An Industry Analysis of



A Strategic Marketing Plan forJames HansenNick KullaPaul MoriEileen O’DonoghueExecutive SummaryThis report was commissioned to examine why the Just Food Co-op is struggling to attract college students at St. Olaf and Carleton colleges. The research draws attention to the fact that the supermarket and grocery store industry is still a growing market. The adjusted sales showed a growth of 3.76% between September 2011 and September 2012. Cooperations pay $171 million in wages and benefits while accounting for a close to $2.1 billion in sales revenue, 15,000 jobs, $252 million in wages and benefits paid, and $316 million in value-added income. Further investigations reveal that JFC is successful in the grocery market because of the wide selection of natural ingredients, especially with a recent popularity in the natural food. However, JFC struggles find members within the colleges in Northfield because of the location of the Co-op, the notion that it is significantly much more expensive than competitors, and the overall awareness of the Co-op is relatively low (see figure 2.7 in appendix II).It is recommended that JFC follow through with the listed below initiatives:- JFC attends the bus route meeting at the end of the semester in January 2013 in order to change the bus route students take when grocery shopping.(contact Kris Vatter, Director of Student Activities).-JFC contacts the ESAC organization at St. Olaf to sponsor school wellness events (contact academic office of the ESAC).-JFC contacts the Sustainability Club at St. Olaf to form a long term relationship with the school that can be lasting (contact representative through Tyler Nielsen).Table of ContentsCompany Overview …………………………………………………………………..4-6Mission ………………………………………………………………………………………………...4Objectives/Goals …………………………………………………………………………………..4Values ………………………………………………………………………………………………….4Current Marketing Strategy ………………………………………………………………….5-6Industry Overview …………………………………………………………………..6-11Food Cooperatives ………………………………………………………………………………8Competitors ………………………………………………………………………………………..8-10Projection of Client’s Competitive Environment ………………………………….10-11Environmental Analysis (CDSTEP) ………………………………………...11-20Culture ……………………………………………………………………………………………..11-14Demographic …………………………………………………………………………………….14-16Society ………………………………………………………………………………………………16-17Technology ………………………………………………………………………………………..17-19Environment ……………………………………………………………………………………..19-20Politics ………………………………………………………………………………………………20SWOT Analysis ………………………………………………………………………20-23Strengths …………………………………………………………………………………………..20-21Weaknesses ………………………………………………………………………………………21-22Opportunities ……………………………………………………………………………………22Threats ……………………………………………………………………………………………..22-23SWOT Conclusion ………………………………………………………………………………23STP ………………………………………………………………………………………..24-28Segmentation ……………………………………………………………………………………24-25Targeting ………………………………………………………………………………………….25-26Positioning ……………………………………………………………………………………….26-27Marketing Mix ……………………………………………………………………….27-32Product ……………………………………………………………………………………………27-28Price ………………………………………………………………………………………………..28-29Place ………………………………………………………………………………………………..29-31Promotion ………………………………………………………………………………………..31-32Implementation …………………………………………………………………….32-36ESAC Events …………………………………………………………………………………….32-33Building Long-Term Relationships with Students ……………………………...33Tabling …………………………………………………………………………………………….34Group Discount on Memberships ………………………………………………………34-35Bus Route …………………………………………………………………………………………35-36Contingency …………………………………………………………………………..36-37Return on Investment (ROI) ………………………………………………….38Company OverviewJust Food Co-opThe Just Food Co-op (JFC) is a private company categorized under Cooperative Food Stores. It belongs in the Supermarkets & Other Grocery Stores Industry (NAICS 445110), which excludes convenience stores. JFC is owned by around 2,500 people in Northfield, MN. The owners invest in the store and participate in its governance. Once Just Food begins to turn a profit and pay off their loans, the company will give a portion of the profits back to the investors through patronage rebates. This ensures that their profits stay in the local economy. MissionJust Food’s mission states that it seeks to be an “association of persons that wish to meet the community’s common economic, social and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.” JFC strives to help the community of Northfield by educating the public about the nature and benefits of natural foods. JFC trains their staff, members, and elected representatives in order to make sure it is an effectively developed cooperative. Objectives/GoalsJFC works to develop the community with policies approved by the members while developing the cooperative itself. It wants to educate the public on healthy choices and sustainable living. ValuesCooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. Ethical values of honesty, openness, social responsibility, and caring for others have been a tradition among cooperative members.Current Marketing StrategyJust Food Coop employs a number of strategies to differentiate itself from larger competition and reach out to their target consumers who are conscious about their health, environment and society. The first main emphasis of JFC is on natural foods. Although JFC is not a certified organic food store, much of the products offered at the store are either organic or natural. By offering less major brands and more quality or health-oriented products, JFC maintains a selection that is not offered by its mainstream competitors.Another emphasis is on local foods. Partnering with local farmers, JFC offers a selection of fresh, locally grown foods. As stated in its goals, JFC seeks to contribute to the community and the local economy by shelving foods from the farmers and also by promoting fair trade labels. JFC also lays a strong emphasis on giving back to the community. Giving back to the community is part of the fundamental model of cooperatives, which are owned by the members from the community. Additionally, JFC has made efforts to give back to the community through its events and services. JFC hosts events and classes on a monthly basis as a way of educating the community about health and environment. Apart from these main emphases, JFC differentiates itself through features beyond the simple groceries. The store contains a section with tables, where customers can sit and enjoy free coffee and free internet. Its “hot bar” offer customers lunch and dinner options with daily specials.Finally, the marketing strategy that is unique to cooperatives is the membership system. In general, those who hold membership at the JFC are owners of the store. Becoming an owner requires a one-time, minimum $125 investment, which gives the person the right to vote on decisions at general meetings as well as benefits such as discounts. However, student membership is different from the standard ownership. Students can become members without becoming an owner by purchasing a student membership card, which costs $15 annually. This gives students most of the benefits but not the right to contribute in the decision-making processes. Currently there are around 100 student members in addition to the 2,500 owners.Most of the consumers for Just Food Co-op are middle-aged, environmentally minded adults. There is a large opportunity to gain market share by gaining student customers from St. Olaf College and Carleton College. Both of these campuses show strong sustainability efforts, and with Ole