Case Study Fm4 1 Group 4 Whole Food Market 2010

 

 

WHOLE FOOD MARKET 2010: HOW TO GROW IN AN INCREASINGLY COMPETITIVE MARKET?

( C ase S tud tudy) y)

Submitted by: Caladcad, Emily P. Delariman, Krisha Dee P. Durban, Dana Marie A. Hobar, Ma. Mozelle E. Jaleco, Dayanara Malaika A. Kua, Harmaein Shirlesther G. Octavio, Marie Antonette O. Seria, Susana Marie C. Sibug, Kristel Joy S.

 

Abstract

Whole Foods has grown from a single store to become the U.S.’s leading natural and organic food chain in the three decades since its inception in 1980. The company is not just a food retailer but represents a healthy, socially responsible lifestyle with which customers can identify. It differentiates itself from competitors by focusing on quality and innovation, which allows them to charge a premium price for their products. This strategy has formed the core of the company’s success over the last 30 years, but like any success story, there are limits to how far it can go before new direction is needed in facing competition. Since the mid-2000s, there has  been an increasing demand for natural and organic foods, which has led to a growing number of  players moving into the organic foods industry, including low-price leaders like Wal-Mart. This increase in competition can introduce price wars where profits are eroded for both competitors and new entrants alike. While proud of its past, Whole Foods is seriously concerned about the future direction it should take. I. Problem

Competitive Strategy of Whole Foods Market through Marketing II. Objectives

1)  To have a competitive advantage over its competitor 2)  To develop the best product with high quality at a lower price 3)  To apply the best competitive strategy suited in the company

 

III. Areas of Consideration (Cause of the Problem)

1.  Competitors Whole Foods has 5 competitors namely: Wal-Mart, Wal-Mart, Target, Sam’s Club, Costco, and Trader Joe’s, the company’s compan y’s biggest competitor within the food retailing industry. All of these retailers, except Trader Joe’s offer grocery products, generally at a lower  price than what one would find at Whole Foods while Trader Joe’s offers premium natural and organic food at high quality at lower price than of Whole Foods. Whole Foods differ from them through their services; there are in-store chefs to he help lp with the recipes, wine tasting and food sampling. Some stores offer extra services such as home delivery, cooking class, massages, and valet parking. The company differentiated itself from the competitors by focusing on quality, excellence, and innovation that allow it to charge a premium price for premium products. Whole Foods carries only natural and organic product, it is highly selective about what it sells, dedicated to stringent quality standards, and committed to sustainable agriculture. By offering minimally processed high quality food, engaging in business  practices, and providing a motivational, respectful work environment. 2.  Price Whole Foods, the company does not use price to differentiate itself from competitors, rather Whole Foods focuses on quality and service as a means of standing out from the competition. All of its competitors sells products, generally at a lower price than Whole Foods. Another of Whole Foods key competitor is Trader Joe's, premium natural and organic food market, expanding its presence and product offerings while maintaining high quality at low prices.

 

3.  Services Whole Foods’ competitors’ offers products that includes a discount and big boxes while Whole Foods only focuses on giving quality service and customer satisfaction that comes in higher prices compared to other supermarkets in the industry.   4.  Product Innovation Whole Foods do not innovate their products. The key component to Whole -up and their products that are Foods’ success relied primarily on their store’s set set-up carefully researched to ensure that they are meeting the demands of the local community. They are only maintaining their products. 5.  Customers Whole Foods was able to find its niche, appealing to the above-average income earners. The company targets its locations specifically by an area’s demographics; they target location where 40% or more of the residents have a college degree  because its citizens are more likely to be b e aware of nutritional issues. The thing about Whole Foods is that their prices and services are only for the rich and educated  persons and not for all. IV. Alternative Course of Action

1.  SWOT Analysis This SWOT analysis of Whole Foods Market focuses on the strengths and weaknesses directly linked to the nature and strategies of the firm, as well as opportunities and threats that shape the grocery and health food store industries. Based on this SWOT analysis, Whole Foods Market managers, employees, and investors can make better decisions on dealing with the business.

 

2.  Porter’s Five Forces Analysis  Analysis  This Porter’s Five Forces Analysis of Whole Foods Market Ma rket focuses on Competitive rivalry or Competition which has a strong force of markets. At the time of Whole Foods’ inception, there was almost no competition with less than six other natural foods stored in the U.S. The main competitor of the whole foods’ foods’ is the Trader Joe’s, a privately held business that began as a chain of convenience stores. -based business also started packaging foods under The Trader Joe’s has a California California-based the store’s name. Trader Joe’s develop a reputation for offering inexpensive yet y et innovative products which key to its value-based pricing strategy. This will allow Whole Foods to further improve their product to develop a strong force that could attract customers. 3.  Continuous Improvement The Whole Foods Market promotes the continuous improvement of the product and the services for the suppliers. As this time, Whole Foods Market delivered incremental operating margin improvement and earnings growth in excess of sales growth. Whole foods market improves their distribution, and inventory management to produce higher gross margin throughout the year. Improvement in the state of the environment and local and larger community support. This could help gain customer satisfaction.

 

V. Recommendation (Final Solution)

Some financial recommendation for Whole foods Market would be to grow income, cut cost, increase revenue, reduce capital expenditures, and raise capital through equity shares and reduce borrowing. We highly recommend to the Whole Foods Market to use SWOT Analysis as it can help them to have a better marketing strategy. They must consider their strengths from both an intern perspective, and from the point of view of your customers and people in their market. They must also consider improving their  products to cope up with the weaknesses of their firm. A useful approach when looking at opportunities is to look at the strengths and try to think if it will open up any opportunities. Alternatively, look at the weaknesses and think if they could open up

opportunities by eliminating them. When looking at opportunities and threats, they should ensure that they don't overlook external factors. Whole foods Market also needs to use their buying power to pressure suppliers and negotiate for lower wholesale price. Another way for the Whole Foods Market is to expand a little more in their marketing strategy. They should increase the marketing budget. They should reaffirm Whole Foods' commitment to its core, social-organic market. Reach out to the price sensitive, healthorganic market. They could also package their goods to be sold as "cook-at-home restaurant boxes" to intrigue those converting over from the restaurant dining option. VI. Conclusion (Action Plan)

After analyzing the company, our group agrees that whole foods is a steady, reliable company that takes pride in their products. Through the use of SWOT analysis, they have good vision of where they want to go and a mission statement that will take them there. Whole foods will probably have a difficult time over the next few years, but they have shown as a company that they can preserve through about anyhing. Revenue

 

growth can be spurred through a marketing campaign and community cost of good sold, and reducing capital cost growth. Net income may not grow much as whole foods might like, butthe company can easily still remain profitable and continue con tinue to grow. Increasing the brand awarenwss, image, and loyalty through various forms of advertising and public relations, This will help Whole foods further penetrate the market and continue to imcrease market shares nd profits. Whole Foods should implement 95%of available resources to alternative 1 and the remaining 5% should be concentrated on determining store sizes and locations for the highest customer acquisition.

 

VII. Documentary