– A COMMUNICATION PLAN TO ENGAGE THE GERMAN MARKET

by Julius Maximilian Paul

A Thesis Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS)

May 2009

Copyright 2009 Julius Maximilian Paul ii

Table of Contents

List of Tables iii

List of Figures iv

Abstract v

Chapter 1: Introduction/ Background 1 • Thesis Goal 1 • Company overview 2 • Introduction to the German consumer market 9

Chapter 2: Business Goal 15

Chapter 3: Statement of Problem 16

Chapter 4: Research Methodology 18 • Research Goal 18 • Research Methods 18

Chapter 5: Situation Analysis 40

Chapter 6: Communication Goals 57

Chapter 7: Objectives 59

Chapter 8: Key Audiences/ Key Messages 60

Chapter 9: Strategies 63

Chapter 10: Tactics 65 • Pre-Launch 65 • Launch 80 • Post-Launch/ Sustainability 84

Conclusion/ Recommendation 90

Bibliography iii

List of Tables

Table 1: Key Finding 1 27

Table 2: Key Finding 2 28

Table 3: Key Finding 3 29

Table 4: Key Finding 4 30

Table 5: Key Finding 5 31

Table 6: Key Finding 6 31

Table 7: Key Finding 7 32

Table 8: Key Finding 8 33

Table 9: Key Finding 9 34

Table 10: Key Finding 10 35

Table 11: Key Finding 11 36

Table 12: Key Finding 12 37

Table 13: Key Finding 13 38 iv

List of Figures

Figure 1: Organic Priciples 14

Figure 2: Metro Cash & Carry in Figures 44

Figure 3: in Figures 45

Figure 4: REWE Group in Figures 46

Figure 5: in Figures 47

Figure 6: Perceptual Mapping 55

Figure 7: Whole Foods Market on Twitter 71

Figure 8: Whole Foods Market on German Wikipedia.org 75

Figure 9: TV Market Share Details 79

Figure 10: Price Difference Organics 83 v

Abstract

This master’s thesis is a communication plan for the international retailer Whole

Foods Market Inc. to successfully engage in a new consumer market: . After entering the European market in 2006, by opening a Whole Foods Market store in

London, the time seems to be right to continue expanding its business. Therefore, I examined the company Whole Foods Market and dissected the German landscape. I pondered on the following questions: Where are the cultural differences? How do

Germans purchase groceries? What do they value and what way of communication should be utilized to effectively target the consumer? As an international student growing up in Germany, my cultural background and insights on the German market allows me to create a plan that could make a business like Whole Foods Market succeed.

1

Chapter 1: Introduction/ Background

Thesis Goal

"We have been interested in Europe for a long time and thought it would make sense to start in Britain, which has been more advanced when it comes to embracing organic foods than the United States," said Jim Sud, executive vice-president of growth and development, Whole Foods Inc.1 Two years after Whole Foods Market successfully opened its first London-based store, it is now time to move forward and target the next major market: Germany. As the largest European economy, Germany is also the third biggest economy worldwide with the fifth largest purchasing power. The country has a reputation for being ‘green’ and environmentally conscious. This can also be seen in the retail landscape, where since the early 1990’s organic agriculture and humane animal husbandry became increasingly relevant. Yet, the German retail market, with a combined revenue of EUR 449 Billion (2007) and 19,800 organic farmers, has no comparable business model to Whole Foods Market: a grocery store that offers a huge variety of high-quality, organic products.

In this thesis, I will examine the company Whole Foods Market, dissect the German retail landscape and create a communications plan to successfully engage in the new market. I will ponder the following questions: Where are the cultural differences? How do Germans purchase groceries? What do they value and what way of communication should be utilized to effectively target the consumer? As a food enthusiast born and

1 http://www.guardian.co.uk/business/2007/jun/07/retail. 2 raised in Germany, I understand and can translate those differences; small insights that could make a business succeed or fail.

As can be seen in the table of contents, this thesis strictly follows the strategic planning model, a tool that structures the campaign in a measurable and replicable way.

Company overview

Background

In 1980, John Mackey and Renee Lawson Hardy, owners of Safer Way Natural

Foods, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery, founded Whole Foods Market in Austin, Texas, opening the original Whole Foods store on September 20, 1980. Throughout the 1980’s, Whole Foods Market began its US expansion moving into Houston, Dallas and New Orleans. During the 1990’s, the Whole

Foods Company acquired a variety of other natural food chains like:2

• Wellspring Grocery of North Carolina

• Bread & Circus of Massachusetts and Rhode Island

• Mrs. Gooch's Natural Foods Markets of Los Angeles

• Bread of Life of Northern California

• Fresh Fields Markets on the East Coast and in the Midwest

• Florida Bread of Life

• Merchant of Vino of Detroit

• Nature's Heartland of Boston

2 http://www.wholefoodsmarket.com/company/history.php 3

At the beginning of the 21st century, Whole Foods Market acquired additional companies like Food for Thought in Northern California and Harry's Farmers Market stores in Atlanta. In 2002, Whole Foods Market moved into Canada opening its first non-

US store in Toronto. Two years later, in 2004, Whole Foods Market entered the European market with the acquisition of seven Fresh & Wild stores in the United Kingdom. In the last two years the company has opened five Whole Foods Market stores in London, the only ones operating outside of North America.

Whole Foods Market Today

On January 23, 1992, Whole Foods Market Inc. went public at an IPO price of

$2.125 per share. The company's stock is traded on The NASDAQ Stock Market

(Symbol: WFMI) and is included in both the NASDAQ-100 Index and S&P 500 Index.3

The company currently employs 41,500 people in more than 270 locations. Its 2007 revenue was $7.9 billion.4 Fortune magazine has named Whole Foods Market one of the

"100 Best Companies to Work For" in America every year since the inception of the list.

Moreover, Whole Foods Market is the only Fortune 500 Company purchasing wind energy credits to offset 100% of its electricity use.6

3 http://www.wholefoodsmarket.com/company/investor-relations.php

4 Annual Report 2007 http://www.wholefoodsmarket.com/company/pdfs/proxy08.pdf

6 http://media.wholefoodsmarket.com/pr/wf/fast-facts.aspx 4

Management7

The Whole Foods Market board of directors consists of six people:

• John P. Mackey Co-founder of the company; served as Chairman of the Board

and Chief Executive Officer since 1980. He also served as President between

2001 and 2004.

• Dr. John B. Elstrott Served as director of the company since 1995.

• Gabrielle E. Greene Served as director of the company since 2003.

• Hass Hassan Served as director of the company since 2005. Mr. Hassan served as

President and Executive Chairman of Fresh & Wild until 2004 when Whole

Foods Market acquired the company.

• Morris J. Siegel Served as director of the company since 2003.

• Dr. Ralph Z. Sorenson Served as a director of the company since 1994.

Corporate Culture

Core Values

To better understand the corporate culture and the market positioning of Whole

Foods Market, it is necessary to examine core values of the company in order to successfully craft a communications plan for the German market. It is critically important to adapt and translate those values for entering the new consumer market. Besides the fact that these can be seen as a competitive advantage, officials see its corporate culture as one of the main reasons why people feel that Whole Foods Market is an exciting

7 http://www.wholefoodsmarket.com/company/leadership_board.php 5 company to be a part of. “These core values are the primary reasons for this feeling, and they transcend our size and our growth rate. By maintaining these core values, regardless of how large a company Whole Foods Market becomes, we can preserve what has always been special about our company. These core values are the soul of our company.”8

Whole Foods Market’s core values are as follows:9

• Selling the highest quality natural and organic products available.

• Satisfying and delighting its customers.

• Supporting team member happiness and excellence.

• Creating wealth through profits and growth.

• Caring about communities and the environment.

• Creating ongoing win-win partnerships with suppliers.

Locally Grown

Whole Foods Market’s history and reputation are intimately linked to its support of local farmers. The company’s goal is to provide customers with the broadest possible selection of the highest-quality products available. Therefore, “locally grown” is one of the means to meet customer needs. In every community where Whole Foods Market does business, the company is permanently committed to buying from local producers, whose fruits and vegetables meet Whole Foods Market’s high-quality standards. Moreover,

8 http://www.wholefoodsmarket.com/company/corevalues.php#selling

9 http://www.wholefoodsmarket.com/company/corevalues.php#selling 6

“local farm production puts a face behind the foods we consume and keeps us connected to the seasons, as well as the unique flavor and diversity of local crops.”10

The following list describes why Whole Foods Market sees locally grown food as desirable:

• Local Means Green. Buying products from local growers reduces the

environmental impact and costs of transportation.

• Preserving Character. Small local farms are a valuable component of a

community's character.

• Crop Diversity and Quality. Farmers producing crops for a local market often

choose to diversify, growing a variety of crops instead of just one. In addition,

they are more likely to harvest them at their peak of freshness and flavor.

Organic

“Organics is at the root of everything we do.”11 Whole Foods Market is strongly committed to organic agriculture and food. Besides the huge variety of products offered in Whole Foods Market stores, the organic aspect is most important for its market positioning. The company states that it is exclusively “choosing organic farmers and producers who believe in good health, quality foods and earth-friendly sustainable

10 http://www.wholefoodsmarket.com/products/locally-grown/index.php

11 http://www.wholefoodsmarket.com/values/organic.php 7 agricultural practices.“12 According to Whole Foods Market organic agriculture:13

• Builds healthy soil that is rich with nutrients.

• Promotes biodiversity.

• Relies on natural prevention pesticides, fungicides or herbicides.

• Prohibits the use of antibiotics and artificial growth hormones in meat.

• Honors the role that animals play in the cycle of life.

• Prohibits the use of genetically modified organisms (GMOs).

• Safeguards water quality by eliminating harmful runoff from artificial fertilizers

and other toxic chemicals.

The organic aspect of Whole Foods Market will be one of the major competitive advantages in the German market, even though the term organic has to be redefined for the German audience due to legal issues. In the course of this thesis I will further examine the term organic for the German market.

Green Action

The third aspect of Whole Foods Market’s corporate culture is what is described as

“green action.” The company’s strong attempt to reduce its impact on the earth and its resources is divided into the following three parts:14

12 http://www.wholefoodsmarket.com/values/organic.php

13 http://www.wholefoodsmarket.com/values/organic.php

14 http://www.wholefoodsmarket.com/values/green-action.php 8

1. Reduce

Whole Foods Market

• Uses paperless ordering systems to reduce paper waste.

• Supports carpooling and public transportation for its employees.

• Uses power monitors and other technology to reduce its energy consumption.

• Uses biodegradable supplies for food and wine sampling.

