Marketing Environment of Wfm in London
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[pic 2][pic 3][pic 4][pic 5][pic 6][pic 7][pic 8]Table of ContentsI. Elements of the marketing environment that affect WFM’s business in London? Similarities and differences with Starbucks in China? (3) 2II. How can WFM achieve the same brand recognition in the UK? Would you communicate the same brand values in the UK? (2) 4III. Strengths and weaknesses of WFM’s in UK versus competitors? How can WFM differentiate its experience in the UK market? (3) 4IV. 5AppendicesAPPENDIX I: PEST ANALYSIS, UK ORGANIC AND NATURAL FOOD MARKET 5APPENDIX II: SWOT ANALYSIS OF WFM 6APPENDIX III: OVERVIEW OF THE 4 MAIN COMPETITORS IN UK 7APPENDIX IV: PORTER’S 5 FORCES ANALYSIS FOR SUPERMARKETS 8APPENDIX V: SWOT ANALYSIS OF WFM’s UK ENTRY 9Elements of the marketing environment that affect WFM’s business in London? Similarities and differences with Starbucks in China? (3)To evaluate the marketing environment of WFM in London, we need to perform an environmental analysis, starting with the PEST & market trends (macro socio-demographic criteria), following with the market structure and focusing on the retail and supply, while keeping in mind the 5C’s of the marketing analysis. [pic 9][pic 10][pic 11]PEST & Market trends: helps us to draw an overview of the organic and natural food market in the UK. Appendix I presents the key findings from it. In a nutshell, the macro PEST environmental factors are globally positive for WFM. Two main reasons:Social factors: Customers are becoming more health conscious and there has been a shit in their attitude: about 9% of people are willing to pay more for organic food and buy fair trade products (exhibit 8, case, 2001-2005). Economic factors: Context of increasing demand for natural and organic product in the UK due to the consumer’s relatively high purchasing power and the country’s economic condition The market trends in the UK show that the organic and natural food market have been growing and will keep doing so in the future (will be worth more than $3,8 billion in 2011, according to Mintel), due to consumer’s interest in healthier products. There is also an increase in fair trade offerings and expansion into non-food concept stores.
Market structure: If the market for organic and natural food could be understood as a new growth market, it can also be seen as a sub-segment of the mature and very competitive (competitors) industry of food retailers. We will analyze the market structure on the retail and supply. Retail: The retail industry in the UK is the second larger in Europe. Food retailers have seen higher growth in the UK (29,3%) than the average in Europe (20,9%), from 1998 to 2002. Supermarkets are dominant in the retail market in the UK with 66,3% of shares (exhibit 13, case), in comparison with other European countries. Also, there are big players involved since the top 5 food retailers share 61,6% of the sales (2002) which makes supermarket retail highly competitive (see ‘5 forces’ below). There is a renaissance of the traditional department stores in Europe and especially in the UK. Also, superstores are preferred over any other type of retailers in the UK. There is proliferation of private label brands. Store brand products rate in the UK is the highest in Europe. Also stores acquire niche brand to serve the organic market. Supply: suppliers (possible collaborators) in UK have long lasting relationships with main retailers and will be unwilling to establish a relationship with new entrants with lower purchasing power such as WFM (exhibit 16, main customers are the market leaders). Exhibit 17 and 18 (case) highlights the advantages and disadvantages of smaller customers for grocery suppliers. If they are more efficient and invest in innovation, at least 50% of suppliers agree that if demand increase / supply shortage, they cannot supply smaller customers. In the organic market, the supplies are fragmented and retailers find difficult to maintain organic standards. Comparison with Starbucks? As internationalization brings complexity, the environmental analysis brings a key question: how much should WFM adapt to the local particularities of the market? Ethnocentric, Geocentric or Polycentric? A brand like Starbucks adapted to the Chinese market with a glocalization strategy. The brand is the same, but the products has been targeting the particular needs of the customers (e.g. Red bean + Green Tea Frapuccino). If WFM’s strategy (company, or internal marketing environment) has been highly functioning in the US, it does not entail that their business model will work the same way in the UK. The UK market has particularities, such as the high level of competition, the high number of supermarkets, and different customer needs. Adaptation is required because of the industry characteristics and the micro environment (value chain, suppliers, private brands, ). ➔ This entails managing the brand, questioning transferability of value, and legal issues (‘Whole Foods’ copyrighted). WFM should adapt to the UK market.