Analysis of Marketing of Whole Foods Company

Whole Foods is one of the biggest organic grocery chains in the world, which operates in the natural, specialty and organic foods retail industry. Established by John Mackey in 1980, Whole Foods rapidly became one of the wworld'smost known and successful foods' grocery chains that took a leading position at the international global market. Nowadays, the company is considered to be one of the most socially responsible organizations in managing a competitive strategy over its major competitors. Whole Foods' main strategy is to provide the consumers with food of great quality and to offer a wide range of different products that everyone may enjoy. Based on the information given on their strategy, we can indication about Whole Foods’s five primary values: “Providing only high-quality foods; Satisfying and delighting customers; Promoting team member happiness and excellence; Creating wealth through profits and growth; Caring about communities and the environment; practice and advance environmental stewardship; Create ongoing Win-Win partnerships with their suppliers; To promote the health of their stakeholders through healthy eating education.”

The strengths of Whole Foods would be that they have one of the highest quality standards for a supermarket. As I mentioned above, Whole Foods believes that their high-quality standards are what set them apart from other supermarkets. This allows it to attract and maintain a wide-ranging base of loyal customers who will most likely return to them often. Its standards ban hundreds of ingredients commonly found in other supermarkets. These include no artificial flavors, colors, sweeteners, hydrogenated fats, or meat from animals that were raised with antibiotics. They also ban numerous amount manufacturing, farming, fishing, and many other resources of food that do not meet to their standards. While other grocery stores offer cheaper products, the quality of these items is typically not as high as Whole Foods’ products. Whole Foods can offer higher-quality products at higher prices because the company can attract customers who are willing to pay a premium for better quality food. Many of these customers tend to have higher median incomes and are willing to pay a little extra.

The weaknesses of Whole Foods would be the ccustomer'sreception of them. While Whole Foods certainly has a big fan base among higher income, health-conscious consumers, there are also many individuals who think the company’s prices are very high. The company even has a very popular nickname from many consumers, which is “Whole Paycheck”, because of the perception that their products are fairly high and can take up a customer’s “whole” paycheck. While the company’s prices are, on average, higher than many of its competitors, quality is also higher, so at least the customers are getting their money worth. However, it has been hard for the company to disconnect this image from lower and medium income households. As a result, many of these consumers have stayed a distance from them.

Whole Foods has many opportunities to develop this company into something even better like lowering their prices, expanding internationally, expanding their products, and electronic retailing.They launched stores named “365”, which, their aim was to provide a similar product line of foods at lower prices which may help them to attract the medium/ low-income consumers. If they could take advantage of the opportunity to expand to developed markets of countries like Asia, Europe, and the Middle East, they could possibly be seeing higher sales coming in. Even though they do sell organic goods and they are pretty limited in their products if they can continue to find new varieties of their organics products it would help them in the long run. Lastly, they could execute on the fact that a lot of consumers use technology for shopping so if they capitalize on advertising online, making apps, and finding ways to getting items delivered to the doorsteps of the consumers they could benefit tremendously.

The biggest threat Whole Foods faces are its intense competitors in its industry, including from local, national, and international supermarkets, natural food stores, warehouse membership clubs, online retailers, farmers markets, and even restaurants. Many of these businesses are joining this market and are saturating the natural and organic foods market in an aggressive way. Costco has been increasing an organic department presents and can offer them at fairly lower prices than Whole Foods. Other competitors include Fresh Market, which is also focused on selling fresh, organic, and natural products, and Trader Joe’s, a privately held business that has a reputation for offering inexpensive natural products. As big-time businesses like Wal-Mart, Target, and Amazon begin to offer more natural and organic products, at lower prices, this will only continue to add more pressure to the results of Whole Foods, particularly given its higher price points. One alternative that Whole Foods needs to do is to eliminate its high price image before it’s too late. Aside from the negative publicity about the company’s products being too expensive, Whole Foods has also faced some other challenges. Not too long ago, Whole Foods were fined $500,000 by New York City for the accusations of overcharging customers. (The Washington Post) While the company has taken steps to prevent overcharging customers going forward, including retraining certain workers and a pledge to give away products if customers discover they were overcharged, the outcome nevertheless hurt the company’s perception too many people. Future mistakes in receiving bad publicity could end up being even more costly for them.

The dependency of Whole Foods on the American market can be a huge negative for them. This dependence on the U.S. market makes it vulnerable to slumps in its economy. International Expansion a company like this would be a great benefit for them simply because the United States is by far one of the unhealthiest countries. Providing more Whole foods in more European countries would be a smart plan for them. Since probably the majority of Whole Foods’ sales would come from the U.S, I think the company has a tremendous amount room to grow internationally.Thus far, the only other markets for the company are Canada and the United Kingdom, and there are very few locations in those countries. I would assume the company to continue to expand their store in Canada. This country has a lot of similarities to the United States like a growing proportion of its population that is interested in natural, organic products. The only negative about expanding to other countries is that it’s going to cost a tremendous amount of expenses and they’ll be entering a slightly new type of market since it is in another country. For example, from 2005 to 2008 they went from $171 million to $339 million in development cost of new locations. The positive of that is that they are expanding in new locations, which mean that more opportunities to make more money, but every good opportunity comes with big risks.

Whole Foods financial statements showed some places in which the company is growing, and in other areas where they are weak. When analyzing their income statement, it is noticeable that they are generating more and more revenue each year. Each year they generated roughly about $1000, more which, is positive to see Other positives like term debt have decreased, shareholders equity has increased, and dividends declared per share have increased. I have noticed several negatives like that their free cash flow continued to drop every single year. Overall, looking through their income statements it shows that this company is heading in the right direction and if I was an investor I would invest in this company.

In conclusion, Whole Foods has done a pretty good job of maintaining its reputation for providing the very best natural and organic products that local consumers can get. However, given the industry trends displaying that there is a more health-conscious United States population out there, other grocery companies and businesses have jumped on the natural foods movement. This has caused problems for Wholes Foods, simply because of its high higher prices. To help fight these concerns, the company has initiated its first national brand campaign and will introduce its lower cost stores later in the year. They also must correct the “whole paycheck” reputation as soon as possible. Their stock looks to have a pretty good long-term attraction, as it should benefit from fortunate industry trends and an expanding store base.