• Reduces landfill waste by up to 75% in some regions due to composting.

• Banned plastic grocery bags from all stores.

2. Reuse

Whole Foods Market

• Strongly encourages reusing grocery bags.

• Reuses plates and bowls for in-store dining.

3. Recycle

Whole Foods Market

• Replaces disposable batteries with rechargeable ones.

• Uses recycled paper with a high percentage of post-consumer waste whenever

possible.

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Introduction to the German consumer market

Landscape and purchasing power

Germany is Europe’s most populated country (82 million inhabitants) centered between seven countries in the geographical heart of Europe. It is divided into 16 different states. The states with the highest populations are: North Rhine Westphalia, in the west with about 18 million inhabitants; Bavaria, in the southeastern part with about

12.5 million; and Baden-Wuertemberg, in the southwestern part with about 11 million. In addition, there are three major cities that are economically important: , Germany’s capital and biggest city with about 3.5 million residents, in the northeastern part;

Hamburg, second biggest city, in the north; and Frankfurt, Germany’s finance-city in the center of Germany. Currently, the country marks the largest economy within the

European Union and the German purchasing power is the fifth largest in the world. In

2007 the combined retail revenue (traditional, catalogue, online) in Germany was EUR

449 Billion.15

When it comes to organic food and agriculture, the German market is constantly growing. In 2008, German retailers realized a combined revenue of EUR 5.8 billion only

15 http://www.lz-net.de/studien/pdf/127-multichannen.pdf

10 with organic products.16 Moreover, organic agriculture is believed to be an up-and- coming business. In 2008, the number of organic farmers increased by 1100 to 19,800.17

As far as Whole Foods Market is concerned, the German landscape provides spectacular opportunities when it comes to the locally-grown factor. In the United States, the company has set a radius of 200 miles (320 kilometers) for its food to become local.18

Depending on the specific location in Germany this criterion could include almost the entire country (for Frankfurt) or multiple countries, which ultimately broadens the possible food spectrum.

Trends

Ernst & Young performed a recent study about organic food in Germany.19 Even though the organic boom is said to be over, the German demand for organic products in

2008 rose despite the financial crisis.20

16 http://www.lz- net.de/archiv/lznet/mylznet/pages/show.prl?params=keyword%3Dbio%26all%3D1%26type%3D4%26whe re%3D0%26suchid%3D%26quelle%3D%26laufzeit%3D0&id=71213&currPage=1

17 http://www.lz- net.de/archiv/lznet/mylznet/pages/show.prl?params=keyword%3Dbio%26all%3D1%26type%3D4%26whe re%3D0%26suchid%3D%26quelle%3D%26laufzeit%3D0&id=71213&currPage=1

18 http://www.iht.com/articles/2007/05/11/news/wbfood.php?page=1

19http://www.welt.de/wirtschaft/article1296891/Deutsche_kaufen_dreimal_mehr_Bio_Kost.html

20 http://www.welt.de/wirtschaft/article2308043/Warum-die-Kunden-bei-Oeko-Kost-jetzt-knausern.html

11

The combined sales of organic products went up by nearly 10 percent to more than

EUR 5 billion.21 22 The study also found that customers are expecting an expansion of the organic variety offered, especially when it comes to drinks and milk products.23

According to a new study, 94 percent of all food industry executives in Germany believe that the organic segment will be rising further, and that the demand for quality products from organic farmers will also continue growing.24 In addition, the study found that the German consumer is becoming more and more health-conscious when it comes to food. Whereas in 2004, 47 percent indicated that they purchase fresh and healthy food, the percentage in 2007 already was 53.25 Interestingly, there is no scientific evidence proving that organic food really is healthier. Dave Cavanagh, head of corporate affairs and communication at the Institute for Animal Health, was quoted in OrganicFarmFoods:

If anything, extensive farming (free-range as opposed to intensive farming) can throw up more potential problems. Birds out in the field can come into contact with other animals that scurry, like rats. Some diseases that chickens get spend part of their lifetime in earthworms and snails that can burrow up into chickens, which are roaming. But consumers perceive organic foods as healthier and therefore have been increasing their consumption as part of a healthier lifestyle.26

21 http://www.lz- net.de/archiv/lznet/mylznet/pages/show.prl?params=keyword%3Dbio%26all%3D1%26type%3D4%26whe re%3D0%26suchid%3D%26quelle%3D%26laufzeit%3D0&id=71213&currPage=1

22 http://www.test.de/themen/essen-trinken/meldung/-Bio-im-Vormarsch/1662483/1662483/

23 http://www.lz-net.de/dossiers/sortimente/pages/show.php?id=1175

24 http://www.lz-net.de/dossiers/sortimente/pages/show.php?id=1175

25 http://www.lz-net.de/dossiers/sortimente/pages/show.php?id=2440

26 http://www.organicfarmfoods.co.uk/news/19-06-2007.php

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For Whole Foods Market the time still seems to be right to enter the German market. With consumers purchasing organic food, a market that demands a bigger variety of organic products and the overall assumption that organics are a healthier alternative, the foundation for establishing a German Whole Foods Market is nearly perfect.

Organic vs. Bio

According to Whole Foods Market officials, organic agriculture “emphasizes the use of renewable resources and the conservation of soil and water to enhance environmental quality.”27 This production method promotes healthy eco-systems by prohibiting genetically engineered seeds or crops (genetically modified ingredients -

GMOs), as well as the use of pesticides, herbicides or fungicides. It is also seen as a livestock-management practice, promoting a humane treatment of animals. This includes fresh air and outdoor access as well as the absence of antibiotics and growth hormones.

In the U.S., the definition of what can be called organic is set by the United States

Department of Agriculture's (USDA) Organic Rule, which first became effective on

October 21, 2002. Whole Foods Market was one of the main corporations, working together with the USDA, to develop this rule. Currently, the Organic Rule applies mainly to organic food products. The USDA, Whole Foods Market and the organic industry are working together to create certification standards for other products such as personal

27 http://www.wholefoodsmarket.com/values/organic.php

13 care, textiles, seafood and pet supplies.28

For Germany and the entire European market, the term organic (Bio) is regulated by the European Union. Regulation (EEC) No 2092/91 on organic production and labeling of organic products was first introduced in 1991. Throughout the years it was repealed and revised several times. The last official version is the

COMMISSION REGULATION (EC) No 889/200829

This regulation sets rules regarding the following aspects:

• Rules on production, processing, packaging, transport and storage of products

• Plant production

• Livestock production

• Origin of animals

• Livestock housing and husbandry practices

• Feed

• Disease prevention and veterinary treatment

• Processed products

• Collection, packaging, transport, storage of products

• Climatic, geographical or structural constraints

• Specific labeling requirements for feed

• Control requirements for plant and livestock products & preparation, and imports.

28 http://www.wholefoodsmarket.com/values/organic.php

29 Official Journal of the European Union: 422-889-2008 implement action rule (EEC) No 2092/91 14

Article 4 of this regulation states the overall principles:30

Figure 1: Organic principles

For Whole Foods Market to successfully enter the German market, it will be necessary to fully examine the EU-Regulation due to certain differences regarding the term organic. The basic principles are more or less equivalent to the United States

Department of Agriculture's (USDA) Organic Rule, though.

30 Council Regulation (EC) No 834/2007 of 28 June 2007 on organic production and labeling of organic products and repealing Regulation (EEC) No 2092/91 15

Chapter 2: Business Goal

This communications plan is created to engage the German market. Therefore, the main business goal is to successfully launch a Whole Foods Market store for the German customer. In addition, the overall goals are as followed:

• Creating brand awareness. In Germany, the brand/ name Whole Foods Market is

not recognized so far.

• Mental brand equity: inclusion of the brand in the consumers’ consideration set.

• Financial equity: brand’s economic performance in the marketplace: selling

products and gaining market share.

• Improve Whole Foods Market’s stock/ satisfy shareholders: continuing the

company’s role as a global retailer expanding its business. 16

Chapter 3: Statement of Problem

In times of economic crisis it is questionable whether or not customers are willing to pay a little more on their groceries.31 Although Whole Foods Market’s potential customer base might not start to cut down on high-end products or change their buying habits when it comes to purchasing groceries, it will still be problematic to engage a new market with a “luxury” business at this point. Moreover, the German food retailing market is believed to be one of the toughest markets to engage due to over saturation32.

As will be seen in the competitive analysis, a lot of international retail companies are based in the German market, flooding the landscape with specially tailored grocery stores for individual customers.

Also, organic products have a longer history in Germany. The German customer is more health conscious when it comes to food than, for instance, American customers.

However, a recent study by the German magazine and online information platform for the retail and fast moving consumer goods sector in Europe, the “Lebensmittelzeitung”(LZ), indicated that skepticism among customers, when it comes to organic products, is still major: only 45 percent believe that an organic label really means organic ingredients, a perception that needs to be changed by Whole Foods Market.

In addition to the organic aspect, the fact that it is an American brand cannot be neglected. For every American company and especially producers of consumer products, there has always been a certain degree of prejudice among German customers. When

31 http://www.welt.de/wirtschaft/article2308043/Warum-die-Kunden-bei-Oeko-Kost-jetzt-knausern.html

32 http://www.welt.de/wirtschaft/article2161046/Die_Bio_Branche_kaempft_gegen_die_Saettigung.html 17

Whole Foods Market opened its first London based store in 2007, the Guardian, a famous

UK newspaper, called Whole Foods Market the “Disney World of Foods.”33 When it comes to food in general, there is an overall bias among European customers that

Americans are not famous for good food. What is known, are fast food chains like

McDonalds, Burger King, and Kentucky Fried Chicken. The perception that American food is unhealthy and bad needs to be tackled and changed by the company.

The last problem Whole Foods Market might face is the size of stores the company . Even though the variety of products is one of the main competitive advantages and a signature of Whole Foods Market, it will be very difficult to operate such a big store on the German market. Besides higher operating costs, labor expenses and utilities,

German cities are structured in a way that makes it difficult to run a grocery store that requires such immense space.

33 http://www.guardian.co.uk/business/2007/jun/07/retail.supermarkets 18

Chapter 5: Research Methodology

Research Goal

The main research goal is to determine buying habits of the German customer as well as perceptions of what organic food means to them. Moreover, primary research can explain why certain tactics and business models will or will not work properly on the

German market. In addition, primary research will show, which tactics Whole Foods

Market is currently using to reach out to its customers, engage them in a conversation and drive them into the stores.

