What is industry analysis? It is “a tool that facilitates a company’s understanding of its position relative to other companies that produce similar products or services.”1 It is extremely important when we start with strategic planning of our business and we want to enter the market. Firstly, we have noticed that the organic food market has grown by approximately 200% in the past decade. Although organic products have higher price, the growth in the market appeared “due to rising health concerns among consumers, awareness of health benefits of organic food, increasing income levels, improved standard of living, and government initiatives aimed at encouraging widespread adoption of organic products.” There are 170 countries that report organic farming activities. Supermarkets and specialists are the main distribution channels in Europe and North America.
1.1 What is eco-food?
Firstly, we should understand that eco, bio and organic refer to products that arise exactly in the same quality system. All of them are created on the basis of organic farming and raw materials in controlled, certified plants and processing plants. Such products must be certified and labeled with the specific logo of organic food; In the EU the logo is so-called “EKOLI??”.2
According to the rules of the European Union regulation, organic food is “produced at least 95% ecologically, without the use of artificial fertilizers and chemical plant protection products, while maintaining soil fertility, biodiversity and respect for the environment.”3
Eco-food can be characterized by the certain features:
· “no chemical plant protection agents and fertilizers are used for production, crop rotation is used to ensure fertility of the soil”4,
· “animals in organic farms are provided with healthy conditions and are fed with organic feed or with an addition of approved mixture of conventional feeds”5,
· “processed organic food does not contain artificial colours, flavours, flavour improvers, preservatives, and is not genetically modified (without GMOs)”6. The organic food market has a potential to develop in Poland. Now, people are more aware of what is healthy food and try to avoid full of chemicals conventional food. In past years, people could have noticed a significant increasing number of health shops and organic food in Poland. “The value of Polish organic food market exceeds PLN 700 million, and the dynamics of its development is estimated at 10-20% per year – for comparison, in September 2014, this market was estimated at PLN 600-650 million.”1 The country possesses “rich agricultural lands not ecologically the contaminated, which is suitable for organic and ecologic farming.”2 In Polish agriculture, there are “fragmented structure and low-use of chemicals”3 what “allows to produce high quality, organic and natural food that are so desired in Europe.”4
We could have observed trends towards organic producers and organic food processing plants:
· The number of organic producers in 2016 was 24276,5 times higher than 10 years ago ( Figure 1.2 ),
· The number of processing plants in 2015 was 562 what was 10 times higher than 10 years ago ( Figure 1.3 ). In which (2014), 54% in total was fruit and vegetables processing and cereal milling products ( Figure 1.4 ).Polish demand for eco food is growing for around 20% each year. What’s more, since 2011 the average number of organic processing plants increased by 19%.1 1.3.3 Benchmarking Organic food sale is more popular abroad than in Poland.The share of organic food in the Polish food market is at the level of 0.3%, while in Austria it is 6.5%, Switzerland 7.7%, Denmark 8.4%, and the EU average is around 4%.2 Consequently, eco food’s share in the Polish food market is much lower than the EU on average. We could also compare Poland to Germany, which market share of organic food market is approximately 50%.3 However, organic industry is regarded as the most potential market sector in Poland. What is more, in 2015 Poland was on the 5th place in the European Union in terms of the number of organic holdings. The Polish market is quite underdeveloped, compared to Western Europe regions. According to the president of ‘Bio Planet,’ its market share is of just 0.33%.4
2.1 Trends in Poland1
In comparison with other developed countries, the size of the Polish market is very little, however, the growth in sales and the number of companies producing certified organic food shows that consumers are ever more interested in this trend.2 In Poland are around 800 healthy food stores, that have from 50% to 100% share of eco-food in the market. The greatest share of eco-food is held by ‘National Brand Hipp Polska Sp. Z.o.o’.
The number of consumers buying eco-food is increasing each year. Consumers for eco-food in Poland usually have higher wages and are highly educated. Today’s consumers are more concerned about healthy lifestyle than a few years ago. They are more careful about the composition of products and try to avoid preservatives and dyes, taking care of the figure and well-being. The growing wealth of Poles also has an impact on the change in the purchasing basket: monthly household expenses per person have increased by 58%, from 690 to 1 091 PLN for the last 10 years.1 Moreover, even though the price is a huge barrier for Polish consumers, there is now greater number of consumers, which do not have problems with the price for eco-food, especially because of the consumers beliefs that eco-food is healthier and better. Polish consumers buy eco-food mostly in ‘hypermarkets, discount stores, delicatessen small stores and specialty outlets.’2
Food customers can be differentiated into segments depending on their lifestyle. These are ‘hunters-kidnappers’ (people without children or single staying in cities, eager to try new things, however do not have a lot of information about the eco food), ‘hamsters’ (eat national food), ‘level-headed consumers’ (older people, who prepare food in effortless way), ‘happy cooks’ (at the minimum one person in a family loves to cook), ‘careful cooks’ (retirees with a high retirement, they have a knowledge about healthy eating).
