Gardenburger Case Summary
Section 1 - Situation Analysis
1.0 Internal Conditions
There has been an evolution in the vision for the Gardenburger Company. This vision was originally to:
Pursue visionary ideas that are helping to sustain the health and integrity of our planet. We are committed to offering healthy food choices to the world, supporting meatless concerns and advocating the benefits of meatless eating.
Current management has built on this vision and has adopted the following direction:
1.1 Objectives
1. To bring the highly profitable Gardenburger into the mainstream consumer market
2. To become the leading developer, producer, and branded marketer of great tasting, convenient meat replacement alternatives in all major distribution channels.
3. To make the brand the premier name in the category. …show more content…
1.2 Strategies
Growth Strategy
1. Brand the veggie patty category
2. Leverage the brand into new channels (achieve a min. of 70% penetration for six SKU¡¦s)
3. Support expansion with advertising and promotion
4. Strengthen leadership position in current channels (food service, club store, grocery)
5. Develop & introduce new products
Product Strategy: Focus efforts primarily on veggie patty category rather than meat alternatives.
Distribution Strategy: Aggressively expand distribution into the mainstream retail grocery channel.
Sales Strategy: Leverage the original Gardenburger veggie patty and its flavour variants to position its product with the trade as the number one veggie patty in each of the food service, natural food store and club store channels in order to become the number one veggie patty in the mainstream retail grocery channel.
Marketing Strategy
1. Build awareness of the category and the brand.
2. Position the brand as healthy, good tasting and convenient.
3. Target the brand to the ¡¥health modifier¡¦ segment.
Pricing Strategy: Slightly higher price than the competition due to company¡¦s perception that their product was better quality and tasted better.
Spending Effort
1. Focused primarily on print ads in food service trade publications, trade shows, off-invoice promotions with distributors, in-store sampling and radio advertising to consumers.
2. Planned to increase budget in 1998 particularly in national television and print media.
1.3 Brand strength, equity & performance
X Gardenburger has steadily grown in sales over the years; from $13M in 1993 to $39M in 1996
X Distribution is broad in the US and Canada- in over 30,000 food service outlets, 10,000 retail outlets, and over 4,000 natural food stores
X Currently holds 21% of the meat alternatives market which is second to Morningstar¡¦s share of 42%.
1.4 Sources of added value and SCA
X Focus on the veggie patty category rather than just meat alternatives- creates an area of specialty and expertise (competitors do the opposite)
X Differentiates the product by not formulating it to taste like meat; uses natural ingredients
X There is no real SCA for Gardenburger
1.5 Resources ¡V human, capital, technological, financial
X CEO, Lyle Hubbard: reputation for increasing profits and reviving images
X Distribution channels- through approx. 60 independent food brokers and 500 active distributors
X Product is shipped in temperature controlled fleets; stored in frozen storage warehouses in major cities in the US & Canada
X Gardenburger has limited financial resources as advertising & promotional efforts increase to meet strategic objectives. Their cost structure puts them at a disadvantage vs. their competitors.
1.6 Organizational Structure and Values
X Initially founded in 1981 by restaurant entrepreneur & chef, Paul Wenner.
X Has maintained small organizational structure.
X Sticks to the original recipe and expands product lines from it.
X Hubbard is leading company away from its initial vision into a more mainstream vision. He is also a ¡¥meat lover¡¦ and may not share the sensitivities of the vegetarian and healthy food consumers. This direction presents a significantly higher degree of risk than the company is used to.
Conclusions: Gardenburger is a small company with limited resources. This condition will have a significant negative impact on the ability of the firm to execute Hubbard¡¦s new strategy. Gardenburger also does not have the capital or human resources in place to execute the strategy, particularly the sales force required to achieve the listings required in national grocery chains.
2.0 Competitive Framework
2.1 Competitive Map
The following Competitive Map places the brands in relation to their current position with respect to the three main segments of consumers; vegetarians, cultural creatives and health modifiers. Gardenburger¡¦s three main competitors were more likely to compete in the health modifier segment. They were all positioned as a meat substitute. Gardenburger was a vegetable product that didn¡¦t base its taste on being just like a ¡¥real hamburger¡¦. This has led to the assumption that it had appeal to vegetarians and health modifiers in addition to its strength in the cultural creatives segment.
Though not currently on the map, the major food manufacturers are expected to become interested in the category should the four main competitors, Gardenburger, Harvest Burger, Morningstar and Boca are successful in pushing into the mainstream.
2.2 Competitive Health Measures and Strategies
Morningstar Farms is at least double the sales of Gardenburger. Morningstar, Harvest Burger and Boca are position as meaty tasting, leaving Gardenburger alone concentrating on the ¡¥cultural creative¡¦ segment of consumers. Advertising expenditures show Morningstar spending over three times what Gardenburger spends.
Morningstar Gardenburger Harvest Burgers Boca Burgers
Brand health measures $35.8M in sales, 42% BS- down from 46% $18.3M in sales, 21% BS- down from 23% $13.7M in sales, 16% BS $7.6M in sales, 9% BS
Resources/SCA Market leader No real SCA.
Limited resources. Green giant name.
Pillsbury national distribution network. Endorsements
Segmentation Strategy Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix. Changing concentration strategy from ¡¥cultural creatives¡¦ to ¡¥health modifiers¡¦. Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix. Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix.