Research Methods

Primary Research

In order to find out how German customers purchase food, what they value when it comes to groceries and what their mindset about organic products is, I interviewed a food-enthusiast (foodie). I choose to interview a foodie, since she represents a main target audience. In addition, it is important to notice that I consider myself a foodie, being very conscious about quality and origin of food. Moreover, the fact that I grew up in

Dusseldorf, Germany, gives me a solid background on the German purchasing behavior and culture. Therefore, a lot of the questions you will be seeing in my primary research

(as well as some of the strategies and tactics) are also based on my personal experience and expertise. Based on the key findings of my interview and my own hypothesis, I then created an online survey (provided by www.surveymonkey.com) about buying habits of 19

German customers, which was send out in December of 2008 (Qualifications and outreach of this survey will be further explained in the section Quantitative).

My second interview partner is a Whole Foods Market account-supervisor from the

Rogers Group, Los Angeles. His first-hand insights will especially help in developing public relations tactics that will not only work, but are also timely and close to what

Whole Foods Market is currently doing in the United States.

Qualitative

Interview I

Interview partner:

Nina Albrecht, 27 years old from Dusseldorf, Germany, Arts-History Major

Household: 2 people, not married, no kids

On average, how much do you spend on groceries per month?

I would say between 500 and 600 Euros ($640-$760).

How often per week do you prepare meals at home?

It depends on my mood and if I have enough time to cook, but I would say that I prepare and eat about 15 meals per week at home.

20

When you need groceries, where do you usually go?

I frequently visit a couple of different places to fulfill my grocery list. Besides REWE (see competitive analysis), where I usually get basics like potatoes, pasta, rice, milk, butter, spices, and all sorts of things, I tend to purchase fresh food at specialty stores. Bread, for instance, I exclusively buy at my bakery, meat at my butcher, fruits and vegetables at a farmers market or at fruit stores.

REWE, as an example of a big retail store, also carries all those products. Why do still choose to go to different places?

Besides the fact that, for instance, meat simply tastes better when I buy it from my butcher, I like the big variety of products and of course the freshness. In addition, I like to know where my food comes from. The butcher I frequently visit has a farm in Neuss

(German town about 15 miles outside of Dusseldorf). I know that my meat is fresh and does not come out of mass production. Regarding fruits and vegetables, I like the fact that people at specialty stores or farmers markets can tell me what is in season right now, what apple really tastes good or what is cheap to get right now. They just know what they are selling and they are honest. You will never find that at a regular .

If you are not really satisfied with what REWE has to offer, why do you still choose to buy your groceries there?

Because it is right around the corner.

21

So proximity is important for you?

Very much. I never buy stocks of groceries ahead of time. Grocery shopping for me follows the ‘pleasure principle.’ I go shopping once I figured out what I want to eat today. Every other week or so, we go to Metro (see competitive analysis) to buy necessities, everything else I tend to purchase fresh for the day.

What do you think about organic food?

Organic is good for certain products. I try to buy whatever organic I can get, but I have to say that it sometimes does not taste that great. For me, organic production is most important when it comes to meat, because of the way animals are treated. I am willing to pay more for my meat, if I know that the animals are able to walk around and are being treated humane.

You said that you are willing to pay a little more. In your opinion, are organic products more expensive?

Absolutely. I would say that organics are at least 1/3 more expensive, sometimes even more.

But you are willing to pay that price?

Sure, because I know why it is more expensive and why it is needed. If you need more land and workers to farm organically, you need to be paid more. As I said, the treatment 22 of animals is especially important for me. Moreover, I think that organic food is healthier for us, which also is very important.

When you think of a grocery store, is there anything you really miss?

Exotic food. Something you cannot find anywhere, like special spices for instance. In addition, I really love how on the farmers markets in Italy you can buy the perfect vegetable mix for a Minestrone. Already chopped up, but fresh. This is really something that is missing. Semi-finished goods, which are fresh and organic.

Interview II

Interview partner:

Keith Creighton, Rogers Group, Whole Foods Market Account

For Whole Foods Market it is important to be “more than just a grocery store.”

From time to time, the company offers special events like “singles-nights” in some of its stores. Do you have any insights on what we will be seeing next from Whole

Foods Market? Are those tactics being appreciated and valued by its customers?

While the Whole Foods Market brand, and the quality of the products within each store, remain consistent location to location, it is up to the Store Team Leaders, the store marketing managers and each person on the store floor to help cater to the specific needs of their clientele. Clientele to the 38 stores in the Southern Pacific Region are consistent in priding themselves on purchasing the best natural and organic foods. But beyond that, 23 the Venice, CA store enjoys a large share of singles traffic. Their prepared foods sales, wine tasting events and singles night mixers are wildly popular. Stores in the suburbs cater to families - their peak times are different and much of their food sales (prepared and uncooked) is enjoyed at home. Digging deeper, many stores offer Artisan Corners, where art, jewelry, clothing and home furnishings by local artists are sold. All stores stock locally-sourced food products, keeping family farms thriving in the region.

How does Whole Foods Market typically promote a grand opening of a new store?

What importance does the community surrounding the store play? What tactics are utilized to create awareness among local residents?

Connecting with the surrounding community is the most important part of the store opening. Key industry leaders and opinion leaders work in collaboration with the store management during the store's development to ensure the needs of the community are being addressed - parking, noise, employment, product selection are all discussed, so when the store opens, the community is already fully invested in its success. We give preview tours to community leaders and key media. Instead of "ribbon cutting" - we break bread and share it with one and all before opening our doors. At most store openings, there is a line around the block on opening day, and the traffic rarely lets up from then on. Many stores also select local charitable partners, and have 5% days to raise funds and awareness.

24

At last, it would be very beneficial to get some insights and thoughts on how they outreach to their different audiences. What new tactics have been implemented to drive customers to the stores or get them involved in an online conversation or social media?

Whole Foods Market connects with its many diverse audiences on the national, regional, city and local level. YouTube, Facebook, Twitter and their continually expanded web site offer a tremendous amount of fresh, relevant content to keep customers engaged. Their

"Whole Deal" newsletter (published quarterly, expanding to 6 times/year) is like having a personal concierge guide you through the store - among their popular recipe ideas: one list of groceries - and recipes to make from that list for the whole week. Recipes for one, couples and families. It allows customers to expand their palates, eat fresh, and make sure no food goes to waste. You can download it as a PFD off their Web Site.

The Whole Deal - and the store's personally guided weekly "Value Tours" remind customers just how competitive Whole Foods Market is on most staple pantry items. The company's private label 365 Brand products compete head to head on price point, while delivering the natural and organic quality standards people demand from Whole Foods

Market. The Whole Foods Market customer just isn't willing to sacrifice the quality of the foods they put in their bodies - it's a way of life.

Quantitative

In December 2008, I created an online survey based on these interview findings and my own hypothesis, with a total number of 123 respondents. The qualifications for 25 the survey were quite simple. All respondents had to be older than 18. Out of my respondents I had 58 female and 65 male shoppers, 80 of them between the ages of 26 and 63. As far as the outreach is concerned, I relied completely on new media technologies and ways of communication, such as social networking sites and e-mail contacts, since it was an online survey provided by “surveymonkey.com”. Based on my own hypothesis and mostly on the key findings of the interview with my foodie, I then constructed an online survey concentrating on German buying habits. The following questions were asked:

1. Do you visit more than one store to fulfill your grocery list?

2. In a week, I:

a. Prepare the majority of my meals at home

b. Eat the majority of my meals outside of the home

3. On average, how much do you spend on groceries per month?

4. When considering a grocer, how important is/are:

a. Reasonable prices

b. Convenience of location from work or home

c. Freshness of produce

d. Quality of meat

e. Overall quality of store

f. Broad selection of products

g. Rewards program 26

h. In-store experts to assist me

5. How often do you frequent the following stores? (Variety of possible

competitors for Whole Foods Market)

6. When shopping, do you tend to buy name brands or generic?

7. Do you read a product's label before purchasing?

8. Please indicate how important buying organics and/or natural foods is to

you.

9. Would you say, you can find organics in most stores?

10. Please rank the following options considering organics:

a. Price

b. Diversity, variety

c. Shelf-life

d. In-store organic experts

11. When you hear the word "organic" what comes to mind?

In order to get as many respondents as possible, I used new media sources to distribute the survey such as Facebook.com and the German equivalent StudiVZ.net. In addition to that I used the e-mail outreach of my undergraduate University, the Heinrich-

Heine University Dusseldorf, as well as personal e-mail contacts. As a result I had 123 respondents, most of them living in North Rhine Westphalia (western Germany), the most populated state with the highest purchasing power in Germany.

Rationale for the different age groups: 27

Between the ages 18 to 20, German high-school students usually graduate. Most students graduating from College or University are between the age of 24 and 26. Young professionals are between 26 and 35. The age group of 36 to 49 usually is considered to be more affluent and tend to have a bigger household. At the age of 63 most Germans retire. The generation 64+ grew up in the post World War II era, a time where a lot of families lost everything. Most of them have a small retirement plan and live simpler lives.

It is necessary to notice that the outcome of this survey just shows trends. With a sample of 123 respondents I know that these results cannot be generalized. It is obvious that the number of survey respondents and the demographic diversity is too low to make generalizations. However, the survey delivered the following key findings that can be seen as trends:

Table 1: Key Finding 1

It can be seen, that most Germans visit more than one store to fulfill their grocery list. Especially the generation 50+ frequents a variety of stores to get their groceries done.

The German landscape, as will further be seen in the competitive analysis, is over floated 28 with small specialty stores for individual needs. Compared to the U.S., a sheer mass of small bakeries, butchers, fruit and vegetable stores as well as organic supermarkets can be found everywhere. Quality meat is mostly purchased at butchers, fresh bread at bakeries. Only a small portion of the German recipients indicated that they would only have to visit one store to fulfill their grocery list.

Table 2: Key Finding 2

Cooking and eating at home has a high value in the German culture. Fast food and delivery services are not as widespread and diverse as in the U.S. or even the UK; dining at a restaurant has more of an event characteristic. The results indicate that the working population between the ages of 26 and 49 are cooking less meals at home than other age groups (still about 50 percent). These numbers clearly indicate a solid foundation for retail and grocery stores like Whole Foods Market in general.

29

Table 3: Key Finding 3

It can also be seen that the average German consumer spends more than EUR 120

($150) a month exclusively on groceries. 58 out of 113 respondents even indicated that they were spending more than EUR 200 ($250).

30

Table 4: Key Finding 4

For almost 70 percent, convenience of location from their work or home was named as important. Because of the fact that German cities are structured differently, most city residents do their shopping without a car. Therefore, proximity is key.

