Marketing Management †Caselet on Organic Foods Essay

Overall Understanding of the Case, 3 C’s Scenario and Analysis Of Complete Marketing Environment : Organic food refers to food items that are produced, processed and packaged without using chemicals. Organic food is increasingly becoming popular due to its perceived health benefits over conventional food. The industry is growing rapidly since the past five years and has caught the attention of farmers, manufacturers and, above all, consumers. The health benefits of organic food are more perceived than real. However, the public opinion that organic food is healthier than conventional food is quite strong and is the sole reason for about 30% growth in the organic food industry since the past 5-6 years In general, organic food consumers, manufacturers and farmers strongly believe in organic food having following benefits over non organic food: ? Better health: Since organic food is not prepared using chemical fertilizers and pesticides, it does not contain any traces of these strong chemicals and might not affect the human body. Better taste: People strongly believe that organic food tastes better than non organic food. The prominent reason for this belief is that it is produced using organic means of production. Further organic food is often sold locally resulting in availability of fresh produce in the market. Environment safety: As harmful chemicals are not used in organic farming, there is minimal soil, air and water pollution; thus ensuring a safe world for future generations to live in. Animal welfare: Animal welfare is an important aspect of producing organic milk, organic meat, organic poultry, and organic fish. People feel happy that the animals are not confined to a miserable caged life while eating organic animal products. ? ? ? Popular organic food items include organic tea, organic coffee, organic wine, organic meat, organic beef, organic milk, organic honey, organic vegetables, organic fruits, organic rice, organic corn, organic herbs, organic essential oils, organic coconut oil and organic olive oil. Indians prefer organic preserves, tea, honey, cashew butter and various flours. The organic concept is not limited to food items. Due to excessive usage of harmful chemicals in cosmetics, people are turning towards organic cosmetics, clothing etc. ACNielsen, survey suggests preference of consumers for functional foods – foods that have additional health benefits. India was among the top ten countries where health food, including organic food, was demanded by the consumers. Around the globe, Organic alternatives are purchased mainly for health reasons. Over two thirds of survey respondents think that organic foods are healthier for them and their children. This healthy perception is consistently strong across the Asia Pacific region. Online Indians top the list with 87 percent of consumers purchasing organic foods motivated by the perceived benefits they can derive for their children’s’ health. Health Benefit for kids is seen, hence even willing to pay more. Organic food market is still a developing market, especially in India. Most of the people who eat organic food don’t buy it regularly. Hence need to sell other health products too if one wishes to get a daily (or at least weekly) visit from their customers. Indian organic food consumer needs education. ? There are many consumers who are unaware of the difference between natural and organic food. Many people purchase products labeled as Natural thinking that they are Organic. Organic food refers to food items that are produced, manufactured and handled using organic means. Natural food, on the other hand, generally refers to food items that are not altered chemically or synthesized in any form. These are derived from plants and animals. Thus a natural food item is not necessarily organic and vice versa. Further, consumers are not aware of the certification system. Since certification is not compulsory for domestic retail in India, many fake organic products are available in the market. ? Q. 1 (a) Your organization , which already markets branded Indian spices and flours, is planning to enter the domestic market with organic foods in related products. Segment the market for organic foods, specify the target you as an organization will choose and develop a positioning platform. The Company is already into branded Indian spices and flours ( Consumer non durable category ) and has a robust Intensive Distribution channel & market share. They can use this strength in making the Marketing environment conducive to launching organic foods in the related products. Understand Consumer decision making process : Company needs to focus on the benefits and experiences ( Basic need of Hunger, Security need of being safer option and Health ) produced by these Organic foods over non organic ones & Question why their consumer will / is buying the Organic products. Concentrate on the Health need, influence consumers by educating them and providing adequate information on Organic foods. Allow them to evaluate alternatives and make firm and favourable purchase decisions. The company will expand market share basis this and increase customer satisfaction & resultant profits. Create pull with adequate & clear communication and use ultimate push at dealer / distributor end – i. e. modern retail format – in-store promotions In terms of opportunity will look at i) Product Development i. e. new organic products in present market and also ii) Related Product Diversification – New organic product in new market – from normal branded Spices & Flours to Organic ones. Can further expand the product line by adding packaged Organic Bread with added supplements / vitamins ; Whole grain, high fibre products ; Cereals and pulses. At a later stage also introduce