Brand Implementation - Report Example

BRAND IMPLEMENTATION: REPORT AND PLAN-WHOLE FOODS MARKET INC Name: Course: Date: Introduction Whole Foods Market Inc. started as a single store in Texas, US. It has grown over the years & currently has over 300 stores in the North America and the UK, making it among the world’s largest organic food chains. Whole Foods Market is perceived as a high-quality brand all over America and the UK. This has enabled it to serve the niche premium market where most customers have healthy lifestyle and high income (Nelson, and Quick, 2010).However, due to competition which is rapidly increasing in organic food market segment, WFM needs to develop its brand to become the leader in order to sustain and increase its growth in future. This project examines the opportunities for WFM brand for more advancement. THE REPORT Market Analysis Market Sector In light of the increasing customer’s health concern, the market share of organics is increasing all over the world. In the UK, demand for organic products such as vegetables, fruits and dairy products has grown significantly after a past continuous drop. Sales increased by 2.8% in 2013 and are now valued at £1.79billion with 1901 businesses and 20, 725 employments. In the United States, sales value for organic products in 2013 was $35 billion, representing a 10 % growth in 2012, with 17000 businesses in the country (Doward, 2014). These statistics show the critical role of organic products in the economy. It is projected that 84% of the leading organic products firms and 80% of independent retailers will increase their sales in 2014 (Soil Association, 2014). Figure 1: Growth of Organic Products Market in UK, Europe and the Whole World . Source: Soil Association, Organic Market Report 2014 The increasing trend of customer needs for organic products has yielded development and competitiveness of organic products retail industry in the UK and the whole world. Key players in the industry include the old food retailers as well as new entrants who have entered who have increased in recent years (Janolick, 2014). Porters Five Forces Analysis The threats to future profits of the general organic industry and specifically the Whole Foods Market can be described from the perspective of Porter’s Five Force. Bargaining power of suppliers. The suppliers’ bargaining power ranges from low to moderate because there are not many suppliers with power over the retailers. However, the organic products supply chain is still while the number of retailer and grocers who are focused on organic products is increasing significantly. Therefore, good relationship between retailer and supplier is important. Bargaining power of buyers. Bargaining power of buyers ranges from moderate to high since the buyers are willing to pay higher prices for organic products. Several factors influence the buyers’ buying process and decision. These include price, in-store experience, the quality and variety of products, customer service among others. During recession, buyers are more concerned with price but they don’t want to compromise the quality; therefore, they look for price-value organic products. Industry rivalry. Industry rivalry is high due to the presence of many firms in the organic products industry who use different pricing strategies including traditional organic foods and products chains such as Abel& Coe, Ocado and Riverford in the UK or Trader Joe’s in the US, supermarkets and retailers which are expanding to organic sectors such as Tesco and Wal-Mart, and new entrants such as local farmers. Threat of new entrants. Threat on new entrants is moderate primarily due to existence of barriers such as requirement of professional workforce, high outlay in property, acquisition of the organic products, distribution and compliance with the necessary legal requirements. Threat of substitute products and services. Threat of substitute products is low due the common view of supermarkets as the most appropriate channels selling organic products with many choices. In a nutshell, competition is the main factor affecting the profits of organic products industry because there are many aggressive competitors with distinct pricing strategies each aiming at gaining the biggest share in the organic products market (Roy, 2009). Competitors Analysis As indicated above, WFM has many competitors who vary in size and the business strategies employed. In 2007, World Food Market merged with Wild Oats, making it the largest company in the premium and natural organic merchandises. WFM competes with all general grocery companies. The major competitors are Trader Joe’s and Wal-Mart (Stock, 2013).The strengths & weaknesses of these competitors are summarized in table 1 below Trader Joe’s Wal-Mart Strength Expansion in the United States Good quality products and competitive pricing Low pricing High sales volume and promotions High brand awareness Weakness Smaller store size Lacks service department No premium organic products Not attractive to well off and health-sensitive customers Less diversity of organic products than WFM Overview of Whole Foods Market (WFM) Business Performance Whole Foods Market success is mainly attributed to their core values which stabilize the interdependence of the stakeholders including employees, customers, shareholders and the community (Nelson, and Quick, 2010). The success of World Foods Market is clearly shown by annual business performance in figure 2 below. Whole Foods