31

Table 5: Key Finding 5

Table 6: Key Finding 6

32

Freshness and quality seem to be the key to success. Throughout every age group,

80 percent or more indicated that they highly value freshness of products, especially in meat. In recent years, a variety of food scandals disrupted the German retail market. Old meat was being sold, issues with animal husbandry and other food related problems are still on the customers’ minds. Due to this, the German consumer is very skeptical and conscious about quality and freshness of products. For Whole Foods Market it is therefore critically important to position themselves as being dedicated to fresh products and humane treatment of animals.

Table 7: Key Finding 7

Even though German consumers tend to fulfill their grocery list by shopping at a variety of different stores, a broad selection of products seems to be desirable. Whole

Foods Market’s business model with a huge variety of products has to be communicated.

33

Table 8: Key Finding 8

Rewards programs are of minor importance. Although most retailers offer some sort of ‘club card,’ it is only being used by a few.

34

Table 9: Key Finding 9

Even though the organic market is still booming, special organic stores (Bio-

Supermarkets) are still not being frequented. 69 percent indicated that they rarely or never shop at one of those stores, while only 3 out of 112 respondents indicated that they do the majority of their shopping here. What this exactly means for Whole Foods Market will be determined later, since those stores are structured radically different from a Whole

Foods Market.

35

Table 10: Key Finding 10

It can be seen that the average German consumer frequently shops at specialty stores like bakeries and butchers as well as farmers markets. Only about 5 percent of my respondents indicated that they never shop at one of those places. The vast majority (63.4 percent) often decides in favor of those alternatives to grocery stores.

36

Table 11: Key Finding 11

It can be seen that organic products overall are not valued to be that important.

Even though almost 50 percent of my respondents said that organic food is somewhat important to them, the numbers are not really standing out. Freshness and quality is valued higher than the organic aspect.

37

Table 12: Key Finding 12

As will be seen in the competitive analysis, most German retail and grocery stores already offer organic products. Looking at the statistics, it becomes obvious that most

German customers are aware of this. 83.6 percent of my respondents indicated that they believe that most stores carry at least some organic products.

38

Table 13: Key Finding 13

When asked for word associations with the term “organic,” the vast majority indicated that organic equals healthy. In addition, most respondents said that organic food is locally grown, has a better taste to it and is more expensive.

Secondary Research

As far as secondary research s concerned, I relied mostly on new-media research methods. For Whole Foods Market as well as its main competitors, I utilized corporate websites to gather necessary information. Moreover, I researched major German and

British newspapers to gather information regarding organic trends and current public 39 discussions surrounding food in general. For all sorts of statistics on the German purchasing behavior as well as organic trends, legislation amendments and company profiles I relied heavily on LZ.net (“Lebensmittelzeitung” = “food paper”; online information platform for the retail and fmcg sector in Europe), planetretail.net and the official website of the European Union. 40

Chapter 5: Situation Analysis

Following is a S.W.O.T. analysis that I conducted in order to determine the internal strengths, internal weaknesses, external opportunities and external threats surrounding

Whole Foods Market. This examination is necessary in order to successfully craft a media campaign for the German consumer market.

Whole Foods Market in Germany

Strengths

• Whole Foods Market has a winning business model in the U.S. market

• Whole Foods Market has an innovative business model that could be adapted to

the German market.

• Whole Foods Market would bring something new to the German market.

• Whole Foods Market is an established and publically traded company.

• Whole Foods Market already engaged the European market in 2007 by opening

the first London-based store.

• Germany is a country with strong economic power

• Germany is a country with strong purchasing power

• German Consumers are already organic-savvy

• German Consumers are health-conscious

• Germans tend to buy their groceries at a variety of different stores. Whole Foods

Market could be one of them.

41

Weaknesses

• Price of products. Limited target audience due to pricing.

• Size of stores. German cities are structured differently and have less space for big

retail stores in city centers.

• Location. A lot of German customers do their grocery shopping without a car due

to proximity to smaller supermarkets, bakeries, butcheries, etc.

• Currently, Whole Foods Market has limited to no brand awareness in Germany.

• The name Whole Foods Market. Since it is an English term, the association with

“wholesome food” will be lost. The brand name will have no meaning for the vast

majority of Germans.

Opportunities

• Organic market is still booming.

• The German consumer is more health-conscious than the American and values

healthy food as a more important part of his or her life.

• Germany has a strong purchasing power. A lot of affluent consumers that could

be potential customers.

• Until today, there is no such business model on the German market. Whole Foods

Markets idea of offering a huge variety of organic products is new to the market.

• Because Whole Foods Market has very limited brand awareness among Germans,

the company would enter the new market without any prejudice of consumers.

42

Threats

• Over saturation of the German retail market.

• Vast array of direct competitors.

• Current economic and financial crisis.

• The perception that Whole Foods Market is a “Disneyland of food.” Similar to the

UK market there is some sort of skepticism among German consumers when it

comes to American companies in general.

• The only U.S. food chains and businesses operating on the German market are

fast food chains.

• Prejudice among German customers when it comes to organic products.

o Mindset that an organic label does not mean organic ingredients.

o Organic food is way more expensive.

o The taste of organic food often times is not as good.

Competitive Analysis

After conducting a S.W.O.T. analysis on the German market in general, this section provides information about Whole Foods Market’s main competitors. This is necessary to fully understand the German market landscape and will further explain the German purchasing behavior. The German market is believed to be one of the toughest markets in the world due to over saturation. Therefore, this section is critically important to identify and recognize the competition. Each competitor will be described from a financial and market-positioning standpoint, followed by an indication of how the company/ the 43 supermarket is perceived by consumers. After the analysis, a perceptual mapping will illustrate Whole Foods Market desired market positioning in comparison to its main competitors.

You will also see an indication of quality, price, store-size and organic segment.

Metro Group AG

The METRO Group is one of the most important competitors for Whole Foods

Market. The company is an international retailer employing 290,000 people.34 It is currently operating over 2,100 stores in 32 European, African and Asian countries.35 In

2006, the Metro Group acquired all 85 German Wal-Mart Stores Inc. boosting the sales-revenue to EUR64.3 Billion (2007).36 The company’s diversified portfolio includes the following two direct competitors:

• Metro Cash & Carry37 is an international market leader in the sector of self-

service wholesale. The stores and services offered by Metro Cash & Carry are

especially targeted to meeting specific needs of professional customers. The

company operates 626 stores in 29 countries, offering a broad selection of high-

quality goods at wholesale prices.

34 http://www.metrogroup.de/servlet/PB/menu/1000080_l2/index.html

35 http://www.metrogroup.de/servlet/PB/menu/1084740_l2/index.htm

36 http://www.metrogroup.de/servlet/PB/menu/1000117_l2/index.html

37 http://www.metrogroup.de/servlet/PB/menu/1000091/index.html 44

Figure 2: Metro Cash& Carry in Figures

High-quality; wholesale price; comparable variety of products; about 600

organic products

• Real hypermarkets38 In 2006, the Real branch acquired Wal-Mart Germany

integrating former Wal-Mart hypermarkets during the first half of 2007. The

brand profile of Real is targeted at young families with children and the 50-plus

generation.

38 http://www.metrogroup.de/servlet/PB/menu/1001973/index.html 45

Figure 3: Real in Figures

Low-quality; low-cost; food section has lower variety of products; about 900

organic products

REWE Group

The REWE Group is a German retail and tourism company based in Cologne. It is the third biggest supermarket chain in Europe, operating 12,000 stores in 13 countries

(3,000 in Germany), employing more than 270,000 people (180,000 in Germany).39 In

2007, the company’s combined sales-revenue was EUR45 Billion.40 Similar to Whole

Foods Market, the company is committed to locally grown products, offering its customers a variety of high-quality, high-cost products. In the last couple of years,

REWE supermarkets are continuously and systematically expanding its organic segment, satisfying the customers growing need for wholesome food. REWE’s business model,

39 http://www.rewe-group.com/index.php?id=11&L=1

40 http://www.rewe.de/index.php?id=47 46 corporate culture and the variety of high-quality products (and therefore the target audience) are most comparable to Whole Foods Market. In addition to “REWE” grocery stores, the company also operates “ Markt,” a very cheap food discounter as well as

“Vierlinden”-stores, a new organic only supermarket. Currently the company operates five of those stores, four in North-Rhine-Westphalia (Western-Germany) and one in

Munich, Bavaria (Southern-Germany).41

Figure 4: REWE Group in Figures

41 http://www.lz-net.de/dossiers/sortimente/pages/protected/show.php?id=3266&backid=1178 47

REWE: High-quality; high-cost; comparable variety of products; big organic segment

Penny Markt: low-quality; low-cost; food section has lower variety of products; small organic segment. Biggest threats to Whole Foods Market’s success.

Kaiser’s Tengelmann AG

The Kaiser's Tengelmann AG, headquartered in Viersen, is a subsidiary of the

Tengelmann Group, based in Mülheim an der Ruhr.42 As a food retailing company it operates 700 stores, employing more than 17,000 workers.43 The company has an annualized sales volume of EUR2.51 billion.44 It is currently the market-share leader in

Berlin and Munich. In addition to “Kaiser’s” grocery stores, the company operates

“PLUS,” a cheaper discount version of Kaiser’s also selling branded products. In the last couple of years, PLUS systematically extends its own organic segment called “BioBio.”

The company currently operates 2,700 stores employing over 27,000 workers.

Figure 5: Tengelmann Group in Figures45

Sales Revenue Billion € Compared to 2007 (%)

Germany 14.16 -0.3

Europe 5.56 10.3

42 http://www.kaisers.de/infoseiten/industry.html

43 http://www.kaisers.de/infoseiten/about.html

44 http://www.plus.de/is-bin/INTERSHOP.enfinity/WFS/Plus-PlusDE-Site/de_DE/-/EUR/ViewCms- Content?Path=%2Fpages%2F61608

45 http://www.tengelmann.de/tengelmanninzahlen.html 48

Total 19.71 2.5

Employees Number Compared to 2007 (%)

Germany 88,344 1.4

Europe 28,103 6.1

Total 116,447 2.5

Stores Number Compared to 2007 (%)

Germany 6,011 0.4

Europe 1,415 7.9

Total 7,426 1.7

Kaiser’s: High-quality; medium-priced; food section has lower variety of products; medium-sized organic segment

PLUS: Medium-quality; low-cost; food section has lower variety of products; small organic segment

Schwarz-Group

The Schwarz Group is a privately owned retail company based in Neckarsulm. The holding company’s sales-revenue in 2006 was €44 billion.46 The owner Dieter Schwarz

46 http://www.handelsblatt.com/unternehmen/handel-dienstleister/schwarz-gruppe-waechst- zweistellig;1233298 49 currently employs 170,000 workers.47 In 2008, Schwarz ranked number 10 in Deloitte’s

“Global Powers of Retailing 2008” study.48 The main competitors for Whole Foods

Market are and , subsidiaries of this holding company. Kaufland currently operates 750 hypermarkets in Germany. The discount version Lidl operates 3,000 stores in Germany. Since the company is not publicly traded, there are no additional data available.

