Reference no: EM13779036

Whole Foods Capitalizes on Consumer Desires for Organic Food

Whole Foods Market's emphasis on organic food and sustainable fishing practices is not just socially responsible business but also good marketing. Whole Foods has adopted the value of putting the customer first. It keeps this value in mind when conducting environmental scanning to understand the different forces in the marketing environment. By paying careful attention to changing trends, Whole Foods has been able to identify major concerns and tailor its business practices accordingly. For instance, Whole Foods banned the use of the chemical compound Bisphenol-A from its baby bottles and cups even before the Food and Drug Administration recognized that it could be potentially harmful for children.

Whole Foods was started as a natural foods market in 1980. Through a series of acquisitions the company expanded from a small Austin-based market into a national organic food chain. However, as organic food became more popular, competition increased. Its rival Trader Joe's, for instance, guarantees that products sold under its private-label brand are free from preservatives, genetically-modified ingredients, and Tran’s fats. Whole Foods products are often more expensive than the competition, requiring consumers to spend more disposable income at its stores. These factors require Whole Foods to constantly examine its environment and modify its marketing strategies to increase consumers' willingness to spend in its stores.

One way that Whole Foods has successfully grabbed market share in the organic food industry is by offering a superior product. Whole Foods Market created its own system of quality standards for its food products to assure consumers that it is purchasing superior products, including promoting organically grown foods, selling food that is free from preservatives and sweeteners, and carefully choosing each product in the mix. Whole Foods also tries to create an exciting customer experience in its stores with its free in-store samples, quality customer service, and environmentally-friendly practices.

In 2009, Whole Foods decided to embark upon a healthy living marketing initiative. CEO and co-founder John Mackey believed Whole Foods was deviating from its core principles by selling certain products that were unhealthy. That year Whole Foods adopted a new core value: "Promoting the health of our stakeholders through healthy eating education." Whole Foods partnered with healthy-eating partners to help it educate its stakeholders about healthy food choices. Whole Foods stores began to post healthy eating information and recipes throughout its stores and began selling healthy eating cookbooks. For its employee stakeholders, Whole Foods began offering programs to help employees live more healthy lives and provided additional employee discounts to those who achieved health objectives.

Whole Foods also recognizes the importance of environment, particularly regarding the precarious nature of the world's fisheries. Whole Foods became the first supermarket to offer Marine Stewardship Council (MSC)-certified seafood. Whole Foods has a rating system that color codes the wild-caught seafood it sells into three ratings: green (sustainable seafood), yellow (medium danger of being overfished), and red (in serious danger of being overfished). Whole Foods has committed to phasing out all red-rated seafood species by 2013.

Whole Foods' products and sustainability initiatives have factors on its side. The company has been able to benefit from sociocultural perspectives supporting natural and organic food. Whole Foods can also profit, albeit indirectly, from political forces. With the governments fight against childhood obesity and its push for healthier eating, companies like Whole Foods that market healthy food options are likely to prosper. However, Whole Foods does have one major disadvantage: its higher price points, while signalling the fact that it sells premium products, can also harm the company during a recession. When the recession hit, Whole Foods had to make quick changes to its pricing strategies to retain customers. It lowered prices on some of its brands and began to sell "extreme value items" at very low prices. Its adoptions to economic conditions have allowed the company to survive and even prosper. Whole Foods is a good example of a company that offers premium products consumer’s desire. Whole Foods customers like the company so much that the company has made Fortune's list for "World's Most Admired Companies."

Questions for Discussion

1. How has Whole Foods been successful in the highly competitive supermarket industry?

2. How does the company adjust to changes in economic conditions?

3. How will changes in socio cultural forces provide opportunities for Whole Foods?