Positioning ¡§The world¡¦s largest company dedicated solely to producing and marketing meatless and other healthful branded food product¡¨ ¡§healthy, great tasting, and convenient¡¨ ¡§An all vegetable protein product that yields a bountiful crop of taste and serves as a welcome substitute for ground beef¡¨ ¡§A new take on the classic American burger, with the same great burger taste¡¨
Product Designed to simulate the taste & texture of real meat, but does not contain animal products.
Frozen & canned meat alternatives Core veggie patty has its own unique flavor 130 calories, 3 grams of fat, Uses fresh, ¡§common¡¨ ingredients. No focus on duplicating flavour of meat. All vegetable protein product designed to simulate the taste of meat. Patties are pre-cooked, can be pan fried, microwaved, or grilled.
Contains little or no fat & cholesterol, with fiber, protein, and complex carbs
Price N/A Slightly higher price than competitors; reflects premium image N/A N/A
Place Mainstream grocery outlets with frozen food aisles grocery stores, restaurants, club stores, natural food stores; now focusing on mainstream grocery channel. Mainstream grocery channel. Natural foods & mainstream grocery outlets
Promotions Spends $14M on advertising. Print, POP, sampling, couponing, etc- spent $3M in 1997 TV spots using comparison strategies (vs. real meat) Does not advertise heavily; relies on PR & word of mouth- seeding on talk shows
Target Consumer Health & natural foods consumers; vegetarians & semi-vegetarians Health Modifier consumer- mainstream, as 80% of current users aren¡¦t vegetarian Mainstream cooks looking to use more convenient, low-fat foods Vegetarians
Conclusions: The category is in the growth stage of the PLC, and operating under competitive conditions of an oligopoly. This would imply that Gardenburger will have to focus primarily on differentiating products and introducing line extensions, as already expressed in their goals & objectives. However, there do not appear to be any compelling points of differentiation or Sustainable Competitive Advantage.
They should also focus on maintaining exceptional relationships with the trade, as product placement, shelf spacing, and sales/trade promotion are Critical Success Factors under these conditions. This will require a significant increase in promotional spending which will require a significant investment is resources the company does not currently possess.
2.3 Attractiveness of Industry
Intensity of Rivalry
The intensity of rivalry seems to be a little less than the average we would expect in a consumer packed food products category. This is due to the fact that the category is relatively small and that it is in the growth stage of the PLC. Competitive marketing objectives revolve around differentiation. Additionally, there are a relatively few number of competitors and no one has really established a strong Sustainable Competitive Advantage.
The size of the category has not yet attracted the large food manufacturers in terms of launching new entries. However, this may change with the agreement Midland Daniels has entered into with Pillsbury.
Threat of Substitutes
There is probably a higher threat of substitutes for veggie burgers than for real hamburgers. The key motivator in the category is to eat healthier rather than eat a burger. Therefore any other vegetarian food could be a substitute.
Threat of New Entrants
If the category continues to grow, the threat of major manufacturers entering the category are quite high. Already Pillsbury has shown an interest.
Power of Buyers
Independent natural food stores and small chains exert the power of refusing to carry the brand. But they are small and not organized so any individual store would present a very limited problem if they did not list the brand.
Chain grocery stores, on the other hand, exert a high degree of power over the brand. Refusal of one of the major chains would put any brand at a significant disadvantage.
Power of Suppliers
There are many sources for ingredients so suppliers exert little power.
It is highly likely that as the category continues to grow, major grocery players will be attracted and enter the category.
Conclusions: The conditions above indicate the industry is moderately attractive, in its current state. The one condition of concern is the attractiveness of the category to new entrants. If the Category grows rapidly, new entrants from the major food companies will likely be launched. Pillsbury has already been interested enough to enter into an agreement with Morningstar.
3.0 Customer Conditions
3.1 Key Motivators
There are a number of motivators operating in the category of vegetable patties and similar products. These motivators vary depending on the consumer segment:
Vegetarians: Primary motivation was to avoid all meat products due to value/belief system. These consumers displayed a high degree of involvement.
Cultural Creatives: Primary motivation was self actualization and self expression. These users also displayed a high level of involvement due to the relationship of the products with the importance of the motivational hierarchy.
Health Modifiers: Primary motivation was to eat foods that fulfilled a healthy lifestyle. Consumers looked for decreased fat, cholesterol, calories, salt, artificial ingredients and hormones. Their degree of involvement was less than in the other two segments, but it still presented a higher level of involvement than for regular grocery shoppers.
3.2 Segment Descriptions
Vegetarians Cultural Creatives Health Modifiers
Growth Segment is growing Likely to grow age baby boomer bubble continues. Likely to increase since % of population voicing health concerns is increasing.
Usage Heavy users Medium users Medium to light users
Market Size 16.2 to 17.9 million 50 million 67.6 to 96.5 million
Characteristics X Loyal and enthusiastic; generated word of mouth recommendations.
X Three quarters sought cooking classes, two thirds were interested in group visits to restaurants, and majority wanted nutrition info to help them become or remain vegetarian. X Seriously concerned with self-actualization.
X Liked the exotic and enjoyed new ideas.
X Read labels carefully.
X More likely to volunteer and be activists.
