Business Model Analysis Report

Background

Whole Foods Market is a natural foods supermarket that was founded in Austin, TX in 1980 by John Mackey. There are now over 300 stores in the US, Canada, and the UK and its business emphasizes the highest quality of perishable foods, diverse product choices, and premium services. In the marketplace, Whole Foods Market is a natural foods grocer offering a premium level of products and services. Whole foods is also one of the top companies on the US Environmental Top 25 Green Power Partners and annually contributes at least 5% of its annual net profits to charitable causes.

Why Whole Foods Market?

I am interested in Whole Foods for many reasons. First of all, health and nutrition has been an interest of mine for quite a few years. I was fortunate enough to be raised in a home where my mom homemade dinner every night, and really emphasized a healthy, well-rounded diet and lifestyle. I specialized in nutrition in HOSA (Heath Occupation Students of America) in high school, and I am now a group fitness instructor for UT Rec Sports and the City of Austin. Further, I am also a wedding server and decorator at the first certified organic events facility, Barr Mansion, where we recycle and compost 99% of our waste.  I really enjoy both of these jobs, and I think that the fact that they align well with my personality and values plays a significant role in that. All of this background further matches well with Whole Foods core mission and values. Oddly enough, I actually like grocery stores and there have been occasions where I have time to kill and will just stop in one and shop around. Continuing with free time, I would rather read Cooking Light or Family Circle than Vogue. However, I admire Whole Foods particularly for its diverse and high quality products as well as the premium services it provides such as cooking classes and special events.  Lastly, upon graduation I hope to become a Marketing Team Leader at one of the locations, and I am currently applying for a Global Marketing Internship with the company.
Customer Segments and Value Propositions 

Upper and Middle Class Families

The first customer segment Whole Foods focuses on is middle and upper class families. These families are willing to pay a higher price for quality food to feed their families. Whole Foods meets different needs by offering a wide variety of prepared meals so a busy family can still eat quickly and conveniently without ordering take-out. It also provides a vast amount of fresh produce and other goods that enable families to make natural, high quality, homemade meals. This segment is important to Whole Foods because they have higher than average levels of brand loyalty which will keep them coming back again. 

 Value Proposition: Whole Foods provides value through brand and convenience to this segment.  Whole Foods has also established itself as a high quality, natural brand, and even the private label products (365) are seen as better quality than some other brands. In fact, as of January 2010, 75% of customers didn't know 365 was a private label partly because  many products in the 365 range are made with ingredients that are of equal or superior quality to nationally branded alternatives sold within the store. The broad selection of prepared foods allows customers to focus on their busy lives while still eating healthy meals and snacks.

Example: I babysit for a family in Austin and at least 80% of the time I am there, the kids take some sort of prepared food (from either Whole Foods or Central Market) out of the fridge and warm it up for dinner. Both parents have busy, successful careers and this works well for the family.

Organic Health Nuts

Another customer segment Whole Foods covers is the organic, all-natural health nuts. This group is sometimes also vegetarian or vegan, and Whole Foods really caters to that customer. Whole Foods really emphasizes its all-natural, no-preservatives, fresh products which is very important to this group, and they are willing to pay for that quality. Going beyond groceries, Whole Foods also offers household products, cosmetics, clothing etc. that emphasize "going green" or organic ingredients. 

Value Proposition: The high quality of food and organic selection offers top performance product in the grocery category. Further, Whole Foods offers a lot of customization in preparing your own boxed lunches, salads, etc. as well as keeping a variety of products and flavors in stock.

Example: One of my coworkers at MedaPoint is a vegan and often brings in fresh fruits and vegetables to juice them or will bring in some sort of vegan tofu wrap. She is a bit of the extreme of this segment, but Whole Foods definitely meets her needs.

Busy, Health Conscious Young Professional

Next, Whole Foods caters to the busy, health conscious young professional. This segment is employed, likely unmarried, and makes a decent disposable income.  This segment is also interested in the cooking classes that Whole Foods provides as they make their way into their adult lives and move away from the ramen they “cooked” in college.

Value Proposition: Whole Foods offers this segment convenience, performance and accessibility. They are able to get in and out of the store quickly, and have to opportunity to warm up lunch and sit at the tables in the stores. This segment is busy, so it is nice that they can get lunch and groceries for the evening fast, but still treat themselves to high quality goods.

Example: My sister’s best friend is an Editorial Development Manager for a Multiview in Dallas, and she often will grab lunch at Whole Foods with co-workers or friends in the area. Since moving up in her career, she has been able to buy higher quality food and join a gym, and has lost 20 pounds since graduating college. She attributes this partly to her healthier food choices.

Involved and Interactive millennial

Lastly, Whole Foods caters to the involved and interactive millennial. This segment is slightly reached through different distribution channels than the other segments. Not only does Whole Foods offer premium quality, they also provide unique services that other grocers don’t provide such as cooking classes and other promotional events like Yoga and seasonal tastings. Much of this is promoted online and on social media where these millennials spend an immense part of their days.

Value Proposition: Whole Foods excels in performance for this segment with all of the extras it offers outside of being a grocery store.  It is convenient for this segment to get a prepared meals for time crunched lives (such as students), and it is also convenient for them to attend a promotional event and do some grocery shopping. Whole Foods also offers samples (often of their private label) to pique the interest of these shoppers to something free and new during their shopping experience. 

Example: Whole Foods has even offered Groupons to their cooking classes to combat this segment’s slightly lower price point. It also offers events like free yoga classes (Core Power Yoga on the roof of the Lamar location) once a week to draw this segment into the store. 

Works Cited 

Colvin, G. (2013). Whole Foods’ Other CEO on Organic Growth. Fortune, 167(7), 128.

Grocery Retailing. (2013). Mintel. 

Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. Self 
     Published. 

The Private Label- Food and Drink Consumer. (2010). Mintel.

The Whole Strategy of Whole Foods. (May 2006). October 7, 2013, from ucdavis.edu.    http://agecon.ucdavis.edu/people/faculty/shermain-hardesty/docs/the-whole-strategy-  of-whole-foods.pdf

Whole Foods Market- Lamar (n.d) Oct. 8, 2013, from Whole Foods Market website        http://www.wholefoodsmarket.com/node/14/?set_store=6606

Whole Foods Market, Inc. SWOT Analysis. (2013). Whole Foods Market, Inc. SWOT  Analysis, 1-8.