WHOLE FOODS MARKET – 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: Real in Figures 45 Figure 4: REWE Group in Figures 46 Figure 5: Tengelmann Group 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: Germany. 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 retail 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.supermarkets 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.