and Schiller dollars already accepted at the Co-op, there is a potential to expand the target market beyond the permanent citizens of Northfield. A survey conducted of 126 St. Olaf students showed 27% of participants were unaware of the Just Food Co-op’s existence. Getting the brand name of JFC out to the colleges could lead to an increase in college consumers. The survey also showed that the largest barrier that kept students from JFC was the idea higher prices at JFC. This idea is not necessarily true, and JFC can prove this with price comparisons on relevant foods, promoting college memberships, and listing prices of seasonal foods. Industry OverviewCurrently the industry consists of over 35,800 businesses, and is valued at $491 billion in revenues. While the annual growth rate since 2007 is said to be negative 0.6%, the adjusted sales data showed a growth of 3.76% between September 2011 and September 2012 according to the US Department of Commerce. The contradictory numbers can partly be explained by the recovery following the recent recession. Also, food expenditure by Americans has actually grown consistently despite the recession. Just in the last 4 years, the total annual expenditure has increased by over $100 million. There are nonetheless some negative trends, particularly for traditional supermarkets. Despite the high number of businesses in the industry, there are still many firms entering the market. These firms include wholesalers, super centers and other nontraditional stores such as online grocery retailers, which are expanding the strategies and practices of the industry. As such, stores categorized as supermarkets have lost some market share. In 2000, supermarkets accounted for 70.9% of sales for “food at home”, but this number has dropped to 63.8% in 2011. The reaction of traditional grocers to the sales inroads made by nontraditional retailers has been to increase the number and types of product offerings, designing new store formats, and using innovative in-store technologies. For example, Hannaford Supermarkets, a division of a Belgian company, introduced "Guiding Stars," a simplified nutrition label to help consumers make more healthful food choices. Other supermarkets are attempting to increase sales by offering promotional tie-ins to grocery purchases, such as gasoline discounts. It must also be noted that the industry constantly faces the challenge from that of food services, whose prepared meals function as a substitute for food at home. The consumer choice between foods at home and away from home has fluctuated over the years. Before the recession, there was an evident trend towards eating out, as more women entered the work force and household income increased. In response, many supermarkets have added a seating area in the stores to challenge fast food outlets. Although the recession changed some of the trends, both industries largely share equal share of the market. Food CooperativesJFC is a member of the National Cooperative Grocers Association (NCGA). The NCGA represents 128 food co-ops operating 165 stores in 35 states with combined annual sales of over $1.4 billion and over 1.3 million consumer-owners. Cumulatively, grocery cooperatives employs 14,000 people and pay $171 million in wages and benefits. According to the University of Wisconsin, adding indirect and induced impacts on the economy, consumer grocery cooperatives account for close to $2.1 billion in sales revenue, over 15,000 jobs, $252 million in wages and benefits paid, and $316 million in valued-added petitorsBefore diving into the Competitors section, since it has not been said, it is important to mention the location of the JFC in order to more closely picture our later ideas. The JFC is located at 516 Water Street South ? Northfield, Minnesota that just happens to be approximately a block away from Econo FoodsEcono FoodsEcono foods is much like Just Food Co-op. Although it features a variety of produce options, it focuses on being organic and environmentally aware. This makes Econo the closest in relation to JFC and may draw some of their potential customers away.Econo is not as large of a brand name as Cub Foods or Target; however, they do have eight stores in MN and 2 in WI. The largest reason for Econo’s ability to be a competitor for JFC is the location, which is only a block away on Division Street. Unlike JFC, the bus route currently stops at Econo foods, which makes it easier for them to gain recognition by St. Olaf students. Target Target Corporation is one of Just Food Co-Op’s strongest competitors. Target was founded in 1962 and is currently ranked 33 of Fortune magazine’s Fortune 500 list. Its success can also be seen through its recent expansion to Canada and “City Target”, small convenience-type stores in American urban areas. The corporation is undergoing an initiative that turns it general stores into P-Fresh stores, or stores that sell produce. Target draws loyalty through its low prices and convenience. It is a one-stop shop that includes: grocery, apparel, beauty, toys, etc. ??Target’s 1744 stores bring both brand recognition and loyalty to its grocery division. Many students said that they shop for convenience type products such as shampoo and conditioner when they go grocery shopping. The one-stop shop aspect of the store gives Target a competitive advantage in the student market.Cub Foods Cub Foods is another competitor in the grocery industry for JFC. Cub Foods was founded in 1968 in Minneapolis, Minnesota and has 73 locations. Cub joined SuperValu in 1980. It is currently struggling financially, with revenue being down 4.7% in their recent quarter. The company’s operating margin was just 0.41%. ?Other competitors, such as Whole Foods and Wal-Mart show operating margins of 6.9% and 5.86%. ?However, Cub Foods is the major competitor of Just Food Co-op in Northfield. Cub Foods has a large selection of products, including many national brands and organic foods, offered at lower prices.Meal Plans One of the biggest reasons why students are unaware or unwilling to buy from the Just Food Co-op is because of pre-paid food on college campuses. ?Each student that has a meal plan has already paid for each meal so why not take advantage of that? ?Meal plans allow students to feel like they are not really paying any money since you just have to swipe a card and don’t have to see the payment until the next year. Furthermore, these meals are often by the parents along with tuition.?Meal plans are probably the single largest blockade stopping students who live on campus to explore the option of Co-op.Projection of Client’s Competitive Environment:Just Food Co-op’s competition for the next few years will remain to be Econo, Target, and Cub Foods. Without a huge economic crisis, all of these stores should stay in business in the near future. JFC can take advantage of the opportunity to change the bus route from St. Olaf into town. Econo will prove to be less of a competitor for all natural foods if this happens. Target and Cub Foods are much larger grocery stores that have high brand awareness. Most of the shoppers at Target and Cub Foods are either loyal customers or go there to get everything they could need without having to stop somewhere else. JFC can raise brand awareness and use their competitive advantage in being an all natural food store to capture some of Target and Cub Foods customers. The competition will remain relatively the same except JFC, as said above, has the chance to jump ahead of Econo and prove itself as the leading “all-natural” grocery store