Marketing and Strategy †Organic Food Essay

One of the most significant forces in changing consumer needs that current marketers face are the ever increasing environmental issues that people are becoming aware of. Consumers are interested in how goods are produced,especially in the food market where there is the increasing issue of labour exploitation and genetic modification. This has gained a lot of momentum in recent years with the growth of the Organic sector and ? Fair Trade’ products. In 2004, the retail market for organic products in the UK was worth an estimated ? 1. 213 billion, and 11% increase on 2003, (Soil Association’s Organic Market Report, 2005). This notion is backed up by Mintel, â€Å"In most of the consumer research we carry out around a quarter of consumers are concerned about green matters, seek out fair trade products or healthy ranges of foods. That is a substantial proportion of the customer base of any food retailer and so cannot be ignored† (UK retail briefing-Household goods focus, 2006). Genetically Modified & Organic Food A genetically modified (GM) food is a food product that has been developed by having specific genes inserted into it to gain a desirable quality. The first GM food to hit the shelves were GM tomatoes which appeared in 1996 in British supermarkets, however, it was not until 1999 that the public scare hit. In a recent survey, one third of people said they would never buy any food that had been genetically modified. This figure is up by four percent in three years, quite a significant amount (attitudes toward ethical foods UK- Mintel, 2006). This provides an opportunity for marketers operating in the food sector, for example a business could promote itself as environmentally aware by claiming they sell only non-GM produce. This would give them the advantage of reassuring worried consumers whilst providing them with the upper hand against firms who do sell GM foods. Another benefit is that there are a large proportion of middle and upper class consumers who are generally aware about the issues related to genetic modification and organic food. This perhaps opens opportunities to price products at the more expensive end of the market, as they are likely to pay more if the food meets their expectations. Organic food products are becoming increasingly popular due to the ever-increasing awareness of health issues, media campaigns from the large supermarket chains and endorsements from celebrity chefs. To meet these changes in consumer needs, all of the leading supermarket chains have introduced organic ranges in their stores. There is also the fear in the UK for the future of the ? fast food games console’ children, (P. Tailor, http://www. learnmarketing. net/environment. htm) which provides a direct market opportunity for healthier food products. If a firm specialises only in selling organic produce they would be able to advantage of these opportunities. A recent example of this is innocent drinks, selling the innocent brand of ?smoothies’. They began with a simple investment of ? 500, selling freshly made smoothies at a music festival and now command a 30% slice of a market with a retail value of about ? 50m, (Market Researchers AC Nielsen, 2003). A problem is that these organisations need to aim their products at the right market. Traditionally it has been consumers in the middle and upper classes who have been buying organic food, however there is â€Å"an encouraging widening of the appeal? with over half those in lower income groups now saying they buy some organic products† (Soil Association Press Release, 2005). This implies that there could be an opportunity at trying to offer cheaper organic produce marketed towards the lower end of the income scale. Even if the price is similar to other organic goods, it could be advertised to show the direct benefits of the food to help consumers justify spending more money for organic produce. ?Fair Trade’ Products Fair trade is a relatively new, organized social movement that promotes equal standards for international labour, environmentalism and social policy in the areas related to the production of ? Fair Trade’ goods. This is another rapidly growing section of the food market that is providing a good opportunity for marketers, reporting a massive increase of around 20% a year (FINE, 2005) and now standing at a market value of ? 660 million. The movement has also benefited from increasing media interest, which means that any unethical behaviour or employee exploitation could lead to a massive amount of bad publicity. It is clear that to promote a good brand image in today’s food market, an organisation should look to be aware to fair trade issues. The possible opportunity here lies in the current range of fair trade products that are on the market. At the moment the main products in fair trade ranges are goods such as fruit, nut products, chocolate and coffee; this means there could be a demand for products in other categories, like meat products or even fair trade drinks. This wider range of fair trade products could give a business a unique selling point, as well as providing them with a strong ethical stance. Perhaps there would even be a chance to use the pressure groups or charities that are involved with fair trade to the organisation’s advantage. Marketers could combine the selling of fair trade goods with holding events to raise awareness of unfair trade issues. If they could gain the backing of charities such as Oxfam or trade networks like the European Fair Trade Association, there would be loots of opportunities to raise their brand awareness, thus increasing sales. Local Produce Environmentally aware consumers are increasingly favouring local produce. Over 100 years ago nearly all the food we ate come from within 20 miles of our homes but now we would struggle to find a handful of locally produced goods in our supermarkets (Inside Out ?East, January 2003). This may not seem as an obvious environmental issue but the problem lies within the transport that must take place to move food products around the UK and the world. A massive 25% of trucks on the UK roads are carrying food products; this means that almost as much greenhouse gas is caused by moving food than by all power stations in the UK (Inside Out ? East, January 2003). Importing products from overseas also causes pollution issues, a large proportion of lamb sold in the UK comes from New Zealand and the same is true for potatoes from Israel. Perhaps there is an opportunity for UK organisations to source their food products locally. A business doing this would be able to promote their policies in pollution reduction whilst also promoting an investment in local farmers. This should help massively in obtaining local market share but it may not be possible to source many food products in certain areas, however, any attempt to reduce the massive pollution caused by transport would offer a strong selling point. It