Question

John Beckett enjoys vegetables, so much so that he has given up his full-time job as a lawyer to concentrate on growing and marketing organic vegetables. He started growing vegetables 20 years ago in his back garden and eventually became fully self-sufficient in supplying vegetables for the family. Partly bored with his legal job and tempted by an attractive severance package, John decided he would try to establish his own vegetable supply business. Eighteen months ago he looked around for two fields to lease in which he could grow organic vegetables.

Organic products including vegetables, is a growth market in the UK. Growers must adhere to strict guidelines in order to gain organic certification. Increasing awareness of the problems associated with many pesticides and fertilizers, coupled with an increased interest in healthy eating habits and ‘wholesome’ food, has meant that many consumers are now either purchasing or interested in purchasing organic vegetables. This is true not only of household customers, but in addition, many restaurants are using the lure of organic produce to give them a distinctive edge in the market place.

All this has meant that many of the larger supermarkets in the UK have begun to stock more and more organic produce from what was a relatively specialized market in the 1990s; the market has grown to where overall organic produce accounts for some 12% of the total UK grocery market and in worldwide terms as of January 2010 it accounts for approximately 3% of all food sales. The market for organic vegetables has grown more rapidly than other organic products and it is estimated that by 2014 some 25% of all vegetables marketed in the UK will be organic. This growth has been sustained at a rate of around 20% per year in developed countries. However, organic yields are between 10% and 20% lower than conventional agriculture, with crops like potatoes some 40% lower. Unsurprisingly, this makes organic produce on average around 40% more expensive than non-organic produce.

A.C.Nielsen Co. cite the case of the United States where organic sales eased in the second half of 2009 as middle- and upper-income families have felt the strain of layoffs and declining investment portfolios. Sales in December 2009 were up 5.6 percent, year on year, against a 25.6 percent rise a year earlier.

Organic vegetables offer several advantages over their non-organic counterparts:

• They are generally tastier, and because they are not treated in the same way, are usually fresher than nonorganic products.

• They are good for a healthy lifestyle as they contain no pesticides and chemicals.

• The fact that no pesticides or herbicides are used in their production means that they are much ‘greener’. For example, they help to reduce the problems associated with nitrates in the soil and water supplies.

• On the downside, organic vegetables are generally less uniform, and as far as some consumers are concerned, are less attractive in appearance. This lack of uniformity has also been a problem in the past with supermarket buyers who have traditionally looked for uniformity in fresh products to aid merchandising and marketing in retail outlets.

• Generally, organic vegetables are more expensive than their non-organic counterparts. Currently, on average they are somewhere in the region of 40% more expensive.

In the UK, anyone wishing to claim that their produce is organic, and market it in this way, needs to obtain the approval of the Soil Association, which checks the organic credentials of a supplier. For example, in this case, they check the conditions under which the produce is grown and how the seeds used.

Two interesting developments are taking place in the organic produce market. One is the growth of home supplies. This is where the producer supplies direct to the householder. There are a variety of ways of doing this. Some smaller growers use mail-shots and leafleting to build up a client base. They then deliver locally to customers who order from a list. Very often the supplier will simply make up a box of a pre-determined value or weight containing a selection of vegetables which are in season and ready for picking. Other suppliers are using a similar system but take their orders via the Internet. This is particularly suitable for this type of product as customers can check on a regular basis what is available and order from home. The produce is then delivered at a pre-arranged time.

The second development in the organic produce market is the growth of farmers’ markets. These markets are usually run by local authorities, often on Saturdays or Sundays. Local and other producers attend these markets, paying a small fee for a stall and then sell their produce direct to the consumer. These farmers’ markets partly came about as a result of the frustration felt by many farmers and growers at the way they were being treated by retailers and at the margins they were receiving. In addition, such markets have been successful because consumers feel they are getting fresh produce at lower prices than they might be able to obtain through supermarkets.