in Northfield. An Overview of Competition in the Eyes of St. Olaf StudentsEnvironment Analysis (CDSTEP)Culture Organic FoodJFC is a natural food store. Though it is not a certified organic food store, one would find that the majority of food at JFC is organic. Organic food is becoming the focus of consumers and consequently food retailers. Inspired by concerns for health and the environment, there is a trend towards purchasing behavior that prioritizes organic food. The Gale Encyclopedia of Diets defines organic crops as “crops that are raised without using synthetic pesticides, synthetic fertilizers, or sewage sludge fertilizer, and they have not been altered by genetic engineering.” Similarly, “organic animal products come from animals that have been fed 100% organic feed and raised without the use of growth hormones or antibiotics in an environment where they have access to the outdoors.” As the figure below indicates, the market around such organic products are evolving rapidly, putting pressure on larger retailers and giving way to the entrance of smaller businesses like coops that specifically targets this market. At the same time, it should be noted the organic food market accounts for only 3% of the overall food market and is burdened with relatively high prices that hinders demand. United States Organic Food Market Value & Value Forecast: $ billion, 2005-2014With the recent health craze movement, shoppers are trying to be more conscious of what they buy and where they buy it. In a recent poll by Thomson-Reuters-NPR, roughly 60 percent of shoppers declared that they would choose organically produced foods over “conventionally produced” foods if they have the option.This is important to note because this “eat healthy” trend can be translated directly on a reason for why people shop at the Co-op. When asking yourself why people do not go to the Co-op one of your reasons cannot be “people just are not into healthy eating.” Although this may be true for a large part of the American public, statistically this fat food craze is downgrading and healthy eating is gaining more importance.Fair TradeSocially conscious consumers have increasingly made fair trade products a trend in the grocery industry. Essentially, fair trade means that it guarantees farmers a fair price for their products, which helps to improve the quality of life in farming communities. Although fair trade products are competitively priced contrary to common beliefs, the slightly higher price is justified by the fair trade label and informs the consumers of the product’s quality and background. Peace coffee is an example of highly regarded fair trade brand that is offered at the JFC, and is particularly appealing to consumers who are conscious of the social aspects of the food supply chain. Local FoodsAccording to the US Department of Agriculture, rising consumer interest in knowing where food is produced has led to an increase in purchases of locally produced food. Retailers who promote local foods often emphasize that it supports local agriculture and that it is environmentally friendly. While the validity of such facts vary depending on the community, socially conscious consumer groups similar to those that prefer fair trade products often choose local foods, hoping to contribute to the economy and at the same time enjoy fresh products that are perceived to be healthier.Online ShoppingPart of the culture of Co-op’s possible target market is the Internet. The Internet has been influencing and changing the way people live their lives for a long time now. Why is this important? Shoppers can order food online instead of shopping in the store.DemographicsDemographics of NorthfieldNorthfield Population: 20,084 (US Census 2011)Sex and Age: Male-47.72%Female- 52.28%Under 5 years:5.08%5-9 years:5.66%10-14 years:6.06%15-19 years:15.37%20-24 years:20.2%25-34 years:9.15%35-44 years:11.89%45-54 years:10.4%55-59 years:3.19%60-64 years:2.47%65-74 years:4.53%75-84 years:3.88%85+ years:2.13%The average age in Northfield MN is 23, because of the heavy influence from the student population at St. Olaf College and Carleton College, which are both located in Northfield.Population Density: 2,452.2 people per square mile.Race: The race in Northfield MN is predominantly white, being 92.57% of the population, 0.90% African American, 0.34% Native American, 2.36% Asian, 0.05% Pacific Islander, 1.78% from other races and 1.99% from two or more races. Hispanic or Latino of any race was 5.73% of the population.Income: Those with annual incomes of greater than 70,000 dollars are more likely to become organic consumers than those whose incomes are lower than 30,000 dollars (Dimitri and Oberholzer, 2009). However, more than half (52%) of organic users have household incomes less than 50,000/year (Demeritt, 2009; Howie, 2004). The average annual income among Northfield residents was $62,253 in 2009.Three out of four organic users tend to be white, 14% are Latino or Hispanic, and 12% are African American. However, in the United States, Hispanics and Latinos are more likely to purchase organic products in comparison to whites and African Americans (Demeritt, 2009; Howie, 2004).Millennials are categorized under those born from 1982-2001.This group of consumers is changing the market as we know especially in the area of food products. A recent report by Jefferies Alix Partners shows that millennials still prefer cheaper food, and want it to be convenient.? But they are also more willing to pay for fresh and healthy food, and are willing to go to great lengths to find it.? And they are also more aligned with the “food movement” and love things like organic farms.The Millennials have much less brand loyalty and are more willing to engage in different distribution models to find food.? This generation is not afraid to purchase food online and to look outside of the traditional grocery store to find what they want.On the other hand, the report also shows that Baby Boomers are losing their ability to impact what is available on the supermarket, and is thus fading away in target markets.SocialMany consumers hold the idea that Organic foods are much healthier than conventionally produced products; however this is not necessarily the case. “Despite the widespread conviction held by the public that organic food is ‘healthier’ than foods produced using conventional farming, evidence to support this perception is difficult to identify. The view that organic foods are ‘healthier’ than conventionally produced foods appears to be based on the perception that organic foods have superior sensory attributes, contain lower levels of pesticides and synthetic fertilizers, and have higher levels of nutrients.With this misconception arrives a level of social awareness and acceptance. The public, regardless of what kind of person you are, wants to receive the acceptance of their peers and in light of recent “movements”, being healthy is assumed to mean eating organic food. Not being organic has mistakenly been confused for not being healthy.It is safe to say that most shoppers prefer to shop for their groceries locally. If not due to the fact that it saves time and energy, perhaps because you have brand loyalty or a feeling of comfort while shopping there. This is exactly why many people shop at Target or Cub, because they have places like them (or the actual store) back at home. One of the largest barriers to brand awareness for college students of JFC is transportation. Although this could play a role in the technological section, it seems to fit more in social barriers and constructs. ?There are many transportation services between Carleton and St. Olaf, but none of them stop by the JFC. 28% of students are using the bus route from St. Olaf to do grocery shopping.?They stop at Target/Cub Foods and Econo Foods, but neglect to simply “stroll by” the JFC. There are two routes, the daytime and evening service that go right into town.?It has been brought up to the St. Olaf council for the potential to change the evening routes to stop in front of JFC in the upcoming semester and years. They will be meeting in January to converge on this idea.?With significant demand, the bus system could be adjusted to favor JFC, not only in terms of transportation but also awareness. (See Appendix I for map of bus route.)