Case Study Analysis of Whole Foods Market Example | Topics and Well Written Essays - 2500 words

Analysis of Whole Foods Market - Case Study Example In the last 30 years, sales of organic products have increased by 30 percent, driven by changing consumer habits in healthier eating and lifestyle (Gemma, 2009; Thompson, 2008). More consumption of organic products and healthier lifestyle products have made this an attractive procurement model for many different grocers and specialty stores to keep up with this increase in consumer demand. Thus, Whole Foods no longer corners the market and runs the risk of losing market share to new competition in key target markets. Using Porter’s Five Forces as the relevant example, Whole Foods operates in a market environment where there is relative ease of entry by competition, a market where competitive rivalry does not require complex technologies or capital investment to differentiate, where there is relative ease of product substitution for consumers, and where there is relatively low bargaining power for Whole Foods within the supply chain. In fact, Whole Foods acknowledges in its 201 0 annual report that the business maintains many different risks associated with current and future unpredictable supply fluctuations that makes forecasting and procurement difficult to manage (Whole Foods, 2010). The supply chain is significantly impacted by changing laws on organic and health-related products (Whole Foods, 2010) that can create harsher product formulation changes. At the same time, increase in competitive procurement of organic products has the ability to limit supply, thus raising prices within the supply chain against the laws of supply and demand (Boyes & Melvin, 2005). High availability of substitutes and increasing competitive rivalry in marketing, supply and differentiation give consumers considerable buying power in this market which forces Whole Foods to continuously monitor the marketing environment to counter competitive marketing to sustain its current and projected market share expectations with key target markets. Currently, the life cycle of organic products in this market environment is unpredictable, as most of the demand for similar health-conscious and organic products is trends-based driven by lifestyle and consumer attitude. Therefore, the sustainability of certain organic products represents a risk to the business and therefore impacts supply chain, promotions, and even pricing establishment. In many ways, the competitive advantages currently experienced by Whole Foods is strongly influenced by consumer behaviour and lifestyle demands that might not always be sustainable. However, Whole Foods currently maintains high revenues that continue to show growth in organic and health-conscious products (Whole Foods, 2012; MMR, 2012, MMR, 2011). Growth estimates recently provided by Whole Foods illustrate an estimate of 15.6 percent, up from the 2011 projection of 13.5 percent (MMR, 2012). The sales growth improves market availability domestically and internationally, however it is a market where competitive differentiation and m arketing-based positioning drive competitive rivalry. 2. Resource and competitive position of Whole Foods Whole Foods Market maintains a significant cost advantage in advertising over competition. In 2007, the business only devoted 0.5 percent of its total budget to this function, relying instead on word-of-mouth for sustaining market share and satisfying customers (Whole Foods, 2010; Thompson, 2008). Other competitors in this environment spend considerably more on advertising and promotion in order to