X Slightly better educated.
X 60/40 female/male.
X More likely to be baby boomers.
X Target for any ¡¥healthy lifestyle¡¦ retailer X Healthy lifestyle consumers.
X More mainstream than the other two segments.
X Watched their fat and cholesterol intake.
X Strived for a balanced eating plan and/or 2 or 3 meatless meals a week.
X More women than men.
X Spanned age boundaries.
Evaluative
Criteria Also valued health properties, availability, taste, convenience and price. Healthy and natural needs to cross over with gourmet and ethnic. X Decreased cholesterol, fat, calorie and salt levels.
X Wanted to avoid artificial ingredients and hormones.
X Wanted the taste of meat.
X Convenience and price.
Promotion
Imperative More likely to respond to demonstrations, samples, preparation information, and prepared meals. X Building relationships.
X Provide valuable info.
X Value honesty, authenticity and trustworthiness.
X Support ecological issues.
X Use symbols that go deep.
X Word of mouth. Mass media.
All segments appear to present healthy growth prospects over the next few years. However, the ¡¥health modifiers¡¦ present the largest absolute volume opportunity and it appears that though per capita usage is moderate now, it will continue to grow.
The Promotion Imperatives (promotional tactics most likely to be successful) vary greatly by each segment. This does not present a problem for other brands since they are targeting only one segment. However, it does present a problem for Gardenburger since they must address the ¡¥cultural creatives¡¦ who currently represent the bulk of their business. Already Gardenburger has changed its package to be more ¡¥slick¡¦ which is exactly what the cultural creatives dislike. Gardenburger¡¦s existing personality appears to appeal to the sensitivities of the ¡¥cultural creatives¡¦ segment.
3.3 What the Consumer Buys
Core Product: The core product is a substitute for meat. It is a dynamically continuous innovation which has responded to an increasing need for healthier food. The features that meet this growing need are the use of vegetable ingredients to provide protein and carbohydrates and to minimize fats, cholesterol and additives. The early majority is now purchasing the core product. Little change in behaviour is required to switch to these meatless products.
Actual product: Each brand offers a number of actual products that differ with respect to ingredients and whether the product is designed deliver a meat like taste. Some products contain soy which offers additional health benefits.
Augmented Product: There is no indication that any brand has augmented their products.
Brand Preferences: Gardenburger offers a set of benefits more likely to appeal to the ¡¥cultural creatives¡¦ while the other three brands address the ¡¥tastes like meat¡¦ benefit.
Brand Benefit differentiation/SCA: Value added by benefit:
Gardenburger
X Own, distinct flavor, taste and texture ¡§superior¡¨ to soy or tofu based burgers
X Low fat.
X Major ingredients more discernible. A more interesting taste experience that is more healthy than meat.
Harvest Burger X Simulate the taste and texture of real meat.
X Contain no animal products.
X Protein replacement.
X No cholesterol, saturated fat, reduced fat, animal fat. A healthy meat replacement that tastes like meat.
Boca Burger X The great taste of a hamburger with no meat. A great tasting hamburger that contains no meat.
Conclusions: Preference appears to be driven by segment needs. Adjusting Gardenburger¡¦s benefit set could result in alienation of their current core of loyal users.
3.4 Where Consumers Buy
Currently consumers are able to buy meat substitutes at specialty food stores, healthy menu restaurants, smaller grocery chains, and into the mainstream grocery channel. Gardenburger¡¦s particular strengths are in the secondary and tertiary channels. This is consistent with their segment strength among the ¡¥cultural creatives¡¦.
Intermediary Description
AFFORDANCES Consumer Manufacturer
Primary:
Mainstream grocery chains X Accessibility
X Selection
X Convenience X Intensive distribution
X Displays and in-store sampling and promotions.
Secondary:
10,000 Retail outlets such as grocery & specialty stores; 4,000 natural food stores X More knowledgeable sales staff wrt health food items.
X Supports the ¡¥specialness¡¦ of more natural foods. X Making information available.
Tertiary: 30,000 Food service outlets X Opportunity to try new foods. X Ability to sample a large number of consumers.
4.0 The Macro Environment
X Legal and regulatory issues facing meat are not applicable to this category, however the use of pesticides and bug species could be an issue when using grains, oats, and vegetables
X Sociocultural trends suggest that healthy, active lifestyles are on the upswing and moms want to bring better foods to the table for their families. Aging baby boomers demographic shifts may be a key source behind growing health concerns. A side effect of this health trend may be the influence of healthier eating and living habits amongst generation Y¡¦s.
X More and more doctors are recommending that patients cut back on things like cholesterol, fat, and sodium intake
X Time is becoming a more and more valuable commodity in everyday life.
Conclusions: The macro environmental conditions appear to support the long term interest of consumers in meat substitutes. This indicates that this is not a ¡¥trendy¡¦ category, but one that is here to stay.
Section 2 ¡V SWOT Analysis
Strengths
X Hubbard was an aggressive marketer successful at building fledgling businesses.
X Consistently been profitable.
X Good distribution in specialty and health food stores and restaurants.
X If tried, there was a high adoption rate.
X On menu at over 30,000 food service outlets providing sampling opportunities.
X Great tasting low fat product.
X More than just a meat substitute.