? The survey of St. Olaf students showed that a majority of people have access to cars on campus. TechnologicalAs touched upon in culture, another new trend in the industry is shopping for food through the Internet. Price-conscious and tech-savvy consumers are turning to the Internet to meet their specific preferences and demands. While online companies like Amazon are capitalizing on the growth of online grocery shopping, traditional food retailers are faced with a potential loss of market share. “’Experian anticipates that the increased popularity of mobile devices will be a major catalyst for furthering growth in this category,’ said Dave Audley, head of research and consulting at Experian. ‘It is generally consumers who are most pushed for time that are likely to use online grocery shopping sites and consumers are becoming more comfortable shopping from mobile devices.’” To briefly explain this short three-step process, an online grocery store delivery service in California, called PinkDot, allows you to easily do your grocery shopping without having to leave your house. First you can email or call to place your order, next they will go and shop for you, and finally they will drop all of your groceries off at your house. It saves you time, gas, and the nuisance of shopping yourself. The amount of families that have access to internet has skyrocketed over the past years, but the percent for those with smart phones is… colossal. “The Pew Internet & American Life project has released some new survey data about smart phone ownership in anticipation of the new iPhone, Pew says… that 78 percent of US mobile phone owners now carry smart phones.”This new innovation could be weakening the bond that many shoppers used to have with their local grocery stores and this could be a problem that the JFC is encountering.EconomicRecent economic hardships have caused people to be more conservative with the way they spend their money. Due to the global recession starting in 2008, people have been spending less money. Students under the impression that JFC has more expensive prices than other grocery stores are likely to opt out of shopping there to save money.St. Olaf students found their number one determinant of shopping to be price. (See figure that follows)An article from CBSNews of July 2011 stated that The Great Recession starting in 2007 has caused Americans to spend $7,356 less than they would have, had they continued on the pace of spending from the early 2000s. The recession affected consumers’ immediate environment, and therefore slowed down consumer confidence for a number of years. On the other hand, A New York Times article published in November of 2012 showed that consumer confidence and spending are rising. Consumer confidence is the highest it has been since February of 2008. In one year, consumer confidence has risen from 40.9 to 72.2 percent. This boost can and should encourage consumers to spend more money on trend-based things such as organic food products.Political Federal Trade Commission (FTC) regulates and oversees the advertising of organic products.Products being promoted as “environmentally friendly” were perceived by customers as being “specific” benefits, which, the government states that they did not have.“Natural” has no regulatory definition.The USDA must certify a finished agricultural product in order to be considered organic.SWOT ANALYSIS-StrengthsMembers of the Just Food Co-op (JFC) are owners and are loyal consumers due to this.JFC has a reputation of high quality organic foods.JFC is the closest grocery store in proximity to St. Olaf Campus (1.43 miles). It is the second closest to Carleton (.67 miles). The average age of a person in Northfield is 23. This age is heavily influenced by the number of college students in the area. Targeting college students will allow the JFC to focus their marketing efforts on the average age person in Northfield.Students can use their Ole and Schiller dollars at JFC.The majority of St. Olaf students have access to cars. (See appendix II figure 6)As identified in the demographic section, 75% of organic users are white. The demographic of St. Olaf and Carleton students are majority white. Membership to JFC can reduce cost and is available to students for a year at a time for a lower price than standard membership.In-season fruits and vegetable are actually cheaper at JFC than what the competitors charge for the same goods. Free, fair trade coffee offered daily.Offer prepared lunches and dinners (menu online).-WeaknessesOrganic foods make up 3% of the current grocery market.The co-op does not have very high brand recognition with students. 31% of students have never heard of the JFC.The majority of St. Olaf and Carleton students have meal plans and do not go to the grocery store for most of their meals. Some students have strong loyalty to other grocery stores. The Northfield lines bus does not stop at the co-op: 41% of students do not have access to carsThere is a perception that the co-op is very expensive. Many students do not know enough about membership at co-op. (see appendix II)The co-op does not have national brand foods at its store.The store lacks a wide selection of non-food goods such as shampoo and toothpaste, which are important shopping items for students. (See figure 2.2 in appendix II)-OpportunitiesThere is a strong opportunity to gain market share in the college student segment. (See figure 2.13 in Appendix II) Organic/natural food is a big trend right now. JFC can capitalize on the cultural and social pressures consumers feel due to this trend.A variety of free classes are offered weekly in the co-op’s community room.Buying food from a co-op is encouraged because it benefits the community it serves. Consumer confidence is the highest it has been since 2008.Millenials have less brand loyalty than previous generations and therefore can be swayed away from more recognized brands and brought towards the co-op for other reasons. -ThreatsOrganic food is trend based. There are studies coming out that show organic food may not be healthier than generic foods. The technology revolution brings an online market for groceries that did not exist before. The online shopping market has risen 70 percent in the past year.Retaining the student population as costumers: Student turnover approximately every 4 petition from nationally recognized petition is entering the organic/natural food market.The hours of operation for JFC are not as convenient as places like Cub Foods, which is open 24 hours a day.Americans are spending $7,356 less than they would have before the Great Recession started. SWOT ConclusionThe most significant strength of Just Food Coop is undoubtedly its selection of organic products that is trending in the industry. The green and healthy image of the store