What is more,we can distinguish consumers into the groups of different eating fashion. These are ‘meat eaters’ (consume meat daily), ‘health enthusiasts’ (mostly older people who eat vegetables, fruit rather than sugar, meat or fat), ‘the well-informed’ (they have a lot of knowledge about healthy eating), ‘the absent-minded’ (they favor already made food), ‘travelers’ (people, who eat out and do not pay attention on healthy food).
3.1 Different groups of eco-food customers in Poland1
Consumers that are engaged into the eco-food are segmented into the following groups: ‘the eco-activist’ (mid-aged married with children, who consume eco-food), ‘the eco-dietician’ (search for food that stop diseases), ‘the eco-traditionalist’ (the reason they consume eco-food is the taste), ‘the eco-innovator’ (they have knowledge about eco-food and they take care for the environment). Eco-food consumers usually pay attention on the caring for environment; they are also keen on learning about new things. Eco-food consumers participate in food market. Nowadays eco-food consumers are greatly informed about the eco-food, however eco-food consumers contrast in the intensity of the engagement in eco-food. Based on the survey we had conducted, the product assortment of our eco-jam may be presents straights:· It’s breadth comes to 9: strawberry, cherry, peach, pear, blueberry, forest fruits, raspberry, plum and apricot.· Length consist of 15 on every taste-line produced, which gives 135 jars of eco-jam.· The depth total only 1, because we specialize in one particular type of eco-jam, leastways on the beginning. If it meets the expectations of our customers, we would prepare also different versions of our product.· In the case of consistency, it’s strength depend on the taste. Forest fruit has very strong relation with blueberry or raspberry, but weak with pear. Other has similar, not-strong linkage. 4.1 Analysis of the product The desired image of eco-jam “Frummy”: The packaging of Frummy will be very traditional: small bubble-shaped jar for 150 g with a piece of yellow-and-red checked material on the cap. It will be tied up by some centimetres of string with a hand-written card with the taste of jar’s contents. The logo will be shown in the front of the jar to make our brand visible, while the nutrition facts and the list of ingredients would appear on the back. The labels will be big enough to notice, but small enough to see what is inside the jar. We would also include eco-labelling to make our customers sure it is an eco-product. We want our product to be healthy and eco-friendly so eco-jam will be produced only from fresh fruits. In ingredients part, we will include information, what the jam will be made out of: the amount of fruits for each 100g of product (in our case 250g), eco-sugar (“ecoStick”) and gelatine. Fruit would be supplied from “EKO-SAD” Company to ensure that fruits in our jams are always fresh, tasty and come from reliable and eco-friendly source. Moreover, there will be the table of nutrition content available for our clients to see nutritional benefits from buying eco-jam. In estimation:
There is a high importance of brand representing consumers’ perceptions and emotions concerning the product and its interpretation. Therefore, we focus on the brand strategy, which is a long-term processing for the improvement of a successful brand in order to gain the targeted goal.
Moreover, a successful brand has a high ‘brand equity’- which is ‘a positive differential effect knowing the brand name has on customer response to the product or service’ (got it from the material).
We can find the main ‘brand strategy decisions’ which include ‘brand positioning, brand name selection, brand sponsorship and brand development.’ Therefore, when choosing the name we focused on brand positioning, which is an effort to influence customer perception of a brand or product comparing to the perception of competing brand or product. Its main purpose is to create a unique, specific and beneficial position in the customer’s mind. We think that this strategy is the most effective way to connect with the ultimate consumers of our eco-jam. It will help us to create an influential image of our product on buyers’ perception.
