Question

Have a look at Whole Foods Market, the upscale grocery retailer. Go and explore the company and products at (official webiste of whole foods market). Take some time to learn about the types of products offered and the product information provided. The website is full of information about product lines, quality standards, safety standards, coupons, and more. Choose items of interest to you.

a) What unique pricing strategy has Whole Foods adopted in the food marketplace?

b) Relative to competitors, what is Whole Foods’ market position?

c) What is the unique “customer value” that Whole Foods delivers to its patrons?

d) Will Whole Foods be able to maintain the balance it is achieving in the price-value equation?

e) How can they charge what they charge?

f) How does the information provided on the website and in the stores add value to a consumer?

Answer 1

THE CASE STUDY OF WHOLE FOODS MARKET

The Whole Foods Market (WFM) is one of the leading grocery stores in the natural and organic food industry. It is the first national “Certified Organic” grocer and has specifically positioned itself in the natural and organic foods supermarkets segment. John Mackey, the founder of the company, started Safer Way Natural Foods in Austin, Texas. The company operated in 1978 and opened the first Whole Foods Market after merging Safer Way with Clarksville Natural Grocery in 1980. The company’s mission is to promote the vitality and well-being of all individuals by supplying the highest quality.

A) THE UNIQUE PRICING STRATEGY:

* Promoting not only the Whole Foods brand but organic foods, in general, should increase sales of current customers and continue bringing in new customers. Whole Foods already holds a strong position in the market, and by increasing the awareness of and demand for organic foods it will inevitably increase its market share and profits.

* Whole Foods allocates 95% of available resources to the first recommendation and the remaining 5% should be concentrated on determining store sizes and locations for the highest customer acquisition.

B) Whole foods market position with respect to its competitors:

*The supermarket and grocery industry is a fiercely competitive environment. The small and medium size operations represent almost 70% of the industry’s revenue while the largest four companies account for the rest. Therefore, the market concentration is still low. Moreover, other wholesale superstores such as Walmart, which also provide groceries (with 25% lower prices than organic products) are considered to be new major players in the industry (Shelly, 2014).

* Food retailing is a fiercely competitive industry. Whole Foods Market’s competition is in local, regional, national, and international conventional and specialty supermarkets, warehouse membership clubs, natural foods stores, online retailers, restaurants, and home delivery companies. The company competes based on product selection and quality, customer service, price, or a combination of all of these. Some of Whole Foods Market’s competitors are profiled below.

- Kroger

Kroger has a diversified portfolio of successful formats, including food/drug combo stores, food discounters, neighborhood perishable-oriented upscale format, and super centers. Kroger launched its own brand of premium-quality natural and organic products to compete in natural foods. The company’s Naturally Preferred line features include baby food, pastas, cereal, milk, and snacks.

Trader Joe’s

- Trader Joe’s has grown its expansion to 344 stores in 25 states and Washington, D.C. The annual sales of Trader Joes are roughly $8 billion. Trader Joe’s growth strategy is to be careful about unplanned expansion of its stores that could be risky for its culture, brand affiliation, and value proposition. For this reason, Trader Joe’s only opened five new stores in 2010.

Wegman’s Wegman’s is one of the leading regional gourmet store chains in the United States. The company offers a broad range of products with 60,000 SKUs, including 400 specialty cheeses. It has developed a European-style open-air market atmosphere, with such offerings as artisan breads baked in the stores’ Spanish-style brick ovens and inviting displays of meats, fresh seafood, and international foods. Wegman’s stores are large with wide aisles, exposed ceilings, granite countertops, and terrazzo floors. Wegman’s offers a full range of healthy food choices, such as hormone-free meats and products that are free of partially hydrogenated oils.

*INTENSE COMPETITION: The food retailing industry is fiercely competitive. Local, regional, national, and international conventional and specialty supermarkets, organic foods stores, warehouse membership clubs, farmers' markets, small specialty stores, and restaurants compete based on product selection, quality, customer service, price, or a combination of all of these. Most supermarkets offer limited choices while some have expanded their selections to aggressively pursue the market. Major competitors include Safeway Inc., The Kroger Co., Publix Super Markets, Inc., Trader Joe's, and retail giant Walmart. These are larger and have more resources than rest in the industry. For instance, Safeway’s revenues were $36,139.1 million in December FY2013, and those of The Kroger Co. were $98,375 million in January FY2014. In comparison, revenues for relatively smaller retailers like Whole Foods Market were $12,917 million in FY2013. Thus, intense competition could negatively drive sales, market share, and margins for relatively smaller names against the giants in the industry (Market Line, 2014).

C) THE UNIQUE CUSTOMER VALUE:

• Whole Foods Market (WFM) sells the highest quality natural and organic products to it's customers

• The company satisfies, gratifies and nourishes its customers

• The company supports and serves its local and global communities

• The company has great influence on environmental stewardship with an eye on becoming a responsible seller.

D) MAINTAINING WHOLE FOODS HIGH-VALUE EQUATION:

WFM’s differentiated-focused strategy and store expansion throughout the world allow the company to capitalize with a growing number of buyers and suppliers of organic products. Whole Foods Market has two narrow markets that it serves. Organic differentiation is the keystone of Whole Foods’s Mission. This means Whole Foods Market uses a focus differentiation strategy, highest quality brand reputation, dedication to the social ethics of 16 organics, industry-best customer service strong supply chain, and developing a private label of organics. WFM’s marketing level is market penetration. In the past 30-plus years, it has built over 300 large customized stores in North America and the United Kingdom. Whole Foods Market is known to provide the highest quality of products in its stores. Whole Foods Market includes the high prices for its products.which is a direct result of the company’s focus on producing the finest products.

E) CHARGING COMPOSITION:

The whole foods charges high because of it's genuine and finest quality products. They significantly takes care of their valuable customers by providing them magnificent products likewise;

The company’s high quality standards prohibit hundreds of ingredients which can be found in other companies’ products, as well as farming, ranching methods, and numerous manufacturing practices that are not in standard form. The standards that the company follows include:

• No artificial flavors, colors, sweeteners, or preservatives.

• No hydrogenated fats •

No meat from animals raised with antibiotics

• No synthetic nitrates added to cured meat,

• Eggs from cage-free hens

• Fifty banned body care ingredients

• Wild-caught seafood rated for sustainability

• Responsibly farmed seafood

They charges on genuine things and the fact original products is understandable by the customers, and they pay for the genuine products.

CONCLUSION:

In conclusion, Whole Foods Market is in good standing with the competition. Whole Foods seems to have a strategy that is working for them; however, it may need to emphasize a bit more on advertising and attracting more health-conscious people with pamphlets at gyms. The company is in a position to change people’s lives forever and future generations as well, as many companies are doing now, finding their consumers and keeping those customers for life. Whole Foods Market is the leader in the niche market of natural and organic foods and is facing strong competition from superstores such as Walmart, Costco, and many other grocery retail chains. Internally, the company looks great with not too much to worry about but externally it must act now before Walmart and other grocery retailers begin taking its profits.

THANKYOU.