Despite the growth in the market for organic vegetables, after 18 months in his business, John is worried. Quite simply, his business has not been as successful as he envisaged it would be, and as a result he is not earning enough to make a living. The real worry is that he is not sure why this is the case. His produce, he believes, is as good as anything in the business. He is a very good grower and the land he has leased is perfect for the range of produce he wishes to grow. Starting with organic potatoes he now produces a range of organic vegetables including beans, sprouts, carrots, lettuce and his latest venture organic tomatoes and corn grown in poly-tunnels. Although customers he currently supplies are very loyal to John, indeed many are friends and acquaintances he has known over the years when he grew vegetables in his back garden, there are simply not enough of them.

As a result, his turnover which increased rapidly over the first year of the business has for the last six months has stagnated. He mainly supplies locally and has tried to increase his customer base by taking leaflets out and posting them through letterboxes in the area. He has done this by dividing up the housing areas in a ten-mile radius around his growing area and dropping leaflets throughout the area to as many houses as he can cover on a systematic basis. Only some 2% of customers have responded with an order, usually contacting by telephone. These customers seem to come from the middle-class areas. He has considered taking a stall at one of the farmers’ markets, the nearest of which is some 40 miles away and operates one day per month, but he realizes this would not be enough to reach the turnover levels he requires. He has in the past supplied one or two local restaurants and hotels, but usually only when they have contacted him because they have had a problem with their existing supplier.

He has never followed these up. His growing area is currently too small to supply a major retailer, although he has been approached on an informal basis by the buyer of a voluntary chain of local grocers representing some 40 retail outlets in the county.

John is wondering where he goes from here. He cannot understand why his superior products are not selling well. A friend has suggested that John needs a more strategic approach to marketing. John is not convinced. He feels his business is too small to warrant any kind of marketing, never mind strategic marketing, and he has always felt that a good product should sell itself. He is, however, anxious to grow the business and become a leading organic vegetable supplier.

Answer all the below questions:

1. What advice would you give to John about developing his business through more effective marketing?
2. Perform the SWOT for Beckett.
3. Develop the Marketing Mix for Beckett.
4. Explain with reasons the Porter’s generic strategies you would suggest for Beckett.
5. Suggest the marketing strategies that John should use to market his Organic vegetables since this is a new and upcoming area of business? Bring out the advantages and disadvantages of the strategy.
6. Bring out the appropriate strategy that you would suggest if this company is to start marketing its products in your home country? Explain with reasons by Performing the PESTLE analysis for your home country.
7. What in your opinion are the pros and cons that an organization of this type usually need to face? When they enter emerging markets?
8. What should be Beckett’s target markets for sustained growth?
9. What are the different innovations that Beckett could think of introducing to his business?

Answer 1

1.Introduction

Over the years, the organic food market has increased rapidly, with increased sales due to the exercise aspect now an integral part of people's routine. The focus of people in today's fast-moving life is changing to make such products more dignified. Although the total population that wishes to buy such goods may be limited in the beginning, benefits are assumed to follow certain consumers. By word of mouth or consciousness created.

In this situation, I agree that the concept of John's selling of organic food is correct, because he has found a unique product that is of superior value to the end customer who would buy the product. I assume, however, that John's marketing strategy is not right. John is now pursuing a marketing hit and trial strategy that is about building local recognition and the fact that he never follows up restaurant owners for repeat transactions shows his weaknesses.

The idea of strategic planning has not yet hit him, the key downside and explanation why he can not expand his client base.

Strategic Marketing and how John will reap its benefits:-

Strategic marketing aims to increase overall sales by targeting the right audience and making sure they are serviced in the best possible way. In this case, John uses a hit and test approach, in which his marketing efforts are limited to the field he manufactures. Furthermore, he never pursues the restaurants that have once ordered their goods and wishes to sell them simultaneously.

It also has no clear direction as to which commodity they are explicitly interested in growing to sustain supply levels so that their output goals can be met and productivity can be achieved. Johnson must be primarily responsible for assessing and deciding on demand for each market. Door-in-door sales or mailing would not, on the one hand, have high profit margins but comparatively minimize investment. Restaurants, on the other hand, can offer greater margins, but require greater investment.

