Question

Many retail stores began to focuses on selling organic foods starting in the late 1990s. The market for organics food really grew after Whole Foods started to expand. Whole Foods began as a small Austin based retailer that focused on selling natural products in the 1980s. It gradually developed and spread through the purchase of other smaller organic food retailers. Now, it is a nationally known retailer with a strong focus on selling natural foods to an upscale target market.   Wholes Foods has successfully positioned itself as the premium organic retailer based on its commitment to offering superior products. It created many innovated ways to promote the concept of organic, natural foods to young professionals and eco-friendly consumers.

Organic products are typically priced higher than regular products. Sometimes the price differences may be 30 to 40% higher depending on the retailer. Organic fruits and vegetables are grown with little or no pesticides which can be harmful to people and the environment. Meats and dairy products are sourced from farms that follow strict guidelines that limit the use of growth hormones on animals, and pesticides on animal feed. Because of the way that the products are produced, organic and natural products result in higher costs.

The government has developed guidelines which determine whether a product can be labeled as organic. Companies selling these products must follow these guidelines or face negative consequences from the government or consumer groups.

The success in the organic market has not gone unnoticed as larger retail chains have begun to offer extensive organic product lines to appeal to the same customers. HEB and Kroger now have wide-ranging organic product lines in both their produce, selected meat and general grocery sections. Their organic products especially produce are just alternatives products lines because the regular nonorganic products can also be purchased. This is an example of retailers responding to market changes.

Questions

After reviewing this case answer the following question:

1.       Explain the major environmental variables which have affected the growth of organic food market. It may be helpful to read chapter Chapter 3 on marketing environment.

Answer 1

1. The major environmental variables which have affected the growth of organic food market in recent times, are as follows:

• Increase in consumer awareness about health and wellness
• Inclination of consumers towards the organic food segment
• Excessive usage of pesticides and insecticides in regular crops
• Easily accessible distribution centers for organic products spread worldwide
• The increase in purchasing power of consumers to buy premium organic products
• The decrease in average life expectancy rate of people has made the general public to become cautious about what they eat