X Brand personality that appeals to the sensitivities of the ¡¥cultural creatives¡¦. Opportunities
X Market for healthful foods predicted to continue growing.
X Over 100 million American shoppers watched their fat intake.
X 51% of shoppers had made changes in their diets due to health reasons.
X 90% of shoppers practiced some level of health-motivated shopping behaviour.
X 26% of adult shoppers were ¡¥Cultural Creatives¡¦ who tended to be innovators and early adopters.
Weaknesses
X Narrowly focused company against a single product category.
X Small privately owned company with few capital, human or financial resources.
X Doesn¡¦t simulate the taste of beef.
X Little presence in the ¡¥meat alternatives¡¦ sub-segment.
X Underdeveloped in mid-west and south-east.
X Low level of advertising vs. competition. Threats
X Launch of veggie patties by Morningstar into the refrigerated section. Launch of new lines by Morningstar.
X Soy products have many benefits.
X Harvest Burger positioned as an all vegetable substitute for meat.
X All Morningstar products were designed to simulate meat.
X Pillsbury has lent Green Giant name and distribution system to Harvest Burger.
X Morningstar is spending over 3 times more than Gardenburger on advertising.
X Mainstream retail channels will demand high trade promotion support expenditures which will threaten the profitability of the category.
An analysis of the SWOT presents few Sustainable Competitive Advantages for Gardenburger and points out the weaknesses which could prevent success in addressing moving into the mainstream.
Low fat ¡V This strength addresses the high level of consumer interest in low fat foods, with over 100 million shoppers expressing an interest in lower fat foods.
Food service strength ¡V This affords Gardenburger the ability to sample their product in what appears to be a fertile set of potential consumers since 90% of shoppers practiced some form of health-motivated shopping behaviour.
Appeal to ¡¥cultural creatives¡¦ ¡V The existing positioning and personality of the brand have a high degree of appeal to the ¡¥cultural creatives¡¦.
Size and lack of resources ¡V these weaknesses must be dealt with in order to take advantage of mainstream consumers seeking healthy alternatives to meat, at least for a few meals a week.
This analysis leads to two fundamentally different alternative strategies. Section 3 - Alternatives
1. To build the Garden Burger brand by growing within the existing distribution channels, using their foodservice presence encouraging trial.
a. The source of business: non-users from primarily ¡¥cultural creatives¡¦.
b. Positioning: meatless products don¡¦t have to sacrifice gourmet or ethnic tastes.
c. Media spending will be in trade magazines and vertical magazines that will reach the target of 60% women/40% men who are interested in social policy and the environment.
d. Promotional spending will be against the foodservice industry to increase distribution and to sample the product.
2. To build the Garden Burger brand from a niche product to a mass-market national brand by focusing efforts on increasing marketing and promotions for the trade and Health Modifiers segment.
a. The Primary source of business will be the Health Modifiers.
b. The target will consist of individuals concerned with health. They span all age boundaries but skewed to women (25 ¡V 54).
c. Positioning will focus on the health benefits of a non-meat diet and the fact that Gardenburger is low in fat.
d. Spending will be on national TV., print, POP and trade incentives.
Evaluation of Alternatives
Expanding within current target Expanding into mainstream target
Ability to increase volume Low to medium ¡V Segment is much smaller than ¡¥health modifiers. High ¡V Largest segment and expected to continue to post high growth.
Ability to increase profit and/or margin Low ¡V Increases in volume will not be enough to affect their higher cost structure. Low - Substantially higher volumes will present economies of scale and more leverage with the trade. However these will be more than offset by higher promotional expenses required to list in national grocery chains and to advertise nationally.
Ability to insulate the brand from competitive reaction. High ¡V Targeting this niche does not provide enough volume to interest another player. No ability
Best fit with company resources. Resources available Capital expansion will be necessary, which may be beyond the financial resources of the company.
Takes advantage of company resources. Good ¡V leverages current relationships, formulas and plant to be more productive by increasing volume without having to build. Low ¡V New resources will be required.
Ability to provide a competitive advantage. Targeting the attraction to gourmet and ethnic flavours should be sustainable. Other competitors can adopt the same strategy.
Ability to differentiate the brand. A gourmet meatless differentiation is possible. Little to differentiate the brand.
Effect on strengthening Brand Health measures. High potential to strengthen brand Health measures in a smaller segment. Medium potential to low since there is little equity at this moment with this target.
Ability to strengthen the Brand identity Fortress. Low;
GB was built around targeting Culture creatives who are know for being very loyal. Low;
GB was built around targeting Culture creatives who are know for being very loyal.
Recommendation: Expanding within the current target best leverages the existing resources of the organization at the least level of risk. Though it does not provide the growth potential of going mainstream, it protects the revenue stream which currently exists. As a small privately owned company, the owners have no need for huge increases in business, especially when this would require a heavy investment in plant and equipment.
It is likely that if the category begins to grow it will attract large food manufacturers. Already Pillsbury is attracted to the category. If major food manufacturers enter the category, Gardenburger will not have the resources to combat them, yet would be insulated if they addressed the niche segment of ¡¥cultural creatives¡¦.
The mainstream alternative does not match the organizational culture of the company. Commitment to social issues, a vision of a healthier world, and less corporate outlook would have to be sacrificed.
