Question

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 2014 some 25% 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.

A.C.Nielsen Co. cite the case of the United States where organic sales eased in the second half of 2009 as middle- and upper-income families have felt the strain of layoffs and declining investment portfolios. Sales in December 2009 were up 5.6 percent, year on year, against a 25.6 percent rise a year earlier.

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 nonorganic 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

1. Explain with reasons the Porter’s generic strategies you would suggest for Beckett.

2. Suggest the marketing strategies that John should use to market his Organic vegetables since this is a new and upcoming area of business? Bring out the advantages and disadvantages of the strategy.

3. Bring out the appropriate strategy that you would suggest if this company is to start marketing its products in your home country? Explain with reasons by Performing the PESTLE analysis for your home country

Answer 1

1. Explain with reasons the Porter’s generic strategies you would suggest for Beckett.

Porter's generic strategies will be good for John because of the following reasons:

Porter's generic strategy includes cost leadership, focus, and product differentiation. I would suggest Beckett a focus strategy from Porter's generic strategies. The strategy focuses on increasing the profitability of a company by targeting a regional market, product line, or community of buyers. Either distinction or low cost strategy can be adopted by the company but only a small target market. The rationale of that strategy is that a company that concentrates its focus on one or several market segments will better serve these segments than an organisation. Significant risk are the likelihood that the costs for a focussed firm are too high compared to the costs of a less focused business, and distinction is also less advantageous as border rivals adorn their goods, and competitors start to focus on the consumer community served by a focused company. The whole target approach is designed to serve a specific goal very well, and this is the basis for cost emphasis or differentiation. Porter noticed that many businesses did not deliberately pursue one of the three approaches and had no strategic advantage in the center of the kit.

The other Porter's generic strategies Cost leadership refers to applying that pricing strategy for the product which can compete with other business. It helps in earning higher and gaining mass market. And Product differentiation  will help in differentiating organic vegetables of Mr. John because of the unique and superior quality of its product that is organic which are valued by customers these days.

2. Suggest the marketing strategies that John should use to market his Organic vegetables since this is a new and upcoming area of business? Bring out the advantages and disadvantages of the strategy.

Mr. John can try is to make a partnership or joint venture with the leading and local supermarkets. In the supermarkets, customer's inflows are much higher. This strategy will help in enhancing the sales of organic vegetables. The drawback of this strategy is that by joint venture or partnership the partner can sometimes resist selling your product or can demand high in the future for selling your product. Another strategy that john can implement its marketing strategy is talking with customers and telling product unique features including its protein, calcium contains and taste. The advantage of this strategy is that it will help in creating value for organic vegetables. The disadvantage is that it requires a lot of research work and time to talk with target customers.

One of Beckett's key principles is that the company does not engage in aggressive marketing. There is therefore less information in the market about the offers of his product. In order to attract new clients and create a more wide base for his company, Beckett needs to integrate strategic marketing into its business model. Beckett should draw on the potential for promoting his company through digital and social media marketing. The current business scenario reveals developments in digital and social media marketing. These strategies have become the marketing future and have changed the way companies treat customers. The complexity, authority and scale of digital and social media marketing are quite enormous. The company requires very little money for such marketing tactics. In order to reach potential customers and make them aware of our offerings, Beckett can use these marketing strategies. The organization will build a dedicated social media profile that can promote the direct business contact with customers. The business can provide the loyal customer base with different offers and benefits. Both tactics will help Beckett draw customer interest and increase its overall presence on the market.

3. Bring out the appropriate strategy that you would suggest if this company is to start marketing its products in your home country? Explain with reasons by Performing the PESTLE analysis for your home country.

The appropriate strategy if the John company started marketing its product in my home country are as follows:

(i) Purpose of marketing: The company will be required to tell about the purpose of marketing his business in my home town. So, Mr. John can tell that he cares about its customer health that's why his company his offering organic vegetables that means chemical-free products.

(ii) Mission statement: For any marketer or firm it is imperative to run their business with an appropriate mission statement. So, Mr. John can divide its mission statement into two ways such as agriculture and motive. In agriculture he can tell natural ways he implies to keep the product grow well and secondly, in motive he can mention the reason and purpose for growing organic vegetables.

So the above-mentioned strategies should help attract the attention of the consumer.

PESTLE analysis of my home country are as follows:

(i) Political: India carries the largest democracy in the world. It runs on the federal form of government. The political environment is influenced by various factors like policies of the government, ideologies of multiple political parties, and politician interest. As a consequence, India affects by multivariate political factors.

(ii) Economic: The economic condition of India has been significantly stable since the formulation of the industrial reform policies in the year 1991. As per this policy, liberalization of foreign capital, industrial licensing, the formation of FIBP, and so on has resultant in continuous improvement in the environment of the economy.

(iii) Social: It refers to any change in vogue impacts a business environment. Social factors vary in India and are quite flexible in terms of education, income distribution, work attitudes, and so on.

(iv) Technological: India possesses the strongest IT sectors in the world. It is constantly upgrading software, IT development, and other technological advancements. Moreover, it is serving 3G and 4G services as well as recently, it has successfully launched a satellite into space.

(v) Legal and Environmental factors: India has implemented numerous legal changes like minimum wage increase, recycling, say no to plastic, and disability discrimination in the recent past which has directly affected businesses. However, the quality of air has been adversely affected by urbanization and industrialization which is resulting in health problems. Thus, due to this various establishment has been made like noise control and regulations on disposal and waste control.