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Whole Foods and Social Responsibility

(Whole Foods Market’s product signs often contain not just the name of the item and its price, but information related to whether the product was the result of environmental or social responsible practices)

An interesting article in USA Today discusses Whole Foods Market’s decision to launch its first ever national advertising campaign. The slogan for the campaign is “Values Matter” and the advertisement spots will feature images and dialogue that highlight the socially and environmentally conscious practices the grocery chain has in place. The reference to the word “Values” is intended to highlight both the value of what consumers get for their money at Whole Foods as well as the values that drive the company.

Amidst declining sales and intense competition from other grocery stores, Whole Foods has sought to invest significantly in marketing to help reignite growth. Many grocery chains such as Safeway are increasing their offerings of organic products which Whole Foods is well known for providing. In addition, many more grocery stores are seeking to communicate to their consumers that the products they offer are produced in ways that demonstrate a consideration for environmental and social factors. For Whole Foods Market, one objective of their upcoming national advertising campaign appears to be to establish the company’s leadership amongst grocery companies in regards to sustainable and socially responsible practices. Part of this can be seen in advertisements that highlight the practices that the grocer’s suppliers take to ensure they are providing products that align with their values. (Note: An example of one of the advertising spots can be seen at the bottom of this post).

Whole Foods Markets appears to be betting big on the value that consumers place on products that are produced in socially and environmentally responsible ways. It may be understood by some consumers that many goods produced in a socially responsible way carry a larger cost; a cost which is in turn passed onto consumers in the form of a higher price. One of the main questions then is how much of this pass through of cost from one end of the supply chain to the other makes sense from a business perspective?

Many research firms have indicated that socially responsible practices can lead to greater sales for brands and that consumer values have been moving towards placing a greater emphasis on supporting socially responsible companies over time, and will continue to do so for the foreseeable future. Nielsen for instance, a leading global information and measurement company, shares in their 2014 Global Survey on Corporate Social Responsibility that 55% of global online consumers polled from 60 different countries indicated that they are willing to pay more for goods and services provided by firms that are committed to a positive social and environmental impact. The survey included 30,000 people from around the world. It is also worth noting that the statistic mentioned above is up from 50% in the prior year when the same survey was also conducted.

As consumers presumably increase their interest in buying from brands that they believe engage in socially and environmentally positive ways, it stands to reason that being able to differentiate a brand as a leader in that space could become a key source of competitive advantage. Jeannine D’Addario, Whole Foods Market’s global vice president of communications, was noted as saying in a statement that “Whole Foods Market has been subtly telling our story for decades, and now is the time to overtly communicate what we’ve spent more than 35 years creating as change agents in the food world.” For the grocery company it remains to be seen how effective their national advertising campaign will be in regards to communicating this message, as well as how receptive consumers will be to it, but the company has placed a significant amount of confidence in the idea to the tune of a 20 million dollar investment in the campaign. That money will go towards TV, print, and online advertising.

From a marketing management perspective here are some questions to consider:

  • Whole Foods Market has a reputation of being a higher end supermarket with prices in alignment with that image. Assuming that one of the main goals of the company’s advertising campaign is to increases sales and attract new customers are there any potential risks related to the advertising campaign that could backfire for the company?
  • As a marketing manager how would you measure the impact of Whole Foods’ advertising campaign? What would be some of the expected results and how would you seek to measure and potentially validate them?
  • For Whole Foods is it more important to bring in new customers or to increase the value of current customers? Why?