Market business performance till 2013 Source: Whole Foods Annual Market Report 2013 SWOT Analysis of Whole Foods Market The biggest strength of WFM is in their concentrated differentiation strategy which focuses of a lean group of customers viewed as unique in ways that suits the company’s business objectives (Fraedrich and Ferrell, 2014).In order to overcome their weaknesses and threats, it is imperative for the company to maintain their exclusive and differentiated positioning and come up with new ways to access prospective groups of customers. Table 2: WFM SWOT Analysis Strength Weakness Focused differentiation Strategy Brand image: good reputation as organic products market leader, ethical values, retail innovation and good corporate citizen. Consumer satisfaction , through customer built focus High quality standards Good distribution network Experienced executive and well trained staff Higher prices compared to competitors Low advertisement-advertisement cost approximated as 0.4% of total sales (Stock, 2013). Geographic constraints Low international market brand awareness High operation cost in areas such as expansion and inventories. Threats Opportunities Stiff competition from both traditional and new competitors Economic decline force consumers to cut off their spending and look for better economic options. Changes of government policies and regulations on organic products market. Increasing trend of customers concerns for their health presents growth of demand for organic products. Improving the brand image and customer loyalty could increase sales Establishment of more stores in the UK and other countries Development of private label products to become the leading organic producer Taking lead in customer education in order to become the market leader Whole Foods Market Brand Meaning (Brand identity) The Kapferer’s prism, which also includes the functional and emotional elements from Newel and Sorrel’s Brand Blueprint, shows how consumers perceive Whole Foods Market brand. Figure 3: Brand identity Prism Source: Adapted from (Kapferer, 2008) Need for Change in Brand Management Brand problems. Despite substantial growth over the years, WFM faces brand problems (as outlined below) which may jeopardize its competitive advantage in periods of economic downturn and complicate global expansion plans. WFM is perceived as an expensive brand for affluent people (stock, 2013). Failure of the brand to appeal to low income earners can cause drop in sales in future. There are many businesses dealing with organic products, therefore, consumers have a variety of options. In this respect, WFM can lose customers and it is important that it maintains its differentiated image and competitive advantage. The brand awareness of World Food Market suffers limitation inside and outside the Unites States because of their geographic coverage. This can pose problems when venturing new markets particularly the foreign markets, since the existing players such as Wal-Mart may have advantage over it. In addition, local competitors are growing and gaining a bigger market share. Propositions for Brand Management Change In view of the brand problems facing Whole Foods Market, it is necessary for the company to strengthen their brand equity and improve consumers’ perception towards the brand in order to acquire higher brand awareness. The company needs to associate the brand equity campaign with consumer’s education on organic products so that it can position itself as the leader in the organic products industry. The campaign should start in the United States, followed by other countries with the UK on the forefront. Additionally, the sales market should implement strategic recommendations outlined below. Hire brand ambassadors to promote organic products as well as the company’s brand. Maintain track on new grocery developments, for example, same day delivery services, more savvy consumers with higher value, and holistic shopping experience (Bhattarai, 2014). Develop an online store to enable shoppers to efficiently choose their desired products. Adopt extensive usage of mobile capabilities in all the company’s retail stores to provide customers with services such as alerts on discount offers and reminders of where they are supposed to park their vehicles (Bhattarai, 2014). Focus on investing in development and advertisement of a private label to spread WFM organic products line in other retail stores. The brand equity campaign and proposed strategies should take advantage of social media, public relations and also advertising. In regard to social media, Whole Foods Market currently have Facebook and Twitter accounts where they post information, interact with consumers, and share tips such as on health eating and address consumers’ problems in real-time(Ferrel and Fraedrich, 2014). It will be valuable to use these tools with the proposed strategies, in particular, active participation of celebrities and brand ambassadors. Consultancy Selection Selection criteria. Whole Foods Market should consider the following criteria in determining the most suitable consultancy to facilitate implementation of the proposed changes in brand management. Reputation of the consultancy in terms of experience of staff and management, quality of the current clients, financial strength and depth of knowledge of organic products industry. The capacity of the consultancy to effectively manage the complicated brand awareness campaign at local and international