1.0 Internal Conditions
There has been an evolution in the vision for the Gardenburger Company. This vision was originally to:
Pursue visionary ideas that are helping to sustain the health and integrity of our planet. We are committed to offering healthy food choices to the world, supporting meatless concerns and advocating the benefits of meatless eating.
Current management has built on this vision and has adopted the following direction:
1.1 Objectives
1. To bring the highly profitable Gardenburger into the mainstream consumer market
2. To become the leading developer, producer, and branded marketer of great tasting, convenient meat replacement alternatives in all major distribution channels.
3. To make the brand the premier name in the category. …show more content…
1.2 Strategies
Growth Strategy
1. Brand the veggie patty category
2. Leverage the brand into new channels (achieve a min. of 70% penetration for six SKU¡¦s)
3. Support expansion with advertising and promotion
4. Strengthen leadership position in current channels (food service, club store, grocery)
5. Develop & introduce new products
Product Strategy: Focus efforts primarily on veggie patty category rather than meat alternatives.
Distribution Strategy: Aggressively expand distribution into the mainstream retail grocery channel.
Sales Strategy: Leverage the original Gardenburger veggie patty and its flavour variants to position its product with the trade as the number one veggie patty in each of the food service, natural food store and club store channels in order to become the number one veggie patty in the mainstream retail grocery channel.
Marketing Strategy
1. Build awareness of the category and the brand.
2. Position the brand as healthy, good tasting and convenient.
3. Target the brand to the ¡¥health modifier¡¦ segment.
Pricing Strategy: Slightly higher price than the competition due to company¡¦s perception that their product was better quality and tasted better.
Spending Effort
1. Focused primarily on print ads in food service trade publications, trade shows, off-invoice promotions with distributors, in-store sampling and radio advertising to consumers.
2. Planned to increase budget in 1998 particularly in national television and print media.
1.3 Brand strength, equity & performance
X Gardenburger has steadily grown in sales over the years; from $13M in 1993 to $39M in 1996
X Distribution is broad in the US and Canada- in over 30,000 food service outlets, 10,000 retail outlets, and over 4,000 natural food stores
X Currently holds 21% of the meat alternatives market which is second to Morningstar¡¦s share of 42%.
1.4 Sources of added value and SCA
X Focus on the veggie patty category rather than just meat alternatives- creates an area of specialty and expertise (competitors do the opposite)
X Differentiates the product by not formulating it to taste like meat; uses natural ingredients
X There is no real SCA for Gardenburger
1.5 Resources ¡V human, capital, technological, financial
X CEO, Lyle Hubbard: reputation for increasing profits and reviving images
X Distribution channels- through approx. 60 independent food brokers and 500 active distributors
X Product is shipped in temperature controlled fleets; stored in frozen storage warehouses in major cities in the US & Canada
X Gardenburger has limited financial resources as advertising & promotional efforts increase to meet strategic objectives. Their cost structure puts them at a disadvantage vs. their competitors.
1.6 Organizational Structure and Values
X Initially founded in 1981 by restaurant entrepreneur & chef, Paul Wenner.
X Has maintained small organizational structure.
X Sticks to the original recipe and expands product lines from it.
X Hubbard is leading company away from its initial vision into a more mainstream vision. He is also a ¡¥meat lover¡¦ and may not share the sensitivities of the vegetarian and healthy food consumers. This direction presents a significantly higher degree of risk than the company is used to.
Conclusions: Gardenburger is a small company with limited resources. This condition will have a significant negative impact on the ability of the firm to execute Hubbard¡¦s new strategy. Gardenburger also does not have the capital or human resources in place to execute the strategy, particularly the sales force required to achieve the listings required in national grocery chains.
2.0 Competitive Framework
2.1 Competitive Map
The following Competitive Map places the brands in relation to their current position with respect to the three main segments of consumers; vegetarians, cultural creatives and health modifiers. Gardenburger¡¦s three main competitors were more likely to compete in the health modifier segment. They were all positioned as a meat substitute. Gardenburger was a vegetable product that didn¡¦t base its taste on being just like a ¡¥real hamburger¡¦. This has led to the assumption that it had appeal to vegetarians and health modifiers in addition to its strength in the cultural creatives segment.
Though not currently on the map, the major food manufacturers are expected to become interested in the category should the four main competitors, Gardenburger, Harvest Burger, Morningstar and Boca are successful in pushing into the mainstream.
2.2 Competitive Health Measures and Strategies
Morningstar Farms is at least double the sales of Gardenburger. Morningstar, Harvest Burger and Boca are position as meaty tasting, leaving Gardenburger alone concentrating on the ¡¥cultural creative¡¦ segment of consumers. Advertising expenditures show Morningstar spending over three times what Gardenburger spends.
Morningstar Gardenburger Harvest Burgers Boca Burgers
Brand health measures $35.8M in sales, 42% BS- down from 46% $18.3M in sales, 21% BS- down from 23% $13.7M in sales, 16% BS $7.6M in sales, 9% BS
Resources/SCA Market leader No real SCA.
Limited resources. Green giant name.
Pillsbury national distribution network. Endorsements
Segmentation Strategy Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix. Changing concentration strategy from ¡¥cultural creatives¡¦ to ¡¥health modifiers¡¦. Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix. Concentration strategy focusing on ¡¥health modifier¡¦ segment with meat-substitute marketing mix.