is highly appealing to the increasing number of health and environment-conscious consumers. However, despite the existence of two colleges that are actively engaged in sustainability efforts, JFC has been unable to gain substantial awareness in the college communities. Also, the Northfield competitors, who already have the advantage of name recognition, low price and brand selection, are entering the organic food market, posing a threat to JFC. Nonetheless, as the organic food market is continuing to grow with millennials taking a central role as consumers, there is potential for a significant increase in demand for JFC if the company can successfully break the barriers of the student market and gain sufficient awareness. STP-SegmentationNorthfield ResidentsCollege StudentsPermanent ResidentsNorthfield can be broken up into two segments of permanent residents (population 20,000) and college students (population 5,000) quite easily. Permanent residents are people who live in Northfield all twelve months of the year and college students are those who attend school at either Carleton or St. Olaf College and are there for nine months of the year. JFC chose not to focus its marketing resources on permanent resources because they believe they know how to reach the permanent resident already. This is shown by the current 2,500 permanent residents that make up members of JFC. JFC management also believes that the permanent resident market is already very saturated and have brand loyalty as to where they are grocery shopping. Just Food Co-op plans to focus resources on college age students from both St. Olaf College and Carleton College. This target was identified by management as a demographic that has not been reached in the area yet. JFC has identified other demographics in Northfield as being primarily saturated and loyal to either the co-op or its competitors. Through a personal survey, we found that there is no identifiable segment within the student body that is more appealing to market to than other segments. Levels of awareness, interest, and ability and willingness to spend money on groceries were the same in every group of the student population. It was found that here are many pros in trying to reach the college student target as a whole and a few cons. These are listed below.ProsThe college student segment is easy to identify. The St. Olaf Class of 2016 is the largest class in school history with 864 students. The rise in population of the school increases the Co-ops chances of gaining consumers. 75% of students buy some type of groceries while at school. (See figure 2.13 in appendix II) With nearly 5,000 students at the colleges combined, there is a potential of 3750 reachable consumers.JFC is located closest of all grocers in Northfield to St. Olaf College and second closest to Carleton. ConsJFC has used marketing techniques such as coupons and free coffee to try and bring students in. These techniques have proved to be unsuccessful. (See Appendix III)The average turnover rate for students at these colleges is four years. This means that the customers JFC gains will most likely not have long-term loyalty.The majority of students at both Carleton and St. Olaf have meal plans with the school and do not grocery shop for the majority of their meals.Only 68% of students know what the Just Food Co-op is. Of those students, only 62% know where it is located. TargetingCollege students from both St. Olaf and Carleton are the segment that should be targeted because they are identifiable, substantial, reachable, responsive, and profitable According to a personal survey conducted of 124 St. Olaf students; college students in Northfield would be a practical target market (see Appendix II). IdentifiableCollege students in Northfield are easy to identify. The segmentation section above shows that there are a few thousand untapped customers in this segment. The majority of both Carleton and St. Olaf students live on campus, and there is a definite number of students that attend both of these colleges. SubstantialThe size of the market is nearly 5,000 people. This is the largest this market has ever been due to the high number of freshmen in the St. Olaf College class of 2016. ReachableThis group can be reached through persuasive communications. Focusing on college students from the two Northfield colleges will allow JFC to reach many consumers that are likely to go grocery shopping. Survey results show that 75% of St. Olaf students buy groceries while at school (see figure 2.13 in appendix II). These habits are likely to continue, and JFC will be able to reach many consumers while reducing wasteful spending on other marketing aspirations. ResponsiveCollege students have high purchasing power due to the majority of students having a part-time job. Students in a new environment do not prove to have strong customer loyalty to any of JFC’s competitors (see figure 2.7 in appendix II). Customer turnover will restrict long-term loyalty. This is not seen as a huge opportunity because Millennials have less brand loyalty than generations in the past. It also allows for new customers to be reached annually by JFC.ProfitableCollege students today have a great amount of purchasing power. Six of ten college students have a part-time job, and a full-time college students average monthly spending is 127 dollars. JFC would profit on increase of memberships alone. There are currently 30 students with memberships to the co-op. This leaves a potential of 3720 untapped students that buy groceries. These students, either purchasing a membership, or simply shopping at JFC, will generate new profit.There is not a core demographic within the student population that is more attractive than any other segment. When looking at data collected from the personal survey, the student population as a whole is very reachable. A large majority of the students shop for some sort of groceries while at school. They are more likely to shop where their friends shop, for convenience sake, and the health friendly trend of the time can be a driving factor that gets groups of students to JFC. PositioningJFC should position themselves away from their strongest competitors by promoting the natural aspect of their products. The product itself is the most important when considering position. JFC sells many products of the organic and natural nature that distinguishes them from other stores. Their products allow JFC to be seen as high quality and healthy. They separate them from their main competitors who are associated with national brands and cheap prices. By positioning JFC this way, it should gain a sustainable competitive advantage. Student groups such as St. Olaf Environmental Coalition, the sustainability clubs at both campuses, and STOGROW give support to the idea that students would value a grocery store that positions themselves this way. Marketing MixProductJFC already has a good selection of products that are specifically appealing to those who value quality, especially in the categories of natural, local and fair trade foods. Thus, the store should continue to differentiate itself from its Northfield competitors using these quality goods. The survey has shown that a large majority prefers natural or organic food to processed food, and in this regard JFC is on a good track to meeting the demands of the student market. It should nonetheless be suggested that JFC should monitor and begin to keep records of products that students typically purchase. On the other hand, the survey also revealed that daily appliances such