level, which will be influenced by factors such as government policies, international business law, diverse cultures and consumer behaviour in various regions . The ability of the consultancy to offer full time service since it will be in charge of the entire communication campaigns which will involve application of different communication channels and strategies. The consultancy selected should preferably have worn communication related awards such as the “One Show”. Such awards can provide assurance of the experience and capacity of the agency to run the campaign and the underlying strategies. Table 3: Shortlist of Suitable Consultancies Consultant Portfolio Clients Ogilvy and Mather creative design, advertising, brand identity, Worldwide Creative Council IBM, Nestle, IKEA, FIFA World Cup 2010, Louis Vuiton The Richards Group planning, finance, media, brand management, print, radio, digital design FIAT USA, Central Market, The Auto Club, MetroPCS BBDO Customer relationship management, creative advertising, media services, specialty communications Starbucks, Bayer, HP, Fedex, Visa Saatchi& Saatchi Advertising, communication Cartier, L’oreal, Oracle, Cartier, Mont Blanch The selection process the will start with brief followed by appraisal of the consultancies’ ideas contained in proposals. Time will be spent with the consultancies in order to gain full comprehension of their cultures, working procedures and characteristics of the relevant teams in order to establish who are suitable to our company. The Most Suitable Choice of Consultancy Using the criteria outlined above, BBDO is the most suitable consultancy due to their good experience with Fedex, Starbucks and other organizations who have business across the country & the world. In particular, BBDO experience with Starbucks is highly crucial since, like Whole Foods Market, Starbuck’s business strategy is concentrating on the niche market to create differentiation. In addition, BBDO has interacted with many popular American cultures. It is, therefore our conviction that they have the capacity gain and provide profound insights about consumers. THE PLAN The Branding Brief Background Whole Foods Market Inc. Started as a single store in Texas, US. We have grown over the years and with over 300 stores in North America and Britain, we are among the world’s largest organic food chains stores. We are the 8th largest public food and drug retailer in the United states and we also rank 232 on the Fortune 500.Our strategy is to offer high-quality organic products, customer’s holistic shopping and effective cooperation with all stakeholders (Whole Foods Market, 2013).In bid to improve the competitiveness of our brand, this brief is looking for a consultancy that can enable us to reinforce and sharpen our brand equity and identity for more sustainable development. For the very first time, we expect to roll out a big communication campaign. In this respect, the successful consultancy requires to have a profound knowledge, comprehension and analysis about consumers’ behaviour in different regions. Overview of the Market and Competitors The organic products market is growing rapidly and substantially as consumers get more convinced that organic products are instrumental to good health and as they also become more concerned with conservation of the environment. The organic products retail sector is substantially competitive with the presence of both local and international brands, traditional and new competitors (Janolick, 2014). Whole Foods Market competes with all retailers regardless of their scale. Though we are the leader in the premium market with high-quality organic products at premium prices, Wal-Mart and Trader Joe’s are our closest competitors. Therefore, this campaign must highlight the WFM differentiation and competitive advantages in order to prevail over these competitors. Whole Foods Market Brand Characteristics SWOT analysis. The SWOT analysis below indicates WFM strengths, weaknesses, opportunities and threats. Table 1: WFM SWOT Analysis Strength Weakness Focused differentiation Strategy Brand image: good reputation as organic products market leader, ethical values, retail innovation and good corporate citizen (Bhattarai, 2014). Consumer satisfaction , through customer built focus High quality standards Good distribution network Experienced executive and well trained staff Higher prices compared to competitors Low advertisement-advertisement cost approximated as 0.4% of total sales (Stock, 2013) Geographic constraints Low international market brand awareness High operation cost in areas such as expansion and inventories. Threats Opportunities Stiff competition from both traditional and new competitors Economic decline force consumers to cut off their spending and look for better economic options. Changes of government policies and regulations of organic products market. Increasing trend customers concerns for their health presents growth of demand for organic products. Green movement spread all over the world advocates organic food industry, making it more attractive Improve the brand image and customer loyalty to could increase sales Establishment of more stores in the UK and other countries Development of private label products to become the leading organic producer Taking lead in customer education in order to become the market leader Based on the SWOT analysis above, it is important to examine the strengths and weaknesses of WFM including business