Positioning ¡§The world¡¦s largest company dedicated solely to producing and marketing meatless and other healthful branded food product¡¨ ¡§healthy, great tasting, and convenient¡¨ ¡§An all vegetable protein product that yields a bountiful crop of taste and serves as a welcome substitute for ground beef¡¨ ¡§A new take on the classic American burger, with the same great burger taste¡¨
Product Designed to simulate the taste & texture of real meat, but does not contain animal products.
Frozen & canned meat alternatives Core veggie patty has its own unique flavor 130 calories, 3 grams of fat, Uses fresh, ¡§common¡¨ ingredients. No focus on duplicating flavour of meat. All vegetable protein product designed to simulate the taste of meat. Patties are pre-cooked, can be pan fried, microwaved, or grilled.
Contains little or no fat & cholesterol, with fiber, protein, and complex carbs
Price N/A Slightly higher price than competitors; reflects premium image N/A N/A
Place Mainstream grocery outlets with frozen food aisles grocery stores, restaurants, club stores, natural food stores; now focusing on mainstream grocery channel. Mainstream grocery channel. Natural foods & mainstream grocery outlets
Promotions Spends $14M on advertising. Print, POP, sampling, couponing, etc- spent $3M in 1997 TV spots using comparison strategies (vs. real meat) Does not advertise heavily; relies on PR & word of mouth- seeding on talk shows
Target Consumer Health & natural foods consumers; vegetarians & semi-vegetarians Health Modifier consumer- mainstream, as 80% of current users aren¡¦t vegetarian Mainstream cooks looking to use more convenient, low-fat foods Vegetarians
Conclusions: The category is in the growth stage of the PLC, and operating under competitive conditions of an oligopoly. This would imply that Gardenburger will have to focus primarily on differentiating products and introducing line extensions, as already expressed in their goals & objectives. However, there do not appear to be any compelling points of differentiation or Sustainable Competitive Advantage.
They should also focus on maintaining exceptional relationships with the trade, as product placement, shelf spacing, and sales/trade promotion are Critical Success Factors under these conditions. This will require a significant increase in promotional spending which will require a significant investment is resources the company does not currently possess.
2.3 Attractiveness of Industry
Intensity of Rivalry
The intensity of rivalry seems to be a little less than the average we would expect in a consumer packed food products category. This is due to the fact that the category is relatively small and that it is in the growth stage of the PLC. Competitive marketing objectives revolve around differentiation. Additionally, there are a relatively few number of competitors and no one has really established a strong Sustainable Competitive Advantage.
The size of the category has not yet attracted the large food manufacturers in terms of launching new entries. However, this may change with the agreement Midland Daniels has entered into with Pillsbury.
Threat of Substitutes
There is probably a higher threat of substitutes for veggie burgers than for real hamburgers. The key motivator in the category is to eat healthier rather than eat a burger. Therefore any other vegetarian food could be a substitute.
Threat of New Entrants
If the category continues to grow, the threat of major manufacturers entering the category are quite high. Already Pillsbury has shown an interest.
Power of Buyers
Independent natural food stores and small chains exert the power of refusing to carry the brand. But they are small and not organized so any individual store would present a very limited problem if they did not list the brand.
Chain grocery stores, on the other hand, exert a high degree of power over the brand. Refusal of one of the major chains would put any brand at a significant disadvantage.
Power of Suppliers
There are many sources for ingredients so suppliers exert little power.
It is highly likely that as the category continues to grow, major grocery players will be attracted and enter the category.
Conclusions: The conditions above indicate the industry is moderately attractive, in its current state. The one condition of concern is the attractiveness of the category to new entrants. If the Category grows rapidly, new entrants from the major food companies will likely be launched. Pillsbury has already been interested enough to enter into an agreement with Morningstar.
3.0 Customer Conditions
3.1 Key Motivators
There are a number of motivators operating in the category of vegetable patties and similar products. These motivators vary depending on the consumer segment:
Vegetarians: Primary motivation was to avoid all meat products due to value/belief system. These consumers displayed a high degree of involvement.
Cultural Creatives: Primary motivation was self actualization and self expression. These users also displayed a high level of involvement due to the relationship of the products with the importance of the motivational hierarchy.
Health Modifiers: Primary motivation was to eat foods that fulfilled a healthy lifestyle. Consumers looked for decreased fat, cholesterol, calories, salt, artificial ingredients and hormones. Their degree of involvement was less than in the other two segments, but it still presented a higher level of involvement than for regular grocery shoppers.
3.2 Segment Descriptions
Vegetarians Cultural Creatives Health Modifiers
Growth Segment is growing Likely to grow age baby boomer bubble continues. Likely to increase since % of population voicing health concerns is increasing.
Usage Heavy users Medium users Medium to light users
Market Size 16.2 to 17.9 million 50 million 67.6 to 96.5 million
Characteristics X Loyal and enthusiastic; generated word of mouth recommendations.
X Three quarters sought cooking classes, two thirds were interested in group visits to restaurants, and majority wanted nutrition info to help them become or remain vegetarian. X Seriously concerned with self-actualization.
X Liked the exotic and enjoyed new ideas.
X Read labels carefully.
