It is noteworthy that Whole Foods Market does not use lower prices in their pricing model (Whole Foods Market, n.p). Instead, the company focuses on offering healthy and high quality products at the prices are worthy for them.
3) Place
Factors that determine channels of distribution come from both the interior and exterior of the organization. These factors tend to decide how the organization should operate. For example, it is perceptible that small-scale firms have insufficient resources to venture in foreign markets. Firms with low break-even level of their volumes operate in low cost channels. On the other hand, the size of the market is one of the external factors that determine channels of distribution by the firm. The customer base that the organization is targeting determines the choice of places of distribution. In the contemporary world of business, place elements have changed significantly thus impacting business marketing operations. Organizations are obligated to make their products available for their customers efficiently and conveniently. The aspect of marketing strategy that ensures availability of products to the customers is known as distribution strategy. Under this strategy, the company ensures that it uses the most effective channels and convenient location that are accessible by the target customers. In this case, Whole Foods Market different channels of distribution to the target markets which include air transport, road, and railway transport. On the other hand, the stores of the supermarket are conveniently located in all markets served. In the first fifteen years of operation, Whole Foods Market focused on extending their operations to Canada and United Kingdom (Whole Foods Market, n.p). After expanding overseas, the company returned back to local markets and started expanding to East and West Coast. In present, the supermarket chain is continuing with their expansion in local markets where in May 2016, made a total of 19 leases of new 365 by Whole Foods Market outlets (Whole Foods Market, n.p). The company is expecting to open more stores in future where one of the recent stores expected to occupy 44,000 square feet is anticipated to be opened by 2018 (Whole Foods Market, 10).
4) Promotion
It is factual that effective communication with the target consumers is very imperative for the overall success of the enterprise. Therefore, advertising is one of the most effective programs under company’s communication with its customers. The major objectives of promotion include informing, persuading and educating customers of the products or services offered. In this case, a company tries to create a positive image of the product which gives customers positive perception thus persuading them to purchase the products. Different types of promotions that companies in the contemporary market use include advertising, sales promotion and personal selling among others. Whole Foods Market uses these promotion activities with regard to the season and market conditions (Whole Foods Market, n.p). Some of the types of promotions implemented by the supermarket chain include advertising, sales promotions and public relations. Most of the advertisements made by Whole Foods Market are typically regional apart from using internet and social media. However, the company also uses national campaigns such as “Values Matter” to advertise their products in national markets. Under advertisement, Whole Foods Market uses its company website and social media channels such as Faceook, Twitter and Google+ to connect with the customers and inform about their products (Whole Foods Market, n.p). Additionally, the supermarket uses television and magazine advertising to give presentation of the features and quality of its products. However, Whole Foods Market does not prioritize advertising so much like other companies in the natural foods and retail industry (Whole Foods Market, n.p). The supermarket chain is also involved in different public relation activities with the society including donations to nonprofit organizations and campaigns.
5) Publicity
The difference between promotion and publicity is based on the fact that publicity focuses on credibility and recognition of the brand name whereas promotion focuses on recognition of the products and services. As a result, most organizations tend to combine publicity with public relations to create awareness in the market. Some forms of publicity embraced by companies include interviews with bloggers/journalists, self-authored stories on websites or prints, and speaking engagements among others. Therefore, in this case, apart from campaigns in the national market, Whole Foods Market has engaged in interviews, talks and stories about the supermarket chain which are printed in magazines, newspapers and in the websites (Whole Foods Market, n.p). This is what keeps the customers of Whole Foods Market flowing to their stores despite recent company’s products quality concerns that were raised by FDA.
6) Packaging
Prior to distributing their products, Whole Foods Market ensures that their products have achieved the packaging guidelines (Whole Foods Market, n.p). The packaging materials used for the products are easily recycled and can be reused in every level of business in the company. Therefore, they use this strategy to prove their corporate social responsibility especially in conserving the environment.
7) Partnership
The company has made partners with companies in the same industry since 1890s which has significantly contributed to its immense development. Some of the companies that Whole Foods Market has partnered with include wellspring Grocery, Bread & Circus, Mrs. Gooch’s, Amrion, Bread of Life, Allegro Coffee, Merchant of Vino, and Food for Thought (Whole Foods Market, n.p). The partnership has helped Whole Foods Market reach a wider customer base and satisfy market demands.
Ideas for ImprovementIt is factual that Whole Foods Market expends less capital on its marketing strategies which means that the company does not reach out much its customer base through marketing. It is exhibited that companies such as MacDonald’s restaurant chain spends approximately $6 billion on advertisement which equivalent to 8% of its sales revenue (Bhasin, n.p). This is the reason why MacDonald’s is among the corporations which has the strongest brands globally. The company utilizes its marketing strategies to reach out every potential customer across the globe. Precisely, $1 out of $6 earned is spent on marketing especially advertisement (Bhasin, n.p). Therefore, it is recommendable that if Whole Foods Market wishes to expand to more foreign markets, they should increase their expenditure on marketing from 0.5% to at least 5%. The other recommendation is based on the pricing model embraced by Whole Foods Market. It is perceptible that the company is known for higher prices for their quality products. The supermarket should lower the prices of their products slightly below that of the competitors in order to attract more customers. A good example of the company that uses pricing model for customer attraction is Amazon. After the financial crisis that faced Amazon back in 2001, the company decided to use low pricing to recover from the losses. By 2013, the revenues collected from sales had increased up to $74 billion (ACCA Global, n.p). Therefore, it is undeniable that one way to increase the sales is by lowering the prices. As a result, Whole Foods Market should lower the price of their products in order to generate more sales that will help them expand to more foreign markets.
ConclusionSince the foundation date back in 1980, Whole Foods Market has endured significant growth in the natural food retail market. By the turn of the new millennium, the supermarket chain had ventured international markets opening more stores in Canada and UK. It can be argued that the development of Whole Foods Market has been promoted by their marketing strategies and mergers & acquisitions. However, it is exhibited that the company does not invest much on marketing since only 0.5% of the annual sales is used for its marketing mix. Therefore, it is recommendable that in the supermarket needs to expand more effectively; it has to invest more on marketing following the example of MacDonald’s restaurant chain. On the other hand, with regard to the pricing model of the supermarket, it is recommendable that the company lowers its prices slightly below that of its competitors in order to increase the sales.
Work Cited
"Whole Foods Market, Inc." Whole Foods Market, Inc. Marketline Company Profile (2016): 1-36.
Whole Foods Market, Inc “Whole Foods Market History” 2016: n.p. Retrieved from http://www.wholefoodsmarket.com/company-info/whole-foods-market-history
Bells, Sonya, “Introducing whole foods: America’s organic food market. Market list” 18th November 2015: n.p. Retrieved from http://marketrealist.com/2015/11/introducing-whole-foods-americas-organic-food-market/
ACCA Global, “The Source of Amazon’s Competitive Advantage” 29th may 2015: n.p. Retrieved from http://www.accaglobal.com/za/en/discover/cpd-articles/business-management/amazon-flow.html
Bhasin, Kim, “This One Statistic Shows Just How Much Macdonald’s Tries to Entrench Itself in Everybody’s Minds” 12th March 2012: n.p. Retrieved from http://www.businessinsider.com/this-one-statistic-shows-how-much-mcdonalds-tries-to-entrench-itself-in-everybodys-minds-2012-3
Appendices
Retrieved from http://www.wholefoodsmarket.com/company-info/whole-foods-market-history