Kaufland: Medium-quality; medium-priced; ; big food section; small organic section.

Lidl: Low quality; low-cost; food section has smaller variety of products; small organic section.

EDEKA-Group

The -Group claims to be the number one food retailer in Germany with more than 10,000 stores and a combined sales revenue of €38 Billion.49 The company currently operates about 4,700 independent supermarkets generating €15 Billion is sales alone.50 In 2007, the company employed more than 253,000 workers.51 The company’s core business is described to be a mix of the independent grocery stores EDEKA and its discount branch . The company prides itself with having the best balance between

47 http://www.deloitte.com/dtt/cda/doc/content/de_CB_R_GPofRetailing08_140108%281%29.pdf

48 http://www.deloitte.com/dtt/research/0%2C1015%2Ccid%25253D186365%2C00.html

49 http://www.edeka.de/EDEKA/Content/DE/AboutUs/Unternehmen/Profil/index.jsp

50 http://www.edeka.de/EDEKA/Content/DE/AboutUs/Unternehmen/Strategie/index.jsp

51 http://www.edeka.de/EDEKA/Content/DE/AboutUs/Presse/ThemenSpezial/Qualitaetsleitlinien/index.jsp 50 quality of products and their prices. Even though EDEKA communicates its high standard of products and its commitment to high-quality food, so far organic products are rare.

EDEKA: medium-quality; medium-priced; big variety of products; small organic segment

Netto: low-quality; low-cost; food section has smaller variety of products; small organic segment

Aldi Nord/ Süd.

In addition to the discount alternatives mentioned above, the company plays a major role in the German food market. ALDI is a privately owned discount chain divided up into ALDI Nord (north; operating stores in North-West Germany; owned by

Berthold Albrecht) and ALDI Süd (south; operating stores in South-East Germany; owned by Theo Albrecht). The combined sales-revenue is estimated to €38 billion. In

Germany, both companies operate more than 4,200 stores.52 ALDI’s concept is to buy huge amounts of branded products, which are renamed and sold under a different name for a discount price.

52 http://www.aldi-sued.de/de/html/company/ueber_aldi_sued.htm?WT.z_src=main

51

Whereas ALDI’s fresh food section is limited and perceived to be of lesser quality,

ALDI ranks very high in customer-satisfaction and quality surveys for all its other products. It is estimated that three out of four families frequently shop at an ALDI store.53

Medium-quality; very low-cost; food section has lower variety of products; small organic section

Butchers, Bakeries, Fruit & Vegetable Stores

When it comes to buying habits, one of the biggest cultural differences between

Germans and Americans is the value of butchers, bakeries, and fruit and vegetable stores.

Even though most grocery stores offer a variety of meat and bread products, the average

German customer purchases his or her bread in small bakeries, offering a huge variety of baked goods. They can literally be found on every other corner inside or outside city centers. Currently, there are more than 800 different bakery chains in Germany, some of them privately owned and limited to a local audience; others are corporations with up to a thousand stores and revenues up to €500 Million.55 Those bakeries offer a huge variety of high-quality baking goods at cheap prices. Consequently, most German grocery stores are partnering with bakeries developing shop-in-shop alternatives for customers.

A comparable cultural trend is the importance of butchers for the German customer.

Butchers or meat markets can also be found everywhere. Because of the high-quality meat and the huge variety of products offered in those stores, prices exceed convenient

53 WirtschaftsWoche Nr.10 March, 5, 2007 P.55

55 http://www.kamps.de/unternehmen/ueber-uns/ 52 grocery stores by far. Health-conscious and solvent customers are more likely to choose in favor of butchers.

Due to climatic conditions, prices and the variety of fruits and vegetables are very dependent on a particular season. Unlike most supermarkets, fruit and vegetable stores are offering products all year round for higher prices. Many customers decide to shop in one of those stores to fulfill their shopping list.

Bakeries: high-quality; low-cost; big variety of baking goods; can be found everywhere

Butchers: high-quality; high-cost; big variety of meat products; most of them locally produced

Fruit & Vegetable stores: high-quality; medium-priced; big variety of products

Farmers Markets

Farmers markets have a long tradition in Germany. Local farmers sell high quality goods for mostly medium prices. The customers value the locally-grown aspect as well as friendliness of the mainly family-run businesses; quality and variety of food; as well as honesty and knowledge about their products. It is recommended not to open a Whole

Foods Market in the same neighborhood of an all-year farmers market.

Bio supermarkets

In the last couple of years, more and more privately owned organic retail stores opened up on the German market. Moreover, a couple of companies focus on organic products and organic farming, due to an increase in consumer demand. The combined 53 sales revenue of all “Bio-supermarkets” increased more than EUR 100 million between

2005 and 2006, to now more than EUR 1 billion.56 The following lists the two biggest companies and therefore most important competitors.

Basic AG

The Basic AG is a publically traded company based in Munich, which is focusing on organic products. The company currently operates 25 retail stores in 17 German cities.

Up to 18,000 organic products are offered to a fairly cheap price.57 In the last couple of years the company was facing enormous financial difficulties resulting in a loss of EUR 7 million in 2007 and the closure of four stores.

Medium-quality; medium-priced; medium variety of products; organic only

Alnatura

Market leader when it comes to organic specialty stores. The privately owned company currently operates 45 stores in 32 German cities, employing about 1,100 workers.58 In 2008 the combined sales revenue grew 24 percent to now EUR 304 million.

Besides major cities, stores can mostly be found in western and southern parts of the country. On average, those grocery stores offer 6,000 organic products.59

High-quality; high-cost; small variety of products; organic only

56 http://www.lz-net.de/dossiers/sortimente/pages/show.php?id=1166

57 http://www.welt.de/wirtschaft/article2098365/Basic_hat_das_Vertrauen_vieler_Kunden_verloren.html

58 http://www.alnatura.de/de/daten-und-fakten

59 http://www.alnatura.de/de/daten-und-fakten 54

Premium Supermarkets & Department Stores

It is also important to note that German department stores have high-quality/ high- cost food markets in their basements. Those supermarkets serve as premium shopping venues for financially strong customers. Inside German city centers they can be found in nearly every department store. Depending on the particular store and city, they are structured completely different. Some of them are privately owned grocery stores, others are subsidiaries of the department store’s holding company and again others are collections of small and delicate butchers, farmers-markets, bakeries, etc. For an inner- city location they have to be seen as the biggest competition, since other grocery stores mentioned above (REWE, Metro, Kaiser’s, Real, etc.) are mainly absent in those areas.

High-quality; high-cost; comparable variety of products; some organics 55

Perceptual Mapping Figure 6: Perceptual Mapping

Additional side notes on German buying habits

A common mistake U.S. companies are making while entering the German market concerns packaging and quantity of products. In contrast to U.S. customers, Germans do not buy products in large quantities (one reason why Wal-Mart had problems in

Germany). The rationale behind this is the fact that Germans tend to live in smaller homes/apartments and do not have storage capacity. Moreover, a lot of Germans buy their groceries without bringing a car. The third aspect is the difference that some 56

Germans tend to go grocery shopping multiple times a week to buy whatever they need fresh.

Another concept that could lead to problems is “food on sale.” Whereas coupons or sales on food products are very common in the United States, German customers would be skeptical. Discount on food has a connotation of old and bad. It is just very unusual and therefore should not be prominently considered.

Strategic Implications

Following up on the conducted S.W.O.T. analysis as well as the competitive analysis, it becomes obvious that the main task for Whole Foods Market and this campaign is to differentiate the company from the mass of direct competitors.

Furthermore, it will be necessary to tackle the consumer’s mindsets about organic food.

In addition, the economic and financial crisis may hinder a financially strong launch.

However, there is no such business model on the German market. Whole Foods

Market’s idea of offering a huge variety of organic products is new to the still-booming organic market. 57

Chapter 6: Communication Goals

The overarching goal of this PR campaign is to create brand awareness. In addition, the plan should seek to:

• Change customer perception about organic food and bring awareness and interest

to the subject.

o One of the most influential publications by the leading German customer

safety group “Stiftung Warentest”60 recently published a study saying that

organic food in general is more expensive but the quality is not better. A

variety of top newspapers picked up this study, writing negative stories

about organic food in general.61

• Change customer perception about costs for organic products.

• Expand and maintain positive communication about organic food and agriculture.

o In order to position Whole Foods Market as the best organic food store, it

is necessary to increase and maintain the total number of news stories

about organic food and agriculture.

60 http://www.test.de/

61 http://www.welt.de/wirtschaft/article1216141/Bio_Produkte_sind_teurer_aber_nicht_besser.html 58

• Increase and optimize the amount of factual information concerning Whole Foods

Market that is available and first to appear in an online search.

o Increasing and optimizing the amount of factual information concerning

Whole Foods Market will allow people to have better access to learning

accurate information that may aid in their decision to shop at Whole Foods

Market. 59

Chapter 7: Objectives

• Within one year, successfully launch one German Whole Foods Market.

• Increase and establish positive brand awareness of Whole Foods Market.

• Establish win-win partnerships with companies, institutions and the media

working in the food business.

• Score highly on quality and/or price comparison by “Stiftung Warentest.”

(German customer safety group; most influential publication) 60

Chapter 8: Key Audiences/ Key Messages

The following chapter identifies Whole Foods Market’s key audiences that have to be targeted in order to successfully engage the German market:

• Food enthusiasts/ Foodies: people who are already very concerned about organic

and healthy food

o College students: men and women between the ages of 18 to 24 who are

conscious about organic agriculture and animal husbandry.

o The older generation: men and women over the age of 60 who cook the

largest percentage of meals at home.

o Individuals that are concerned about food, but which are not satisfied with

their current grocery store.

o Hobby-Chefs: men and women that are passionate cooks and are

constantly searching for new ideas and shopping alternatives. The big

variety of products is a critical message to this group.

• Health-conscious consumers: individuals who are generally living a healthy

lifestyle.

• Celebrities: It is always good to have celebrities shopping at your store. For this

audience, the “green factor” as well as the “health factor” are important. Shopping

at Whole Foods Market could send a signal to meat mass-production industry.