strategy, products quality, relations with the community and consumer satisfaction. It is important to work on WFM weaknesses such as by removing consumers’ brand association with high price and instead employ tactics to make them associate the brand with WFM leadership in the organic industry. Working on the weaknesses will enable the company to overcome threats and be able to take advantage of opportunities. Brand meaning. It is essential to understand how customers find and establish social and cultural value meanings in a brand since this influences the perception created in the consumer’s mind about the brand. Kapferers brand identity prism shows six facets to understanding brand identity. The prism also includes the functional and emotional elements from Newel and Sorrel’s Brand Blueprint. The model below shows how consumers feel when they buy from Whole Foods Market (Kapferer, 2008). Figure 1: Brand identity prism The consumers perceive WFM as a premium brand in view of the Kapferer’s prism above. It is important to maintain this market positioning. Overview of Objectives and Targets Scope of Branding Objectives The brand equity campaign is geared towards strengthening and sharpening the image of Whole Foods Market to make the brand the leader in organic products market for more sustainable development. To attain this main/key objective, the following specific/particular objectives must be achieved: Increase brand awareness locally and internationally as a brand offering the highest quality of organic products. This will commence in the U.S. and spread to the UK and other countries. Replace customer’s view of the brand as pricey with the leader in the organic products market. Associate WFM market brand with organic products industry through consumer’ education. Develop and create awareness of WFM private label to enable to spreading WFP organic products line to other retail stores. Figure 2: Communication Channels Table 2: Shortlist of media channels to be used Media Channel Application TV Advertising through engagement of celebrities, public relations for consumers’ education Outdoor advertising Interaction with public to promote brands image Events To attract different target customers Social media such as Twitter and Facebook To inform and attract customers to the brand equity campaign, and provide them with real-time responses Consumer’s style magazines Advertising and public relations Target Audience The primary target audiences in this campaign are middle and upper class consumers who prefer quality organic products and are less price sensitive. The secondary target audiences are low income earners who are price sensitive but also value quality organic products. Timeline The campaign is expected to be inducted during the Christmas and New Year holidays period and extend to May, 2015. A tentative timeline is set as shown below. Table 3: Campaign timeline Budget The outlay on the campaign is not above average of advertising outlay of the industry which is approximated around 1. 5 % percent of total revenue. It is our expectation that this investment in the brand improvement will yield a sufficient return on investment leading to increased sales revenue and subsequent profit. Conclusion In summary, World Foods Market has experienced continuous growth over the years. However, with competition increasing in the organic products market segment, the company faces challenges in bid to position itself as the leading brand in the industry. This is a threat to future growth and expansion. Therefore, it is paramount to develop the brand through domestic and international brand equity campaign. The report and the plan have outlined the steps required to inaugurate the campaign in order to develop the brand. Bibliography Bhattarai, A., 2014. Five retail trends to watch in 2014. [online] Washington Post. Available at: http://www.washingtonpost.com/business/capitalbusiness/five-retail-trends-to-watchin- 2014/2014/02/21/fca8180e-99ab-11e3-b931-0204122c514b_story.html [Accessed 6 Nov. 2014]. Doward, J., 2014. Environment | The Guardian. [online] the Guardian. Available at: http://www.theguardian.com/environment/2014/feb/09/organic-producesales- increase [Accessed 6 Nov. 2014]. Fraedrich, J. and Ferrell, O., 2014. Ethical decision making for business. Mason, Ohio: South-Western. Janolick, M., 2014. Rising consumer demands aids organic industry. [online] Available at: http://www.businessweek.com/ap/2013-05-17/organic-industry-clout-grows-withconsumer- demand [Accessed 6 Nov. 2014]. Kapferer, J., 2008. The new strategic brand management. London: Kogan Page. Nelson, D. and Quick, J., 2010. Organizational behavior. Mason, OH, USA: South-Western Cengage Learning. Roy, D., 2013. Strategic foresight and Porters five forces. München: GRIN. Soil Association, 2014. Good news! #Organic sales up 2.8% reveals @Soil Association Organic Market Report 2014 #OMR14. [online] Soilassociation.org. Available at: http://www.soilassociation.org/marketreport [Accessed 6 Nov. 2014]. Stock, K., 2013. Whole Foods Profits by Cutting Whole Paycheck Reputation. [online] Available at: http://www.businessweek.com/articles/2013-05-08/whole-foods-profits-by-cuttingwhole- paycheck-reputation [Accessed 6 Nov. 2014]. Whole Foods Market, 2013. 2013 Annual Report. 1st ed. [ebook] Available at: http://www.wholefoodsmarket.com/sites/default/files/media/Global/Company%20Inf o/PDFs/WFM-2013-Annual-Stakeholders-Report.pdf, [Accessed 6 Nov. 2014]. Read More