School of Business
MT460 Management Policy and Strategy
Author: Jessica Rushing
Professor: Dr. Andryce Zurick
Date: May 27, 2015
Name of Case Study
Company Name: Whole Foods
Topic of the Week: Internal Analysis and Long-Term Objectives
Synopsis of the Situation Whole Foods was founded in 1980, in Austin, Texas. The original founders included John Mackey and Renee Lawson Hardy (Whole Foods Market, 2015). The original store opened with 19 people. The company now currently boasts 53, 500 team members, and operates 289 different locations. Whole Foods is currently the current leader in natural and organic foods and is the first certified organic grocer in the United States. The food market industry has changed dramatically over the years, as consumers become more and more health conscious. Whole Foods offers over 30,000 different items, with a focus on perishable goods, including produce. Due to the additional processes involved in organic farming, the overall cost of production is higher, which means Whole Foods has to charge a higher premium for their products. The company is searching for additional ways to draw consumers in and generate higher revenue. Their focus is on maintaining an environmentally friendly structure, with fresh options for customers. In an era of growing concern for healthy options, Whole Foods is facing competition from other retailers such as Trader Joes, so they need to find ways to continue to draw in more customers.
1. Whole foods should create their own loyalty program to provide customers with cost saving options. This will encourage them to continue spending in their stores, and reward them for brand loyalty. 2. Whole Food should increase their marketing efforts, focusing on some of their cost efficient products, which include the different 365 lines. This would provide consumers with exposure to the healthier food options that aren’t as costly. 3. Whole Foods could purchase sustainable land for their own farming. This would allow them to find a more cost effective way of producing items that can be sold in their stores.
Selected Solution to the Problem In order to stay competitive with some of the big box supermarkets that are currently dominating the market, Whole Foods needs to create a way to generate customer loyalty. There is still a stigma attached to healthier food options as being more costly, which can prevent some consumers from making decisions to shop at grocers such as Whole Foods. The company has already done a great job of creating their own product lines, which offers a cost savings in comparison to some of the other items sold within the store, but they have an opportunity to create even more brand loyalty. One recommendation would be to create a loyalty program that offers cost savings to customers that continuously shop at their stores. If consumers were provided with an incentive, especially financially based, they may be more inclined to choose Whole Foods over any other seller. The loyalty program could include Whole Foods, Allegro Coffee Company, and Pigeon Cove, which would encourage spending within the walls of the company’s subsidiaries as well.
In order to effectively create a loyalty program, the company needs to find creative ways to market it to their consumers. This marketing will need to be done both within the store as well as externally, in order to continue to build on existing loyalty but also attract new consumers. In a world where social media has exploded, Whole Foods has an opportunity to use one of the lower cost marketing options. The company can reach out to customers through these online channels, and introduce individuals to the idea of their new loyalty program. The loyalty program should include a physical card, but also an online portal. This will allow