as shampoos are primary shopping goods for students. Hence an increased focus on making this category of products available may help to attract more student customers and improve their perception of convenience. While such a focus will not necessitate a complete replacement of existing products with well-known brands, JFC could potentially include these products in their promotional efforts targeted towards students.Additionally, JFC should continue to offer the variety of classes and seminars that relate to health and foods. These are services that none of the other competitors are offering and has the potential to become one of JFC’s sustainable competitive advantages. Unfortunately, there are very few people in both the Northfield residents and college market that are attending these events. In order to increase the student attendance of these events, JFC could seek to make these count towards the Wellness Credits that Exercise Science Activity (ESAC) Department requires of some students at St.Olaf. Similar use of academic credits could be sought out at Carleton as well. By making these events so-called “swiped events”, JFC can increase attendance, which can possibly lead to greater awareness of the coop and ultimately motivate students to shop there. PriceAlthough a large portion of student take price into account when shopping, it should be acknowledged that there are limited options for changing the price of products. The major competitors in Northfield, particularly Cub Foods and Target, employ everyday low pricing (EDLP) strategy and have the economy of scale and capacity to maintain this advantage. As such, competing for the lowest price in Northfield would most likely cause more problems than benefits for JFC. On the other hand, JFC can apply creative pricing strategies that would raise awareness as well as make JFC products more accessible.One strategy that can be suggested is to reduce membership fees even further under specific conditions. Coop membership has a direct impact on long-term commitment and loyalty that can create benefits for both the store and the consumer. In increase membership, JFC can give discounts when multiple memberships are purchased together. Since many students expressed that they often choose shopping locations based on where their friends go, JFC can encourage students living in houses (typically groups of 5 or more) or pods (10 students per pod) through discounts. This discount would have the potential to increase awareness, frequency of visit and loyalty. Another strategy is to monitor the purchasing behavior of students to find products that are most appealing to the college market and occasionally lower the prices of those products. An example of such products is coffee. A majority of students are coffee drinkers, and JFC offers a wide selection of fair trade coffee, which has followed the trends of natural foods. Although the coffee of the same kind is offered at the Cage in St.Olaf, it only offers the beverage and not the actual beans. Furthermore, the researchers of this plan has observed through word-of-mouth that coffee beans is the primary reason that some students decide to shop at coop. If JFC can find more of such products that have a greater appeal to students, it could discount these products and better compete with other grocers.Finally, JFC should continue to offer free products. While Target have recently opened a Starbucks in its store, which often attracts loyal Starbucks customers, the free coffee offered alongside JFC’s warm food services is a primary area in which JFC has a lower price advantage. The total percentage of Americans over the age of 18 that drink coffee every day is 54% according to a recent study done Live Science. Although there are only few students who utilize this service, the free coffee can become a greater advantage if it is coupled with adequate promotion. This strategy should be sustained at least until there is substantial increase in the utilization of the free coffee offered during lunch and dinner. Similarly, the service of free Internet should be continued. Again, the free Internet should also be better incorporated into all the promotional aspects to raise awareness of these deals and increase the frequency of visits. PlaceCurrently, Just Food Co-op is located on 516 Water Street South, which is one block away from the “heart” of downtown Northfield. Consequently, the location is a disadvantage for JFC relative to its competitors like Econo foods, which is located more visibly on Division Street. The location is also an issue for St.Olaf students in particular, because the college is a half hour walk away for those who do not have cars. Below are some of the ways to deal with such problems of accessibility. Bus Route: St. Olaf as a campus does not venture into town that often and when they do they often go to Target or Cub Foods. Most of the freshman and sophomore population do not have cars and must either walk or take the bus. The problem with this, however, is that there is no bus route that passes by JFC, which contributes to the lack of awareness. Surveying the St.Olaf students showed that many international students are frequent grocery shoppers, and it is often these students that utilize the bus services. To remedy this problem, JFC should explore the possibility of changing the bus route. There are currently two bus services available at St.Olaf: the daytime route and the evening route. The former is operated by Northfield Transit and is not flexible to change, while a responsible committee within St.Olaf organizes the latter evening route. This evening route was recently changed through different inputs, and could potentially be adjusted further when the committee meets again in January 2013.Tabling: While transportation is often an issue for students, JFC can remedy some of the convenience issues of students by bringing the store to the campus instead. Even though business advertisement is restricted on the campuses, tabling is allowed with permission. An example of successful business tabling is “Friday flowers” at St.Olaf. Friday flowers is catered by florists from Forget-Me-Not, who set up a table every Friday in front of The Cage on the second floor of Buntrock Commons to sell flowers that students can place in the P.O. boxes. The service has become a part of student culture that gives the business access to hundreds of students that would otherwise not go to the store, which is located across the street from JFC. Tabling to sell a selection of products would help JFC overcome the location disadvantage and also raise awareness about the co-op. Online Grocery Shopping: Another possibility is to bridge the location gap with online grocery shopping. The option of shopping for food products online and having it delivered to campus would eliminate the necessity for students to leave campus, and would give JFC a significant advantage over its competitors. However, there is uncertainty regarding the demand of students, many of whom own a meal plan. Furthermore, the implementation would require a costly investment in order to change the website and create a delivery system. This report therefore concludes that JFC should prioritize the other cost effective and student specific suggestions that are listed before considering online grocery shopping, which would drastically change the business model of JFC towards the entire Northfield community. PromotionPromotion is a vital aspect for accessing the student communities. JFC should combine existing channels of communication