Question

Kindly check Case Below and if possible to answer the question at the end of the case.

Beckett Organics
John Beckett enjoys vegetables, so much so that he has given up his full-time job as a lawyer to concentrate on growing and marketing organic vegetables. He started growing vegetables 20 years ago in his back garden and eventually became fully self-sufficient in supplying vegetables for the family. Partly bored with his legal job and tempted by an attractive severance package, John decided he would try to establish his own vegetable supply business. Eighteen months ago he looked around for two fields to lease in which he could grow organic vegetables.
Organic products including vegetables, is a growth market in the UK. Growers must adhere to strict guidelines in order to gain organic certification. Increasing awareness of the problems associated with many pesticides and fertilizers, coupled with an increased interest in healthy eating habits and ‘wholesome’ food, has meant that many consumers are now either purchasing or interested in purchasing organic vegetables. This is true not only of household customers, but in addition, many restaurants are using the lure of organic produce to give them a distinctive edge in the market place. All this has meant that many of the larger supermarkets in the UK have begun to stock more and more organic produce from what was a relatively specialized market in the 1990s; the market has grown to where overall organic produce accounts for some 12% of the total UK grocery market and in worldwide terms as of January 2010 it accounts for approximately 3% of all food sales. The market for organic vegetables has grown more rapidly than other organic products and it is estimated that by 2018 some 40% of all vegetables marketed in the UK will be organic. This growth has been sustained at a rate of around 20% per year in developed countries. However, organic yields are between 10% and 20% lower than conventional agriculture, with crops like potatoes some 40% lower. Unsurprisingly, this makes organic produce on average around 40% more expensive than non-organic produce.
Organic vegetables offer several advantages over their non-organic counterparts:
• They are generally tastier, and because they are not treated in the same way, are usually fresher than non- organic products.
• They are good for a healthy lifestyle as they contain no pesticides and chemicals.
• The fact that no pesticides or herbicides are used in their production means that they are much ‘greener’. For example, they help to reduce the problems associated with nitrates in the soil and water supplies.
• On the downside, organic vegetables are generally less uniform, and as far as some consumers are concerned, are less attractive in appearance. This lack of uniformity has also been a problem in the past with supermarket buyers who have traditionally looked for uniformity in fresh products to aid merchandising and marketing in retail outlets.
• Generally, organic vegetables are more expensive than their non-organic counterparts Currently, on average they are somewhere in the region of 40% more expensive.
In the UK, anyone wishing to claim that their produce is organic, and market it in this way, needs to obtain the approval of the Soil Association, which checks the organic credentials of a supplier. For example, in this case, they check the conditions under which the produce is grown and how the seeds used.
Two interesting developments are taking place in the organic produce market. One is the growth of home supplies. This is where the producer supplies direct to the householder. There are a variety of ways of doing this. Some smaller growers use mail-shots and leafleting to build up a client base. They then deliver locally to customers who order from a list. Very often the supplier will simply make up a box of a pre-determined value or weight containing a selection of vegetables which are in season and ready for picking. Other suppliers are using a similar system, but take their orders via the Internet. This is particularly suitable for this type of product as customers can check on a regular basis what is available and order from home. The produce is then delivered at a pre-arranged time.
The second development in the organic produce market is the growth of farmers’ markets. These markets are usually run by local authorities, often on Saturdays or Sundays. Local and other producers attend these markets, paying a small fee for a stall and then sell their produce direct to the consumer. These farmers’ markets partly
came about as a result of the frustration felt by many farmers and growers at the way they were being treated by retailers and at the margins they were receiving. In addition, such markets have been successful because consumers feel they are getting fresh produce at lower prices than they might be able to obtain through supermarkets.
Despite the growth in the market for organic vegetables, after 18 months in his business, John is worried. Quite simply, his business has not been as successful as he envisaged it would be, and as a result he is not earning enough to make a living. The real worry is that he is not sure why this is the case. His produce, he believes, is as good as anything in the business. He is a very good grower and the land he has leased is perfect for the range of produce he wishes to grow. Starting with organic potatoes he now produces a range of organic vegetables including beans, sprouts, carrots, lettuce and his latest venture organic tomatoes and corn grown in poly-tunnels. Although customers he currently supplies are very loyal to John, indeed many are friends and acquaintances he has known over the years when he grew vegetables in his back garden, there are simply not enough of them. As a result, his turnover which increased rapidly over the first year of the business has for the last six months has stagnated. He mainly supplies locally and has tried to increase his customer base by taking leaflets out and posting them through letterboxes in the area. He has done this by dividing up the housing areas in a ten-mile radius around his growing area and dropping leaflets throughout the area to as many houses as he can cover on a systematic basis. Only some 2% of customers have responded with an order, usually contacting by telephone. These customers seem to come from the middle class areas. He has considered taking a stall at one of the farmers’ markets, the nearest of which is some 40 miles away and operates one day per month, but he realizes this would not be enough to reach the turnover levels he requires. He has in the past supplied one or two local restaurants and hotels, but usually only when they have contacted him because they have had a problem with their existing supplier. He has never followed these up. His growing area is currently too small to supply a major retailer, although he has been approached on an informal basis by the buyer of a voluntary chain of local grocers representing some 40 retail outlets in the county.
John is wondering where he goes from here. He cannot understand why his superior products are not selling well. A friend has suggested that John needs a more strategic approach to marketing. John is not convinced. He feels his business is too small to warrant any kind of marketing, never mind strategic marketing, and he has always felt that a good product should sell itself. He is, however, anxious to grow the business and become a leading organic vegetable supplier.

You were hired by John as a strategic analyst to develop a detailed strategic management process for this company. What shall you do? And how to direct the company in the future? Elaborate your answer.

Answer 1

In the given case, there is a need for having comprehensive marketing and business strategy. As John is mainly focusing on the local market and depends on the traditional advertising tools such as the distribution of leaflets and personal meetings with the customers and the retailers it will not help him to grow his business. In order to grow his business, there will be a need for having greater marketing intensity. Secondly, his marketing coverage area is very limited, this needs to be increased.

All these two objectives can be accomplished with the help of social media marketing which is free of costs and has a large penetration at present. For doing so, he can use many social media platforms such as Facebook. Twitter or Instagram. In these websites, he can make the business account of his business and promote the product through social media marketing. This will not only provide a good platform for the marketing and advertising but he can also contact the customers from a wider geographic area

Once this strategy results in good outcomes, John can look to have the formal marketing practices by using the distribution of the products, contact the large retail chains such as Wal-Mart and to advertise his product on the major TV channels, radio channels, newspapers. This will ensure greater penetration and reach in the future.