is important to note for firms looking to take advantage of the increasing consumer awareness that there can be problems. Shops focusing on only selling Organic, Fair trade and local produce are generally small in size and very specialist. If they are seen to have a very successful idea it is highly likely that the major supermarket chains will try and imitate it with their greater resources. This would be very serious competition and should be considered if a business is considering in solely selling goods to the environmentally aware consumers. There is also the chance of certain barriers to enter into these specialist markets; one of these is the established competitor. Organisations like the Co-op have already been long-term supporters of fair trade. Another likely problem is the increased scrutiny that a business will face when ? announcing’ themselves to be environmentally aware. If a business declares to be environmentally aware and is then seen to be doing damage, it would most likely cause significant financial damage. How can Marketing help in ethical terms? The most obvious way in which marketers can help in ethical terms is by increasing consumer awareness in the issues that are troubling the food market today. A way to do this would be to create simple promotion campaigns where the benefits of organic food or local produce are shown clearly to the consumer. An example of this could be Sainsbury’s TV advertising campaign fronted by Jamie Oliver showing the re-launched ? Taste the Difference’ range. They have removed all artificial flavours or colourings, stopped using hydrogenated fats and only using free-range eggs and UK-sourced meat, (The Guardian, October 2006) combined with the links Jamie Oliver has to health awareness and has lead to a very effective campaign. Another way that marketers can help consumers is to make sure that the packaging of a product follows environmental awareness and ethical issues. Firstly the packaging of a product should be recyclable and reduced to a minimum, in fact there should be ? reminder to recycle’ on all products that have recyclable packaging. Secondly the labelling of products needs to display the relevant health and environmental information clearly. Tesco have implemented the traffic light system to show the qualities of a product at a quick glance. Customers can see by the colour of the light whether or not the product is considered healthy, which is determined by the fat, calorie and salt content. Likewise it could be possible to put small sections of information on fair trade products to show the benefits to the producers that fair trade has. If there was a greater knowledge by the average consumer it might lead fair trade food products to become standard, opposed to the current niche that they are filling, providing social benefits like reducing the global poverty gap. It is also important for the labelling and packaging on a product to not be misleading. If a food product clearly meets organic food standards then it should be labelled as organic; likewise anything that is not produced locally or is not organic should be labelled correctly. Recently there have been reports of Supermarkets putting pressure on organic food watchdogs to lower standards so they can fully exploit the industry, (The Guardian, October 2006). It has been stated â€Å"there are lots of loopholes in the regulations and in practice these are being heavily exploited† and that â€Å"Organics is increasingly becoming industrialised and the consumer will one day wake up and see this stuff is not what they think it is†, (L. Woodward, former head of The Soil Association). It is clear that marketers need to stay fair and honest to ensure that the supermarkets are unable to lobby together and reduce the standards. Perhaps a stance could be taken by one of the supermarket chains to actually support the stricter guidelines, even if it might close the exploitative opportunities. A possible way to encourage people further to buy organic or fair trade products would be to offer promotions involved with the purchase of these goods. Supermarkets could easily offer their customers a larger number of store reward points when the sale takes place, or even try to focus BOGOF deals and price reductions to these product ranges. I would recommend that promotions where the customer gets one fair trade product for half price when two organic products are purchased should be implemented. Linking the product ranges might help encapsulate some of the organic aware consumers into purchasing fair trade products or locally sourced goods and vice versa. A new concept that has been introduced to counter the issue of transportation pollution is food miles; the basis of this revolves around a label on food products stating how far the product had to be transported to reach the supermarket. Marketers could use this function to show customers that products are contributing heavier to pollution. It would also aid in educating consumers into seeing which products should be purchased at seasonal times to minimise transport. If you were looking to purchase strawberries in the winter they would have travelled a long distance to reach the UK, possibly highlighting this fact would teach some consumers to eat more ? seasonally’. The new more socially aware consumer is presenting big opportunities to the major food retailers due to the growing markets in organic food. These opportunities can conflict with what would be considered ethically considerable, especially the issue with organic food appealing to the higher end of the market thus leading to the possibility of keeping prices high. Of course it is best for environment and consumers if the prices are kept lower on organic food so everyone can eat healthier. Perhaps the supermarkets should consider lowering their margins on organic food and making it back on more price inelastic goods such as alcohol or cigarettes. It is clear however that organisations should be careful in deciding which opportunities to take advantage of as their actions could possibly have negative repercussions like consumer cynicism, leading to consumer cynicism. Although if marketers are able to promote these ethical issues and increase public awareness whilst still maintaining profit growth, the potential benefits for everyone are great. Bibliography ?Soil Association (2005) â€Å"Organic Market Report 2005† ?Soil Association (2005) â€Å"Soil Association Press Release†? FINE (2005) â€Å"Fair Trade in Europe 2005: Facts and Figures on Fair Trade in 25 European countries† ? Mintel (2006) â€Å"UK retail briefing – Household goods focus ? Mintel (2006) â€Å"Attitudes toward ethical foods in the UK† ?P. Tailor, Learnmarketing. net/environment. htm ?AC Nielsen (2003) Market Research ?BBC. co. uk/insideout/east/series2/local_produce_organic_healthy_eating. shtml ? Laville. S & Vidal. J (2006) â€Å"Supermarkets accused over organic foods†, The Guardian, October 5th.