Our desired image, for our brand is when hearing the brand name ‘Frummy’, consumers will connect ‘Frummy’, with adjectives fun, joyful, adventures, friendly and enjoyable. Most of all, we wanted to create the brand name, that is distinctive, easy to pronounce and makes consumers smile when they hear it. 5.2 Research proposal Our project group has conducted a research relative to opt the brand name for our eco-jam. The research was carried out among four people from International Management in Emerging Markets course, aged 19 to 22. The participants marked proposed brand names from 1 to 5 (where 1 indicated that “the name is not relevant”, whereas 5 meant” it’s a relevant name”) and gave opinions concerning their associations with the heard names: • “Frummy” • “Eco-Orchard” • “Fruity Way” • “Best of Nature” • “Fruitful Joy” The research has given the results1: · The first name was found as “interesting”, also connected with “sweet, tasty, cute” and “fruits, yummy”. Given points were similar to each other and the sum of all points was 13. · The second supposed name earned 5 points with very consistent judgment. Participants considered it as “more eco-friendly, colorful but not impressive”. · For the third position, there were very extreme points given. The name was associated with “fruity, juicy, healthy” and got 14 points in total. However, it was also announced as “boring, not creative”. · The fourth proposition gained 11 points and was consociated with “more good more natural” and “sleepy”. · The last one got 12 points and opinions such as “more joyful creative, interesting, enjoy eating”. As the research showed, the highest score was voted to “Fruity Way”. However, opinions about the name are ambiguous and contradictory to each other what might indicate that this brand name is too risky. “Frummy”, on the other hand, got high score and opinions that had positive connotations which met our assumptions and the desired image of the eco-jam. In this situation, we believe that “Frummy” is much more suitable name for our brand and it would be associated with eco-friendly, healthy and tasty product as well as with catchy, original and maximum correlative with the product brand name. 5.2.1 LogoWe have also decided to design a logo for our brand to make our business more recognizable among potential customers. We have designed 2 projects and chosen one presented in the Figure 5.1
There are 3 strategies for a start-up business: intensive, exclusive and selective.
Intensive distribution stock the product in all available outlets and is a winning strategy when
there are a variety of brands. A wholesaler makes sure to provide a product to nearly all
potential consumers. Our product is quite unique and there are not a lot of competing brands
to use this strategy.
Exclusive distribution uses only one retailer to sell the product. It is complicated and not
necessarily to detect and choose one and the most special and specific outlet in Poland, since
the development of organic food market are just growing. People started to be more attentive
of their health and the composition of a product. There are plenty of eco-stores available
where customers do their shopping and all of them offer a high quality, environmentally-
friendly, and natural products.
Selective distribution strategy tends to be used for upscale and high-quality products. This
distribution strategy lies between intensive and exclusive distributions and uses more than one,
but not all of the intermediaries that exist. Selective distribution allows us to concentrate on a
few outlets in specific geographical area which rises a possibility of positive outcome. We would
pay fewer cost and help producers to gain best market coverage than with the intensive strategy distribution.
After considering and analyzing each of those strategies selective is turned out to be the most
effective. Unlike intensive and exclusive strategies, selective is more appropriate and beneficial
for our product. We want to maximize profits and focus on point of sales (POS) in order to increase awareness of our brand “Frummy” in the market and selective distribution would be a midpoint to achieve this since we would have higher sales than in exclusive distribution while retailers carry competing brands.
As a result, we as suppliers would be encouraged to provide marketing support and retailers would focus on “all efforts that increase sales at the point the purchase is actually made (POS).”1
7.2 Business relationships
As the new brand in the market, we would like to pay attention to our business relationships in B2B market. Our brand represents the organic world where everything is 100% natural and eco-friendly. As we believe in high quality and harmlessness to the environment of our products, we are looking for businesses that have the similar perspectives and care about the nature. Our candidates for suppliers of ingredients necessary for the production of eco-jam are: “EKO-SAD” and “ecoSticks”. The first firm is known for both quality products and quantity purchase, and wholesale of a variety of high-valued fruits and vegetables. We want to make our products only from fresh and organic fruits so cooperation with “EKO-SAD” would enable us to ensure the high quality of the ingredients. What’s more, we could learn a lot from the eco business with many years of experience. The second firm cares about the natural environment through saving space, reducing waste and delivering the same great taste of sugar. We want to support all ecological actions that aim at diminishing harmless impact of the “ecoStick” production so the collaboration would be mutually beneficial for both firms. From our side, we can guarantee the high quality of the products and their organic production as well as being consistent and keeping all promises included in the agreement and keeping the partners informed with changes that may impact them or your relationship.