I agree that having one specific plant in bulk, which is seasonal and is needed at a given time, which takes advantage of its benefit, is the best way to sell organic food for him. Upon returning to the restaurants for example, he will be able to pursue products that are more selling, and only those products which are normally short in high demand could be produced.

He will continue to focus in the remaining months on smaller market segments now, which helps him retain productivity. A strategy mix in which John produces specific products for a number of months is therefore ideal. This would reduce the costs per unit and make it relatively easy to sell on the market.

2.SWOT refers to Strengths, Weakness, Opportunities and Threats.

According to the case study, John Backett has the abundance of organic plants that are of the best quality and have greater potential for marketing than any other organic product on the UK market where organic plants are in the trend and people in their homes and restaurants prefer organic plants to traditional plants. However, John also has excellent technical experience in soil and commodity varieties.

Weakness- Weakness is John Backett's lack of knowledge about marketing and sales strategies, and because of the inadequate marketing information he didn't carry out a business study to understand consumer behavior as well. This is his greatest weakness in business, since no company can develop without an appropriate R&D and a proper marketing strategy in the current scenario.

Opportunities- Since John has an art of growing organic vegetables on his own, can produce several varieties and, at the same time, organic food industry is prevalent on the UK market and the British government encourages organic plants on account of good health evidence, he has the means to receive subsidies for the grounds. So the funding of the local authorities is his biggest opportunity.

Threats- A lack of response from the customers is the greatest threat to his market. While he has already distributed posters, etc. to local clients, there is no positive response on their side as a result. Now, when he takes loans in order to expand his business and carries out marketing activities and the consumers do not yet give any positive reaction, it is quite possible that he'll be overburdened with a loan.

What in your opinion are the pros and cons that that an organization of this type usually need to face? When they enter emerging markets?

This provides a certain industry with premium price points, which increase the margins and allows to achieve economies of scale even further due to additional penetration in emerging markets. Nevertheless, it has several adverse effects, such as logistical problems, brand image shortages, shareholder micromanagement, government bureaucracy when setting new ground The biggest advantage of such a niche organisation.

Explain with reasons the Porter’s generic strategies you would suggest for Beckett.

I'd suggest Beckett's standardized marketing priority approach. The strategy is aimed at making a company more competitive by targeting a particular regional market, product line or community of buyers. The company can use differentiation or a low-cost approach, but just a narrow target market. The rationale of this approach is that a benchmark organization can serve these segments better than a body which tries to influence the whole market in one to many market sectors..

The major dangers are the risk of too much of a consumer cost compared to a custome business, less beneficial distinction, as competitors serving border markets improve their goods, and the competitors may start to focus on a customer community served by the company in its concentrating strategy. The whole focus approach fits a particular goal very well and is built with this in mind. Cost emphasis or defining focus. Porter found that many firms did not deliberately pursue one of these three strategies and had no strategic advantage in the middle of the pack.

Bring out the appropriate strategy and pricing decisions that you would suggest if this company is to start marketing its products in your home country? Explain with reasons by Performing the PESTLE analysis for your home country.

With a good idea, then implement and wonder why John is not so successful as they planned, John typifies many ambitious business people. John was expected to do a marketing research study in the first place. He didn't, though, but at least he's still in company. Now, it needs to report on marketing research to determine the likely demand for its products and to find out what it is doing well and what it is doing wrong. It should be done.

He should then be able to draw up a medium-term (1 year) and long-term tactical marketing plan with answers to those questions. Obviously, these plans are necessary when investment is required by a bank or other form of finance. I'd suggest a conceptual emphasis from Porter to Beckett's traditional approach.

It is a strategy that targets a particular regional market, product line or consumer community to make a business more competitive. The company can choose or use a low-cost approach but only a small target audience. The explanation for this is that a corporation can better represent these segments than an organization that seeks to dominate the entire market by limiting its resources to one or more segments of the market.