Moreover, eating healthy and living healthy is a big concern to many celebrities. 61

• Key influencers: Besides celebrities, kitchen chefs, restaurant and food testers as

well as journalists have to be targeted strongly. This audience is most likely to be

very critical, yet, it is important to get fast and positive brand awareness.

• Direct neighborhood: Whole Foods Market will be entering a new community. It

is critically important to get the immediate neighborhood involved and happy to

have a Whole Foods Market around the corner. In the UK, a lot of residents felt

negatively about Whole Foods Market because the company built a huge parking

lot, destroying the ambiance of the neighborhood. Even though German

customers would probably appreciate the convenience, American-sized parking

lots are very unusual and ugly, and would therefore be seen as a negative.

• Food publications: Food magazines that reach out to those consumers who are

already food enthusiasts. “Everything Whole Foods Market” is potentially

relevant to them. (Company overview, organic commitment, green commitment,

recipes, etc.)

• General Media: For the general media, Whole Foods Market is a new major

corporation entering the German market. They will mostly be interested in the

business model.

• Parents: “Do something good for you and your kids.” This motto should be

repeated when targeting parents. This audience is important since they teach the

new generation the value of food. More importantly, this group is most likely to

cook a lot of meals at home and tend to shop bigger amounts of groceries. 62

• Generation 64+: The older generation is mostly concerned about quality and

freshness of products. Moreover, they are the ones cooking a lot of their meals at

home. In addition to that, the aspect of teleshopping/ food-delivery is very

important to them.

• Generation 18-30: For the younger generation, the future core of Whole Foods

Market’s business, it is most important to communicate humane animal

husbandry. The young generation is very concerned about mass-produced meat

and the way animals are treated by large corporations. Telling them that Whole

Foods Market is very committed to organic agriculture and the humane treatment

of animals will create positive awareness. The goal is to get this audience to buy

from Whole Foods Market, because they believe in doing the right thing.

• Neighborhood business professionals: Whole Foods Market is the fastest way to

get a healthy lunch. During lunch break (noon-3 P.M.), German city centers are

packed with professionals working in the area. Highlight Whole Foods Market’s

diverse lunch menu to this target audience.

• Local farmers: Whole Foods Market needs to create win-win partnerships with

local farmers. Mutual interests in quality and freshness of products have to be

communicated to local farmers. Therefore, Whole Foods Market’s green

commitment should be emphasized to create an atmosphere where the farmers are

proud to supply Whole Foods Market. 63

Chapter 9: Strategies

To communicate the key messages, it is recommended that Whole Foods Market implements the following strategies in order to effectively target the key audiences mentioned above.

• Position Whole Foods Market as a new, high-quality grocery store.

• Differentiate Whole Foods Market from its competitors such as REWE and

EDEKA because of its unique choice of products.

o In order to attract the largest number of possible customers, it will be

necessary to make Whole Foods Market stand out on its own. It needs to

be communicated differently to draw in new customers.

• Differentiate Whole Foods Market from other organic supermarkets such as Basic

because of its unique variety of products.

• Position and communicate Whole Foods Market to be environmentally friendly.

• Shift focus away from comparison to regular grocery stores.

• Shift focus away from comparison to other organic supermarkets.

• Use Internet and other viral outreach to create awareness about Whole Foods

Market.

• Highlight:

o Nutrition of products.

o Variety of products.

o Variety, freshness and quality of products in a German tagline. 64

o Whole Foods Market’s organic commitment.

o Whole Foods Market’s unique market positioning.

o Social, ethical aspect of organic farming and the price you have to pay for

it.

o Whole Foods Market’s diverse lunch menu.

• Use national media outreach to broaden awareness about fresh and locally grown

food. 65

Chapter 10: Tactics

The following chapter is devoted to communication tactics that effectively target the audiences mentioned above. I am recommending a “rolling launch,” and have divided the tactics into three main waves:

• Pre-Launch: everything leading up to the launch of Whole Foods Market.

• Launch. The timeframe surrounding the grand opening of the first Whole Foods

Market in Germany.

• Post-Launch. These tactics should be implemented for sustainability reasons.

Even though this communication plan focuses on entering the German market, a

nationwide increase of brand awareness is desired for future expansion to

different cities.

Pre-Launch

Company/ Brand Name

Prior to all communication tactics it is critically important to recognize the problem of the English brand name “Whole Foods Market.” Even though German children are now starting to learn English in their first grade of elementary school, the vast majority does not appropriately understand English terms used by a variety of especially U.S. companies. A recent study found out that even very simple English is not being understood properly.62 Examples for taglines that were not correctly received are

62 http://www.spiegel.de/unispiegel/wunderbar/0,1518,310548,00.html 66

“Lufthansa – There’s no better way to fly,” “McDonald’s – I’m lovin’ it” (has been translated shortly after the introduction), “Have a break, have a kitkat,” and even

“Magnum (M) – Yes I’ M.” According to this and prior studies, 92 percent of the respondents did not understand what the tagline or slogan meant.63 Moreover, German customers who do understand the meaning are less affected by English terms, taglines or slogans. Whereas, “Whole Foods Market” automatically stimulates the association with wholesome food for the English speaking community, it will not be understood by the average German customer. Therefore, it is important to add a German tagline that expresses Whole Foods Market’s values and business model. According to a variety of studies, newspaper articles and my own survey, the most important factors when it comes to organic food are:

• Freshness of products

• Organic meaning healthy

Moreover, it could be seen that the market desires a bigger variety of organic products. The new tagline should meet those demands. My suggestion is:

Whole Foods Market – Gesunde Vielfalt

(Whole Foods Market – Healthy Variety)

or

63 http://www.spiegel.de/unispiegel/wunderbar/0,1518,310548,00.html 67

Whole Foods Market – Frische Vielfalt

(Whole Foods Market – Fresh Variety)

Partnerships for German green-action approach

In 2002, Whole Foods Market’s Berkeley store became the first major food retailer in the U.S. to use solar energy as its primary power source. In 2006, Whole Foods Market made its first landmark purchase of renewable energy credits from wind farms to offset

100% of its electricity used in the United States and Canada.64 It is desirable to create such win-win partnerships in Germany following this green action. Germany is the world leader when it comes to recycling and renewable energy. Therefore, it is necessary to continue this green-energy commitment, by implementing or purchasing electricity from renewable energy sources.

Social Media Tactics

Pull versus push is key to social media. In order to effectively engage in an online conversation it is important to understand that pushing out a message will not work properly online. It is desirable to create content that is compelling to the target audience so they pull the information.

Whole Foods Market is a company that is extremely involved in social and online media in general. Whole Foods Market continuously turns its website into a destination where customers can meet, talk, and exchange information about products they care

64 http://www.wholefoodsmarket.com/values/green-action.php 68 about.65 Recipes are also very popular on www.WholeFoodsMarket.com. The company provides the opportunity for visitors to rate and comment on posted recipes and store favorites ones in an individual recipe box.66 This tactic is directly changing customer behavior, by engaging into an online conversation and then providing shopping tips and shopping lists for individual recipes. The online blog “blog.wholefoodsmarket.com” is also trying to change customer perception by informing consumers about nutrition facts, organic and wholesome food in general, the company’s green action approach and its commitment to environmentally friendly farming.67

Adam Weiroth, director of product marketing at Pluck said:

The blog has become a place where customers come together to learn more about organic food and express their thoughts on a range of topics central to the Whole Foods Market community. Enhanced by video and audio podcasts, the blog is used by Whole Foods Market experts to alert customers to topical issues, such as last summer’s tomato safety concerns, as well as share the inside scoop on new products coming to market. Customers also contribute their opinions and directly interact with Whole Foods Market experts via the blog.68

Besides engaging directly with consumers via online blog, Whole Foods Market is also using an even newer way of online communication: Twitter. The company is currently tweeting about product recalls, reward programs or special offers. It is also utilized to redirect interested customers to all sorts of special events, like a Live-Blog

65 http://www.wholefoodsmarket.com

66 http://multichannelmerchant.com/ecommerce/0113-benefit-social-media/

67 http://blog.wholefoodsmarket.com

68 http://multichannelmerchant.com/ecommerce/0113-benefit-social-media/ 69 about value shopping. Similar tweets about how to shop or how to cook are especially creating interest among young food-enthusiasts and parents.

Moreover, Whole Foods Market is also using social media sites like Facebook.com to engage in a conversation with especially the younger target audience. A recent

Facebook initiative was a recipe contest. Interested customers where asked to submit their favorite “Big Game Recipe” for the Super Bowl.69 The winner received a $25

Whole Foods Market gift card. This tactic presents a two-way call of action. First, people get involved by posting a recipe. After that, at least the winner will be shopping at a

Whole Foods Market and hopefully buy products for more than the $25 he or she won.

Overall, the company is strongly engaged in online media, using a variety of different channels to reach its target audience and get them involved. A strong online presents not only changes customer perception about the Whole Foods Market itself, but also changes behavior by providing desired content that is redirecting consumers directly into the stores. Moreover, Whole Foods Market perfectly connects all its social media content by redirecting blogs to tweets, tweets to Facebook groups and Facebook groups to the corporate website.

Facebook/ StudiVZ.net

The German equivalent to Facebook is called “StudiVZ” (short for

Studentenverzeichnis; student directory). Currently it has about 12 million users and is

69 http://www.facebook.com/topic.php?uid=24922591487&topic=6028 70 the ninth most-visited Website in Germany.70 71 Unlike Facebook it has fewer applications and an overall simpler design. Corporate accounts are not introduced, yet.

Recently, the owners announced the opportunity for corporations to buy banners for advertisement or announcements. Targeting the young audience with a variety of key messages via StudiVZ.net will increase brand awareness among health-conscious students and young professionals. Currently, Facebook states that there are about 600,000

German users registered at their website.72 It is also possible to target those users on

Facebook by sending tailored messages (in German) to those users logging in from a

German server. Currently, Facebook is the 12th most visited Website in Germany.73

Twitter

Twitter is relatively new in the world of social media. Founded by Jack Dorsey, Biz

Stone, and Evan Williams and launched in July 2006, it is “a social networking and micro-blogging service that allows users to post their latest updates. An update is limited by 140 characters and can be posted through three methods: web form, text message, or instant message.”74 In March 2008, web analytic service Hitwise indicated that users as well as tweets are going up, but are still not big, with only about one million users and

70 http://www.studivz.net/l/about_us/1

71 http://www.alexa.com/site/ds/top_sites?cc=DE&ts_mode=country&lang=none

72 http://thekillerattitude.com/2008/02/facebook-statistics-update.html

73 http://www.alexa.com/site/ds/top_sites?cc=DE&ts_mode=country&lang=none

74 http://www.crunchbase.com/company/twitter 71 about three million tweets per day.75 Only 1.12 percent of those were Germans.76 Since it is an up and coming business and because Whole Foods Market is already engaged into

Twitter, they the company should create a German subdivision, continuing to release special offers and company information via short messages. Press releases should prominently display the Twitter logo with a short rationale explaining the consumer benefits, if customers follow Whole Foods Market on Twitter. It is a cheap way to create awareness on a platform that may get picked up by Germans soon. Besides engaging directly with consumers, Whole Foods Market is currently tweeting about product recalls, reward programs or special offers. It is also utilized to redirect interested customers to all sorts of special events, like a Live-Blog about value shopping:

Figure 7: Whole Foods Market on Twitter

Similar tweets about how to shop or how to cook would especially create interest among young foodies and parents.