X More likely to volunteer and be activists.
X Slightly better educated.
X 60/40 female/male.
X More likely to be baby boomers.
X Target for any ¡¥healthy lifestyle¡¦ retailer X Healthy lifestyle consumers.
X More mainstream than the other two segments.
X Watched their fat and cholesterol intake.
X Strived for a balanced eating plan and/or 2 or 3 meatless meals a week.
X More women than men.
X Spanned age boundaries.
Evaluative
Criteria Also valued health properties, availability, taste, convenience and price. Healthy and natural needs to cross over with gourmet and ethnic. X Decreased cholesterol, fat, calorie and salt levels.
X Wanted to avoid artificial ingredients and hormones.
X Wanted the taste of meat.
X Convenience and price.
Promotion
Imperative More likely to respond to demonstrations, samples, preparation information, and prepared meals. X Building relationships.
X Provide valuable info.
X Value honesty, authenticity and trustworthiness.
X Support ecological issues.
X Use symbols that go deep.
X Word of mouth. Mass media.
All segments appear to present healthy growth prospects over the next few years. However, the ¡¥health modifiers¡¦ present the largest absolute volume opportunity and it appears that though per capita usage is moderate now, it will continue to grow.
The Promotion Imperatives (promotional tactics most likely to be successful) vary greatly by each segment. This does not present a problem for other brands since they are targeting only one segment. However, it does present a problem for Gardenburger since they must address the ¡¥cultural creatives¡¦ who currently represent the bulk of their business. Already Gardenburger has changed its package to be more ¡¥slick¡¦ which is exactly what the cultural creatives dislike. Gardenburger¡¦s existing personality appears to appeal to the sensitivities of the ¡¥cultural creatives¡¦ segment.
3.3 What the Consumer Buys
Core Product: The core product is a substitute for meat. It is a dynamically continuous innovation which has responded to an increasing need for healthier food. The features that meet this growing need are the use of vegetable ingredients to provide protein and carbohydrates and to minimize fats, cholesterol and additives. The early majority is now purchasing the core product. Little change in behaviour is required to switch to these meatless products.
Actual product: Each brand offers a number of actual products that differ with respect to ingredients and whether the product is designed deliver a meat like taste. Some products contain soy which offers additional health benefits.
Augmented Product: There is no indication that any brand has augmented their products.
Brand Preferences: Gardenburger offers a set of benefits more likely to appeal to the ¡¥cultural creatives¡¦ while the other three brands address the ¡¥tastes like meat¡¦ benefit.
Brand Benefit differentiation/SCA: Value added by benefit:
Gardenburger
X Own, distinct flavor, taste and texture ¡§superior¡¨ to soy or tofu based burgers
X Low fat.
X Major ingredients more discernible. A more interesting taste experience that is more healthy than meat.
Harvest Burger X Simulate the taste and texture of real meat.
X Contain no animal products.
X Protein replacement.
X No cholesterol, saturated fat, reduced fat, animal fat. A healthy meat replacement that tastes like meat.
Boca Burger X The great taste of a hamburger with no meat. A great tasting hamburger that contains no meat.
Conclusions: Preference appears to be driven by segment needs. Adjusting Gardenburger¡¦s benefit set could result in alienation of their current core of loyal users.
3.4 Where Consumers Buy
Currently consumers are able to buy meat substitutes at specialty food stores, healthy menu restaurants, smaller grocery chains, and into the mainstream grocery channel. Gardenburger¡¦s particular strengths are in the secondary and tertiary channels. This is consistent with their segment strength among the ¡¥cultural creatives¡¦.
Intermediary Description
AFFORDANCES Consumer Manufacturer
Primary:
Mainstream grocery chains X Accessibility
X Selection
X Convenience X Intensive distribution
X Displays and in-store sampling and promotions.
Secondary:
10,000 Retail outlets such as grocery & specialty stores; 4,000 natural food stores X More knowledgeable sales staff wrt health food items.
X Supports the ¡¥specialness¡¦ of more natural foods. X Making information available.
Tertiary: 30,000 Food service outlets X Opportunity to try new foods. X Ability to sample a large number of consumers.
4.0 The Macro Environment
X Legal and regulatory issues facing meat are not applicable to this category, however the use of pesticides and bug species could be an issue when using grains, oats, and vegetables
X Sociocultural trends suggest that healthy, active lifestyles are on the upswing and moms want to bring better foods to the table for their families. Aging baby boomers demographic shifts may be a key source behind growing health concerns. A side effect of this health trend may be the influence of healthier eating and living habits amongst generation Y¡¦s.
X More and more doctors are recommending that patients cut back on things like cholesterol, fat, and sodium intake
X Time is becoming a more and more valuable commodity in everyday life.
Conclusions: The macro environmental conditions appear to support the long term interest of consumers in meat substitutes. This indicates that this is not a ¡¥trendy¡¦ category, but one that is here to stay.
Section 2 ¡V SWOT Analysis
Strengths
X Hubbard was an aggressive marketer successful at building fledgling businesses.
X Consistently been profitable.
X Good distribution in specialty and health food stores and restaurants.
X If tried, there was a high adoption rate.
X On menu at over 30,000 food service outlets providing sampling opportunities.
X Great tasting low fat product.
X More than just a meat substitute.