with new ones in order to reach out to students. The integration of these would contribute to the overall awareness of the JFC brand as well as its products and services.The official website of JFC is a great medium. The current website has an attractive design and is very informative, giving frequent updates about upcoming events. Nonetheless, it could be improved by adding a section dedicated completely to college students, highlighting relevant events, student membership information, use of student currencies and free coffee. Social media is also important. The Facebook page of JFC, which was set up a few months ago, has been utilized very well with activities averaging three to four posts a week that informs the users of daily specials and upcoming events. JFC also has a Twitter account, which is used for a similar purpose as Facebook. With Twitter, on the other hand, there has been no activity since April. In both social media sites, JFC has about 1,000 likes and followers, and serves as an excellence mode of communication with customers who care about the store. As such, the marketers of JFC should continue to use these sites and increase the level of activity to expose itself to the community even more. A different way to raise awareness and gain customers would be to build long-term relations with the sustainability clubs at St. Olaf and Carleton. The marketing manager of JFC has already met with the sustainability club at Carleton in the past, and this network should be extended to St.Olaf as well. Sustainability clubs are often the groups on campuses that address and engage with some of the cultural trends already mentioned, and thus share common grounds with the values of JFC. By building a relationship with these clubs, JFC can gain support from students to collaborate on events and spread information about the co-op on the campuses. To make this relationship more substantial, we suggest that JFC appoint a student representative who can carry a diplomatic function, by attending meetings of both JFC and the sustainability club. This person would allow JFC to access the student clubs and student community more consistently, and reciprocate promotional information or even plan collaborative events. Finally, a new way for JFC to promote itself to students is through emails. Although social media is a more modern form of communication, students of both colleges are highly dependent on emails in their studies. Each student has a college email account through which important information is exchanged. In both colleges, an outside person cannot send mass emails to the entire student body. However, by using specific alias, JFC can contact houses and interest groups on campus. To avoid ethical dilemmas, we suggest that emails should only be sent to students who are members or those who have already been exposed to JFC through the sustainability clubs. Using an alias that organizes these students into one group, JFC can send out promotional emails to those who are interested in JFC and even stimulate word-of-mouth. Given the lack of access through campus mail, emails will serve as the best direct marketing strategy. ImplementationESAC EventsThe first step of turning JFC classes into St.Olaf credited Wellness Events would be to contact the academic office of the ESAC. All such requests must first be sent to wellnessrequest@stolaf.edu. In the case of JFC events, since the request concerns a long-term request of several different events, this should be effectively communicated in the request. Secondly, if the college is willing, the two partners should agree on how to record the attendance of students. Although Wellness Events typically swipe the Ole Card to register the attendance, there is a possibility that the same method could be used at the JFC, since it already accepts the student IDs of both colleges. If this is not an option for whatever reason, the JFC representative present at the event could simply email the list of students present to whomever responsible at ESAC. A good timetable for implementing the sponsorship of classes would be to get the approval of the ESAC and the college within the current academic year, so students can begin to receive credit for them by the academic year 2013-2014. This will also give the ESAC enough time to incorporate the option into their system and advertising routines.Building Long-Term Relations With StudentsIn order to build long-term relations with the student body of both colleges, JFC should seek out the various environmental and sustainability related clubs and social groups that exist on the campuses and contact them. While the nature of these relationships will be vague, casual meetings between these parties can initiate a network in which both sides can gain awareness of each other. Ultimately, the hope is for these clubs to serve as mediums for JFC to market its events and products and build on the community-caring culture that already exists. Since most of the clubs and student groups on campus engage themselves with activities and events on a regular basis, JFC can synchronize its calendar with these groups and possibly coordinate events together. Again, the details of this strategy implementation are vague and there is no timetable for building this relationship. Hence the coordination of events and the regularity of communication are to be explored by both parties upon meeting with one another. TablingProactively setting up a table on the campus of both colleges will improve the awareness, accessibility and sales of JFC. First, JFC should select products that it believes will be best suited for the college market. Suggestions of these products, as mentioned, include coffee beans, granola and other food items that last longer without refrigeration. Secondly, JFC must approach the relevant offices of the colleges to gain approval. At St.Olaf, for example, the tabling option is limited to Buntrock Commons, and approvals are thus granted by Nancy Stuckmayer (stuckman@stolaf.edu) at the building office located in room 147. JFC can sell merchandise on the second floor of Buntrock Commons in front of the café as long as it does not compete with Bon Appetit, which possesses the catering rights on campus. However, Bon Appetit makes the assessment of competition, and JFC must seek approval accordingly. A table rental fee of no more than $15 is also required. Thirdly, JFC should explore the alternative of routinely tabling at St.Olaf and Carleton, once or twice a month. This is an experimental, short-term strategy that can be initiated immediately. Group Discount on MembershipThe implementation of group membership will first and foremost involve the establishment of set discounts for students purchasing the student membership card as a group. Given the current buy-in price of $15, a possible discount would reduce the price to $10 if ten students, ideally living together in a pod, buy it together. It could also give price reductions that are targeted towards houses. For example, JFC could offer collective membership to honor houses at St.Olaf and Carleton. A house with 5 students can be charged $50 for the membership. If it wishes, JFC could make its own assessment of projected increase in sales, and adjust the discount accordingly. The primary challenge of implementing such price reduction is communicating the deals in the promotional effort. In order to directly reach the off-campus students, JFC may need to gain permission to give flyers or emails to individual houses. The most effective way of reaching these off-campus