other Organic food product lines like Vegetables, Fruits, Fruit juices etc. Marketing will determine which attributes are most important in influencing a consumer’s choice to purchase. Initially being a Consumer nondurable ( FMCG ) category of product, the involvement will be low. But with the increased awareness, emphasis on the emotional Health need, Credence attribute, consistent quality and value to customer, can look at moving our products to high involvement and Brand loyality. Therefore, creating awareness amongst consumers and within the distribution chain could be seen as an opportunity for marketers to find a positioning for Organic foods claiming health benefits, to reach out to a wider base. Product – Will prefer to choose Organic flours first then spices to begin with as flours are Base foods which are consumed in larger quantity as compared to spices which are Ingredient foods, consumed in lesser quantity. Also base foods have a larger reach and are considered more important as compared to ingredient foods. Segmentation : Name of Product : Potential customer needs : Organic Foods – Flours – Base Foods Basic Hunger need : Base Food Security need : Safe/No Harmful Chemicals / Clean Sub market : Determining variables : Consumer Characteristics Emotional need : Healthy Tasty and Nutritious Pure / Unadulterated High Fibre content Non Polluting / Environment Friendly Base Food : Flour Health & Nutrition B2B – Health Food Restaurants Health & nutrition value Availability Awareness Calorie / Nutrition info Children Health conscious Mothers Earning members of family Elders in family with special health needs. Further Segmentation Geographic – Metro – A class cities Demographic – Income – High income group families Age / Occupation – Children : 3-15 yrs / Students Earning members of family : 25 – 60 yrs /Professionals Elders : 60 yrs + / Retired Psychographic – Health and fitness conscious With special health needs – like Nutrition, BP, Diabetes, Tension, Obesity etc Cultural shifts: lifestyle, leisure Target chosen : Customer : Mother – working / homemaker Consumer : Children Will first target Children Health needs, then at later stages of acceptance can cover all other areas of consumers and also introduce more product lines and variants as discussed earlier. Position : Positioning by Benefits : Basis is the benefit consumer gets in using the product, Product Promise POSITIONING STATEMENT : IT IS A ORGANIC FLOUR, BETTER THAN THE NORMAL NON ORGANIC FLOURS BECAUSE IT IS HARMFUL CHEMICAL FREE AND HENCE MORE HEALTHY AND NUTRITIOUS FOR GROWING CHILDREN The company will talk about the Farm to Fork concept – ie from unpolluted Creation to Consumption Everything is Organic, in the purest form. There is nothing artificial about it For a. Healthier India Will educate existing consumers, create awareness wrt FAB of Organic Foods through all possible areas of Media like TV, Print, In store promotions, Outdoor, Sampling, Demos, Direct mailers, Schools info sessions, Nutrition talks / classes, School Canteens, Health food outlets, Health food restaurants, Exercise areas, Public chat rooms, online etc Q. 1(b) Based on the above question’s answer – Assume that the organic food category is in the introduction phase of PLC, accordingly what would be the major marketing decisions at this stage? Do you expect the adoption rate to be fast or slow? Justify. Major marketing decisions at this introduction phase of PLC As discussed above in the Overall Understanding of the Case, 3 C’s Scenario and Analysis Of Complete Marketing Environment and the Product STP, initially mass market the product through existing Intensive distribution network. This stage will see more of Product information through Promotional campaigns to increase Public awareness, which will then Stimulate demand. The later growth & maturity stages of PLC will see more of Brand Promotion and Market segmentation ( also see above ) Product chosen – Base food – flour , can move to whole grain organic bread / biscuits / pasta Also later Organic ingredient foods like spices, condiments Expand in the area of Organic pulses, vegetables, fruits, juices & preserves. Price – Premium / atleast 20% above normal non organic foods Place – Modern trade / also Health food Restaurants tie up like Subway etc which will exclusively use our organic flours for their whole wheat & multi grain breads. Promotion – In shop education, in store activation to educate consumer. Media like TV, Print, In store promotions, Outdoor, Sampling, Demos, Direct mailers, Schools info sessions, Nutrition talks / classes, School Canteens, Health food outlets, Health food restaurants, Exercise areas, Public chat rooms, online etc Initial Adoption rate will be slow. But with sustained awareness will wait for the tipping point in our favour. As new product category, greater awareness is required There is already a Movement towards natural foods from synthetic / chemical based foods : Beverages – Aerated drinks to juices, Tropicana, Real, no preservatives – LMN, Neebooz, Lemonez, Green tea. Base foods – white to brown – whole grain, multigrain breads, flour Cosmetics – study says 66% of what we apply is absorbed by body – harmful chemicals etc, Hence move towards organic & safe products eg Body Shop, Biotique etc Organic food market small now but Volume to come from growing trend of Health & Environment conscious campaigns and followers who will in turn be major influencers in buying decisions of people. Market will grow and prosper – by creating new market for safe, healthy, and environmentally friendly Organic Foods. Also with this the Company will maintain credibility and constantly improve quality and offerings to suit customer needs and hence hope to create a big brand with loyal customers over a sustained period of time.