75 http://www.techcrunch.com/2008/04/29/end-of-speculation-the-real-twitter-usage-numbers/

76 http://www.basicthinking.de/blog/2008/04/23/regionale-verbreitung-von-twitter/ 72

Blogs

Whole Foods Market continuously turns its website into a destination where customers can meet, talk, and exchange information about products they care about.

Recipes are also very popular on WholeFoodsMarket.com. As mentioned above, the company provides the opportunity for visitors to rate and comment on posted recipes and store favorites ones in an individual recipe box.77 It would be wise to continue this way of communicating with Whole Foods Market customers.

It is important to recognize that when it comes to social media and blogs, the

German audience is just about to start using it. Different from the U.S., where thousands of blogs allow millions of users from a variety of different age groups to engage into an online conversation, Germans are still very passive and skeptic. A study from 2006 found that about 55 percent of the German population over 14 is aware of the format, 45 could not associate anything with it. About 32 percent (equivalent to 6.6 million) indicated that they (sometimes) read a blog. On the other hand, about 7 percent (1.5 million) indicated that they have an own blog.79 However, a different study from 2008 indicates that only about 200,000 German blogs are updated frequently, while there is still skepticism whether individuals or companies mainly operate those blogs.80

77 http://multichannelmerchant.com/ecommerce/0113-benefit-social-media/

79 Digital Life Report http://www.basicthinking.de/blog/2006/09/21/umfrage-weblogs-und-internetnutzung/

80 http://don.antville.org/stories/1816384/ 73

An older format, forums, is still bigger and actively used by 47 percent of all

Internet users. Why Germans are not really engaged, is being discussed in multiple ways.

One of the most popular and most influential weekly magazines “Der Spiegel” recently wrote that the main problem is a lack of credibility and teamwork. Whereas U.S. bloggers are working as a team, linking and quoting each other on their websites, the German landscape is a puzzle of individual blogs that are not connected to each other. Moreover,

German bloggers are said to be less professional, egocentric and not engaged in serious discussions. The top 100 German blogs are mostly carrier blogs, computer-technology blogs or city and sightseeing-blogs.81 Unlike in the U.S., German mothers do not visit blogs to inform themselves about healthy food or nutrition.

There are a few food-blogs that are interesting to keep track of. Yet, they have a very limited audience:

• http://blog.wordpress-deutschland.org/

• http://kochtopf.twoday.net/

• http://www.genussblogs.net/

• http://www.testschmecker.de/

• http://www.abgespeist.de/actimel/index_ger.html

• http://www.oekoinform.de/

• http://www.blogverzeichnis.eu/gourmet/

81 http://www.deutscheblogcharts.de/ 74

It is still questionable why German Internet users are currently not that engaged in blogs. For Whole Foods Market this means that there is less need for blogger-relations, and more need to create an own blog. It should function as an explanatory or educational blog, informing heath-conscious consumers and food-enthusiasts about organic food, a healthy lifestyle and new ways of cooking and shopping groceries. A video blog about

Whole Foods Market’s locally grown products could be implemented. The German consumer will want to know where his or her meat/ fruit/ vegetables come from.

Moreover, a digital tour through the new store should be created, posted and hopefully go viral. A lot of the top 100 German blogs82 are city blogs. Posting a video-tour on those blogs would create a buzz prior to the launch. In addition to that, it is necessary to also inform U.S. bloggers about Whole Foods Market activities in Germany, since it is a publically traded company.

Corporate Website and Search Engine Optimization

Prior to publishing any launch activities, it is critically important optimize search engine results. The German google.de, for instance, only provides the corporate website and a variety of third party URL’s, none of them in German. It is absolutely necessary to establish a German equivalent to wholefoodsmarket.com. The German “.de” is available.

In addition, press releases have to be tailored in a way that they can be found on google.de. There is no doubt that an English website would not be used by the vast majority of customers. Also Wikipedia has to be tackled from all sides. Right now the

82 http://www.deutscheblogcharts.de/ 75

German Wikipedia entrance (keyword: Whole Foods Market) only shows the following result:

Figure 8: Whole Foods Market on German Wikipedia.org

It is also important to create German content and manage these search engines constantly. Key messages for the German audiences have to be available on online searches. It cannot be expected for German customers to visit an English website.

Keywords that should relate to Whole Foods Market on an online search are:

• Bio/ Bio-Supermarkt (organic/ -supermarket)

• Gesunde Ernaehrung (healthy diet/ nutrition)

• Lokal angebaut (locally grown)

• Lebensmittel (food)

76

Currently google.de is the most visited Website in Germany, google.com the second most visited and Wikipedia.org number 5.

Media Outreach

This segment is devoted to the media that has to be targeted in order to communicate key messages, which were mentioned above. I divided them into the categories newspapers, magazines, television, and food and retail publications. Audio broadcasting (Radio) is limited to specific regions and cities. It would be necessary to determine specific Radio stations, once the desired location of the Whole Foods Market is set.

1. Newspapers: traditional newspapers still have a very high influence on the

German consumer and are (besides television) the main resource for information.

Press releases should be tailored in a way that the company profile is prominent.

Highlight Whole Foods Market’s green action, commitment to organic farming

and products as well as corporate information about its business model. The most

influential newspapers that need to be targeted on a regular basis are:

a. FAZ (Frankfurter Allgemeine Zeitung). Daily newspaper with a

circulation of 390,000. A special edition on Sundays sums up main events

of the week.

b. Sueddeutsche Zeitung. Daily newspaper with a circulation of 460,000.

c. Die Welt. Daily newspaper with a circulation of 280,000. A special edition

on Sundays sums up main events of the week. 77

d. Financial Times Deutschland. Daily newspaper with a circulation of

100,000.

e. Die Zeit. Weekly newspaper with a circulation of 550,000 and an

estimated readership of over 2 million.

f. Handelsblatt. German financial/ economy newspaper with a circulation of

150,000 daily copies. Mostly read by business professionals and

politicians.

g. Bild. Daily newspaper with a circulation of 3,300,000 and an estimated

readership of 11.5 million. A Sunday edition sums up main events of the

week. The reporting style and tonality of this newspaper is comparable

with “The Sun UK.”

2. Magazines: Pitch the company profile to those magazines. Focus and Spiegel

frequently write about health issues and new companies; Wirtschaftswoche is a

straight-up business publication that will be more interested in the corporate

aspect of Whole Foods Market.

a. Spiegel. One of Germany’s and Europe’s biggest weekly magazine with a

circulation of 1 million and an estimated readership of 6.5 million.

b. Focus. Weekly magazine with a circulation of 750,000 and an estimated

readership of 5.7 million.

c. Wirtschaftswoche. Weekly magazine with a circulation of 190,000 and an

estimated readership of 800,000. 78

3. Food and retail publications: Pitch shopping and meal alternatives as well as

news stories about local German farmers that supply Whole Foods Market with

healthy, organic food. It is critically important to generate a positive partnership

with these publications in order to successfully get key messages across to food-

enthusiasts.

a. Lebensmittelzeitung (LZ). Leading publication for the retail industry in

Germany.

b. Meine Familie & Ich. General food publication

c. Lust auf Genuss. General food publication

d. Der Feinschmecker. Monthly ‘haute cuisine’ food publication

e. & Trinken. Monthly food publication

f. Schrot & Korn. Organic food publication

4. Television: The German TV landscape is structured differently from the United

States. It is more comparable to the UK system. A strong and influential public

broadcasting network generates about 50 percent market share. Besides that, the

“Bertelsmann AG” and the “ProSieben/ Sat 1 Media AG” are the two major

corporations operating most of the other network stations. Analog Cable-TV

allows customers to watch 34 different channels; terrestrial television (DVBT

Digital Video Broadcasting – terrestrial) offers 12 to 32 different channels

(depending on location). The most important TV stations for Whole Foods Market

are:

• ARD (public) 79

• ZDF (public)

• RTL (private)

• Sat 1 (private)

• ProSieben (private)

Figure 9: TV Market Share Details:83

To secure news coverage, it is necessary to communicate with editors and influencers on a regular basis, using a variety of round-up articles, trend stories and features that are appropriate for Whole Foods Market.

83 http://www.agf.de/daten/zuschauermarkt/marktanteile/ 80

Spokesperson

Besides company executives, a spokesperson should be announced to become

Whole Foods Market’s public face. My recommendation would be Heidi Klum. The fact that she now lives in Los Angeles (for a certain amount of time throughout the year) makes her credible for being familiar with the company, its products and business model.

As a supermodel, Klum stands for a quality diet. As a loving and caring mother of three children, she stands for being cautious about healthy food. Heidi Klum, more than anybody else, represents the desired target audience. Moreover, she is known and respected throughout every demographic. Germans love Heidi. Getting a quote like “in

California I always shop at a Whole Foods Market because it’s good for me and my family,” would have a huge and positive effect.

Launch

High-Touch Promotion

German city centers are comparably dense and heavily frequented with pedestrians.

Therefore, street promotion is important to reach out to a majority of residents. Especially on weekends as well as in the timeframe before major holidays, German cities are also heavily frequented by residents of surrounding towns and countries. On the four weekends leading up to the launch and the two weeks after, a street promotion team should visit the neighborhood and downtown area where the Whole Foods Market is located. During the week, they should target high-traffic areas like train stations. In the timeframes between 6:00 A.M. and 10:00 A.M. as well as between 4:00 P.M. and 7:00 81

P.M. a huge amount of commuters can be reached (a team of 6 can easily create 15,000 personal contacts/ day). The team’s goal is to hand out flyers. The front should prominently display the logo as well as the new tagline. The backside should have one key message, a map with the location and contact information (website, blog, twitter, etc.) on it. A sample of Whole Foods Market organic chocolate attached to it would make it easier for the promotion team to grab and engage with the audience.