X Brand personality that appeals to the sensitivities of the ¡¥cultural creatives¡¦. Opportunities
X Market for healthful foods predicted to continue growing.
X Over 100 million American shoppers watched their fat intake.
X 51% of shoppers had made changes in their diets due to health reasons.
X 90% of shoppers practiced some level of health-motivated shopping behaviour.
X 26% of adult shoppers were ¡¥Cultural Creatives¡¦ who tended to be innovators and early adopters.
Weaknesses
X Narrowly focused company against a single product category.
X Small privately owned company with few capital, human or financial resources.
X Doesn¡¦t simulate the taste of beef.
X Little presence in the ¡¥meat alternatives¡¦ sub-segment.
X Underdeveloped in mid-west and south-east.
X Low level of advertising vs. competition. Threats
X Launch of veggie patties by Morningstar into the refrigerated section. Launch of new lines by Morningstar.
X Soy products have many benefits.
X Harvest Burger positioned as an all vegetable substitute for meat.
X All Morningstar products were designed to simulate meat.
X Pillsbury has lent Green Giant name and distribution system to Harvest Burger.
X Morningstar is spending over 3 times more than Gardenburger on advertising.
X Mainstream retail channels will demand high trade promotion support expenditures which will threaten the profitability of the category.
An analysis of the SWOT presents few Sustainable Competitive Advantages for Gardenburger and points out the weaknesses which could prevent success in addressing moving into the mainstream.
Low fat ¡V This strength addresses the high level of consumer interest in low fat foods, with over 100 million shoppers expressing an interest in lower fat foods.
Food service strength ¡V This affords Gardenburger the ability to sample their product in what appears to be a fertile set of potential consumers since 90% of shoppers practiced some form of health-motivated shopping behaviour.
Appeal to ¡¥cultural creatives¡¦ ¡V The existing positioning and personality of the brand have a high degree of appeal to the ¡¥cultural creatives¡¦.
Size and lack of resources ¡V these weaknesses must be dealt with in order to take advantage of mainstream consumers seeking healthy alternatives to meat, at least for a few meals a week.
This analysis leads to two fundamentally different alternative strategies. Section 3 - Alternatives
1. To build the Garden Burger brand by growing within the existing distribution channels, using their foodservice presence encouraging trial.
a. The source of business: non-users from primarily ¡¥cultural creatives¡¦.
b. Positioning: meatless products don¡¦t have to sacrifice gourmet or ethnic tastes.
c. Media spending will be in trade magazines and vertical magazines that will reach the target of 60% women/40% men who are interested in social policy and the environment.
d. Promotional spending will be against the foodservice industry to increase distribution and to sample the product.
2. To build the Garden Burger brand from a niche product to a mass-market national brand by focusing efforts on increasing marketing and promotions for the trade and Health Modifiers segment.
a. The Primary source of business will be the Health Modifiers.
b. The target will consist of individuals concerned with health. They span all age boundaries but skewed to women (25 ¡V 54).
c. Positioning will focus on the health benefits of a non-meat diet and the fact that Gardenburger is low in fat.
d. Spending will be on national TV., print, POP and trade incentives.
Evaluation of Alternatives
Expanding within current target Expanding into mainstream target
Ability to increase volume Low to medium ¡V Segment is much smaller than ¡¥health modifiers. High ¡V Largest segment and expected to continue to post high growth.
Ability to increase profit and/or margin Low ¡V Increases in volume will not be enough to affect their higher cost structure. Low - Substantially higher volumes will present economies of scale and more leverage with the trade. However these will be more than offset by higher promotional expenses required to list in national grocery chains and to advertise nationally.
Ability to insulate the brand from competitive reaction. High ¡V Targeting this niche does not provide enough volume to interest another player. No ability
Best fit with company resources. Resources available Capital expansion will be necessary, which may be beyond the financial resources of the company.
Takes advantage of company resources. Good ¡V leverages current relationships, formulas and plant to be more productive by increasing volume without having to build. Low ¡V New resources will be required.
Ability to provide a competitive advantage. Targeting the attraction to gourmet and ethnic flavours should be sustainable. Other competitors can adopt the same strategy.
Ability to differentiate the brand. A gourmet meatless differentiation is possible. Little to differentiate the brand.
Effect on strengthening Brand Health measures. High potential to strengthen brand Health measures in a smaller segment. Medium potential to low since there is little equity at this moment with this target.
Ability to strengthen the Brand identity Fortress. Low;
GB was built around targeting Culture creatives who are know for being very loyal. Low;
GB was built around targeting Culture creatives who are know for being very loyal.
Recommendation: Expanding within the current target best leverages the existing resources of the organization at the least level of risk. Though it does not provide the growth potential of going mainstream, it protects the revenue stream which currently exists. As a small privately owned company, the owners have no need for huge increases in business, especially when this would require a heavy investment in plant and equipment.
It is likely that if the category begins to grow it will attract large food manufacturers. Already Pillsbury is attracted to the category. If major food manufacturers enter the category, Gardenburger will not have the resources to combat them, yet would be insulated if they addressed the niche segment of ¡¥cultural creatives¡¦.
The mainstream alternative does not match the organizational culture of the company. Commitment to social issues, a vision of a healthier world, and less corporate outlook would have to be sacrificed.