houses would be to contact Pamela McDowell from St.Olaf (mcdowell@stolaf.edu) and Andrea Robinson from Carleton (arobinson@carleton.edu) in order to get permission and send a mass email to students in off campus houses, informing them of the deal. It could also contact the Area Coordinator of Yttreboe Hall, which is the only dorm with pods (groupings of 10 students), where a majority of seniors live, to gain access to the emails of pod residents. Upon implementation, the success can be measured by tracking and monitoring the use of the membership cards. Bus RouteAs previously mentioned, the committee who is in charge of setting the evening bus route is meeting again in January. In order to change the route so that it would stop in front of store, JFC should write a formal request and submit it to Kris Vatter (vatter@stolaf.edu) in the Buntrock administrations office (located on the second floor of Buntrock, by the post office). The request should include an alternative route that is realistic and avoids any major detours. Furthermore, JFC should contact the existing members as well as the sustainability club to get support from students and strengthen the leverage. It may also be useful to contact Christy Hall-Holt (hallholt@stolaf.edu) who is the international student advisor (office located right next to Kris Vatter), and get the support of international students as well. If at all possible, JFC should explore the possibility of attending the January meeting to present and defend its case. If the request is approved and the route is changed, the necessary implementation will be made by the committee.ContingencyThe greatest challenge for JFC in marketing to the colleges is to keep the students coming to the store. The student market is very different from the rest of the Northfield community in that they non-permanent residents who typically leave the city after four years. This turnover of students hinders the continuity of awareness and complicates the marketing strategy. Looking at the consumption of students as a function of awareness rather than product appeals, the key to success is dependent on student exposure to JFC that is not affected by the turnover. Hence this plan has focused on long-term solutions that can consistently raise the level of awareness and accessibility. The adjusting of the bur route, for example, would be a structural change that generates perpetual exposure to the store. With the other suggestions such as ESAC supported classes, group membership and tabling, however, it is up to JFC to sustain the efforts. For instance, the tabling success of “Friday flowers” by Forget-Me-Not has been a result of consistent and persistent effort of the business to reach the student community. Similarly, the goal of JFC should not necessarily be to focus on the choices of individual students who will eventually Northfield, but rather to become a part of the college culture. Both with ESAC supported classes and tabling, our recommendation is to initially set up the events once or twice a month and gradually increase the frequency until it becomes regular routines. Also essential to the long-term cultivation of awareness is the sustained relations with the sustainability clubs of the respective colleges. Given the limited resources of JFC relative to its competitors, it is understandable that the marketers of JFC are limited in their ability invest time on campus. Through an annually appointed student representative, however, JFC can maintain access to the community and create a two-way stream of communication. Yet, it is again up to JFC to proactively use this communication channel to collaborate on events and find new ways of utilizing the clubs to raise awareness about the store as well as social issues of interest.Finally, the ultimate element of the contingency plan is student membership. The membership is a symbol of loyalty that serves as a natural incentive to return to the store. The group discounts can potentially increase the number of these student memberships and shape the shopping behavior of students who are frequent grocery shoppers. Yet, taking this plan a step further, JFC would be wise to utilize an email alias specific to student members to request regular feedbacks and use emails as means of promotion. In fact, email should be used to engage in sustained communication with all the students that JFC has access to, including ESAC class participants and members of sustainability clubs. If JFC is persistent in the use of the mentioned methods, the business should see an improvement in awareness that can generate word of mouth, and consequently present itself as a viable option for the targeted students who find the values and products of JFC appealing.Return On Investment (ROI)This plan has attempted to analyze how Just Food Coop can raise awareness and accessibility to expose students to the brand and boost the number of student customers. As such, the plan has focused on cost effective methods that present a structural and cultural solutions to the practical problems such as location and lack of awareness. Thus, the suggested investment is very low in cost, but rather demands more time and energy from the marketers of JFC. The main cost would be the charges for tabling, which will be no greater than $300, if JFC decides to table twice a month for 9 months during the academic year.Measuring the ROI, on the other hand, is quite complicated. Due to the fact that the researchers of this plan did not have access to financial statements or the specifics of student related consumer data, it is almost impossible to quantify the exact financial return that these investments might yield. Nonetheless, it is possible to give a rough estimate of returns using student membership as metric. We believe that it will be realistic for JFC to increase the student membership by 100 members in the academic year 2013-2014. The specifics are shown in the table below:Members from group discounts (8 houses and 2 pods)60Members from sustainability clubs (10 from each college)20Members from changing the bus route10Members from promotions at ESAC events10Total100Given the current student membership total of 100 members, a 100 members increase would essentially double the revenues from student members. Although co-op members are not the only group of people that shop at JFC, they are certainly indicative of the level of loyalty that JFC holds from the student customers.If we simply look at the revenue that results from the purchase of membership cards using the above allocations, JFC will receive $1,110 after the suggested discounts. Applying the $300 in investment (which excludes nonmaterial costs such as hours put into meetings and writing formal requests), implementing the given suggestions would yield an ROI of 270%. Since this number excludes all sales that come from actual purchases at the store, the total revenues from the implementations of our suggestions are estimated to be much higher. Appendix I: Evening Bus RouteAppendix II: Additional Data from Survey of St. Olaf StudentsA survey was conducted with 124 students at St. Olaf. These students varied in gender, age, grade, and race. The students were asked yes/no and multiple-choice questions regarding grocery shopping habits and JFC specifically. The following figures represent those students’ answers.Figure 2.1Figure 2.2Figure 2.3Figure 2.4Figure 2.5Figure 2.6Figure 2.7Figure 2.8Figure 2.9Figure 2.10Figure 2.11Figure 2.12Figure 2.13Figure 2.14 ................
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