In-Store Recommendations

In 2007, The Guardian wrote: “employees milled around, keeping customers happy with free oatmeal biscuits and cubes of cheese from the store's special cheese aging room.” This way of engaging directly with the customer is not that common or desirable in Germany. Besides the fact that employees should be trained well enough to assist customers when they ask for it, I would not recommend a proactive approach. It is very uncommon in the German culture to start a conversation when the consumer did not ask for it. It is also questionable if some sort of economic service that Whole Foods Market introduced in the U.S. would be viewed as positive (see Value Tour). Moreover, German customers would not appreciate paper bags for their groceries. For environmental reasons, Whole Foods Market recently banned all plastic bags from its stores. In

Germany, fabric/ cloth bags should be used instead of paper versions. As a general rule, even plastic grocery bags have to be purchased. Another aspect that could lead to problems is “food on sale.” As stated earlier, this practice should not be considered in the

German market. The general store-atmosphere and therefore culture of Whole Foods 82

Market should be kept. “At a typical Whole Foods Market store, it’s common to see shoppers and employees chatting about cooking tips, product ingredients, and their personal experiences with products.”84 This farmers-market-like atmosphere is highly desired.

Third-Party Price Comparison

My research found that organic food in general is perceived as extremely pricey. It is recommended that a third party compares Whole Foods Market’s prices to other organic and non-organic products from a variety of different competitors. It is important to get a positive outcome that could be used for follow-up news stories. A similar tactic was used in the UK, showing that Whole Foods Market’s prices are not ultimately higher.

Especially staple pantry items from Whole Foods Market are very competitive according to Keith Creighton: “The company's private label 365 Brand products compete head to head on price point, while delivering the natural and organic quality standards people demand from Whole Foods Market.”

The current price difference between organic and non-organic food is averaging 20 percent:

84 http://multichannelmerchant.com/ecommerce/0113-benefit-social-media/ 83

Figure 10: Price Difference Organics

One of the most influential publications is the leading German customer safety group “Stiftung Warentest.”85 This independent foundation constantly compares products and labels, grading them on a numeric scale (1 very good – 6 very bad). The outcome of these tests plays a major role for the German purchasing behavior. It is therefore vital to review prior tests in order to find out what the Foundation is looking for.

Launch Event

“We give preview tours to community leaders and key media. Instead of "ribbon cutting" - we break bread and share it with one and all before opening our doors.”86 An old German tradition is to give your new neighbors bread and salt as a housewarming gift. Back in the days, salt was a very expensive good and therefore stands for wealth.

85 http://www.test.de/

86 Interview Keith Creighton 84

The bread symbolizes food in general and is being handed out to neighbors so that they should never starve again. Even though this is an old tradition that is not being celebrated anymore, a lot of Germans still understand and especially value it. For Whole Foods

Market as a supermarket that wants to become more than just a grocery store, this is perfect opportunity to get involved with the surrounding neighborhood, get instant recognition and a positive standing amongst residents and/ or business people. It also provides great opportunities for news stories and even photo ops.

Post-Launch/ Sustainability

Celebrity Management

Celebrities are key influencers, also when it comes to food. Celebrity partnerships always work among certain demographics. It is necessary to establish and maintain partnerships with celebrities known for being healthy and body-conscious. In Germany, for instance, Heidi Klum even became a spokesperson for McDonald’s after the company introduced its “Salads Plus” line. Let celebrities create their favorite, nutritious and organic Whole Foods Market meal and publicize them on TV. The cooking show “Das

Perfekte Dinner” (Perfect Dinner) has a weekly special, where celebrities in groups of four compete against one another by cooking at their homes. It is extremely popular and, interestingly, viewed by all audiences (14-79) to pretty much the same extent. On this show it should be easy to get celebrity endorsement. For credibility reasons, it would be necessary to find a celebrity living in the same city as the Whole Foods Market. (VOX:

10.9 percent market share) 85

TV Cooking Shows

Similar to the U.S., German foodies love TV cooking shows. Partnering with of those for product placement is highly desired and would create huge brand awareness among food-enthusiasts. It is important to be absolutely transparent about these partnerships. A variety of food labels maneuvered themselves into a negative public discussion about product placement, because they did not display it appropriately.

Some of the “TV-chefs” even film themselves grocery shopping to explain insights.

A special episode about organic food in general, and Whole Foods Market in particular, would need to be arranged. The most recommended shows are (TV stations in brackets):

• Alfredissimo (ARD)

• ARD-Buffet (ARD)

• Johann Lafer (ARD)

• Lafer! Lichter! Lecker! (ARD)

• Johannes B. Kerner – Kochen bei Kerner (ZDF)

• Die Kuechenschlacht (ZDF)

• Die Kochprofis mit Ralf Zacherl (RTL 2)

• Die Kochprofis (RTL 2)

• In Teufels Kueche (RTL 2)

• Unter Volldampf (VOX)

• Die Kocharena (VOX)

86

Chef-Days

To garner positive brand awareness among key influencers, a special night for restaurant chefs should be set up. Quarterly, Whole Foods Market should open its doors exclusively for this audience (Monday mornings, for instance). They should be able to walk around and take their time to explore the whole market. Trained Whole Foods

Market employees should personally assist the chefs whenever they need. This is a great opportunity to present Whole Foods Market’s diverse product assortment and can also place emphasis on seasonal products.

Value Tours

“The store's personally guided weekly "Value Tours" remind customers just how competitive Whole Foods Market is on most staple pantry items. The company's private label 365 Brand products compete head-to-head on price point, while delivering the natural and organic quality standards people demand from Whole Foods Market.”87 This tactic should be adapted and utilized in the German store as well. It is a great opportunity to how customers the benefits of Whole Foods Market. It can also function as an educational tool to explain prices and origin of products available.

Lunch at Whole Foods Market

The new neighborhood of the Whole Foods Market has to be systematically targeted with lunch coupons and key messages. Some sort of invitation cards that can be

87 Interview Keith Creighton 87 distributed to nearby businesses should be created. Whole Foods Market should promote its diverse, healthy, organic and tasty lunch products to all surrounding businesses. It is an easy way to get people into the store and interested in Whole Foods Market. Thereby brand awareness can be created also among people living in different cities.

Wine Tastings

Wine tastings in general are a welcomed and valued event at every winery and specialty store. Yet, my research and personal experience does not implicate that any

German supermarket offers something comparable. I suggest offering those tastings at specific points throughout the year that are already associated with wine. In June for instance, a major event for the greater Dusseldorf area is the so-called “Weinblutenfest.”

In celebration of the first wines of the relevant year, local wine growers and high-class restaurants are creating an annual wine-festival on the streets. In December a famous

French wine, the Beaujolais Primeur, is offered everywhere for the Christmas season.

Depending on the location of the new store, wine tastings should be timed with regional traditions and events surrounding wine.

Twitter Campaign/ Cell Phone Service

Especially for working parents, the daily question “What’s for dinner?” could be answered by Whole Foods Market. The idea is to create daily recipes that could be distributed via text message, tweet or blog to the subscriber’s cell phone. Every day at around 4:30 P.M. a message with the recipe, its ingredients and the price could be send 88 out. On the corporate blog, customers could then research the actual cooking steps. It is a great opportunity to draw-in customers, especially business people who work but do not live next to the store, and set emphasis on promotions or seasonal items.

Rewards Programs, Memberships & Newsletter – The “Whole Deal”

As could be seen in my survey, Germans in general are not that interested in rewards programs. Most retail stores have some sort of membership card/ rewards program, but customers do not really care. Yet, rewards programs are an easy and effective way to gather data about buying habits and desires.

(When it comes to data protection, Germans are extremely cautious. Under no circumstances this data should be given to third parties.)

Most important are the customers’ e-mail addresses. A monthly newsletter should be created informing the Whole Foods Market member about new products, cooking recipes or special offers. Even though this is an older one-way communication, which is

(to some extent) contradictory with social media, it still is an effective way to keep consumers interested and loyal to one brand. This newsletter should also prominently display the corporate blog and twitter-account. The consumer can then decide if he or she engages into a conversation or not. For event announcements those newsletters should contain .ics files (Apple iCal, Microsoft Outlook). These files are making it easy for 89 consumers to add the event to individual calendars and most importantly remind them of

Whole Foods Market.

Their "Whole Deal" newsletter (published quarterly, expanding to 6 times/year) is like having a personal concierge guide you through the store - among their popular recipe ideas: one list of groceries - and recipes to make from that list for the whole week. Recipes for one, couples and families. It allows customers to expand their palates, eat fresh, and make sure no food goes to waste. You can download it as a PFD off their Web Site.88

88 Interview Keith Creighton 90

Conclusion/ Recommendation

In times of economic crisis it is questionable whether or not customers are willing to pay a little more on their groceries. Although Whole Foods Market’s potential customer base might not start to cut down on high-end products or change their buying habits when it comes to purchasing groceries, it will still be problematic to engage a new market with a “luxury” business at this point. Moreover, the German food retailing market is believed to be one of the toughest markets to engage due to over saturation.

For Whole Foods Market the time still seems to be right to enter the German market, though. With consumers purchasing organic food, a market that demands a bigger variety of organic products and the overall assumption that organics are a healthier alternative, the foundation for establishing a German Whole Foods Market is nearly perfect. In addition, it could be seen that 94% of industry executives believe in a further growth of the organic segment in Germany. Revenues of organic retailers are still rising and the organic agriculture is booming.

In my opinion, Whole Foods Market should start monitoring the German market immediately. Because of the current economic crisis that also affected Germany, the company should wait one or two more years with the grand opening of its first store.

Now is the time to create brand awareness and buzz surrounding Whole Foods Market.

By creating online contend like a corporate website and food blogs, and by optimizing search engine results as well as pitching stories about Whole Foods Market and organic products in general, the company can now start to generate future customers. 91

Similar to what Whole Foods Market did in the United Kingdom, I suggest opening one store at a time, staring in Dusseldorf, Munich, or Frankfurt, bigger cities with a desirable demographic.

Moreover, it is important to recognize and respect cultural differences and ways of living. Do not try to adapt or simply translate American ways of engaging with customers. Coffee giant Starbucks, for instance, started asking customers for their first name, when purchasing a product. While this may be seen as friendly invite to a ‘family- like’ atmosphere in the U.S., the German culture strictly forbids a personal question like this.

Besides those minor suggestions, I believe that Germany, the German customer and the market landscape is a perfect fit for Whole Foods Market. After entering the

European Market two years ago, Germany should most definitely be the next step to continue the company’s extraordinary business model and its motto:

"Whole Foods, Whole People, Whole Planet." 92

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