CASE STUDY: ORGANICS – MOVING FROM NICHE TO MAINSTREAM IN AUSTRALIA Taken from:

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CASE STUDY: ORGANICS – MOVING FROM NICHE TO MAINSTREAM IN AUSTRALIA

Taken from: Strategy, Marketing Plans and Small Organisations, 1st edition, 2016 Dr Breda Mccarthy & bookboon.com

Pierce Cody bought an organic store, Macro Wholefoods in 2004, and with the help of his business partner, turned a single store into Australia’s first chain of organic supermarkets (Strates, 2007).
In 2007, it was named one of the top ten retailers around the world and showed strong growth prospects (IGD, 2007). It was bought out by Woolworths, who wanted to capitalise on the trend

in Australia towards ‘health eating’ and ‘ethical consumption’, where more and more people are making intelligent choices about the food that they consume. The organic product lines stocked by Woolworths include organic meat, fruit, vegetables, cereal, dried fruit and nuts, dairy, detergents, aromatherapy and natural skin care products. More and more organic supermarkets have emerged in capital cities, regional cities and towns around Australia. It was not that long ago when Australians associated organic foods with ‘greenies’, ‘hippies’ and ‘health freaks’ and with ‘alternative’ towns such as Byron Bay and Nimbin. Today organics is a mainstream market. Although the Australian organics industry amounts to only 3.4% percentage of the conventional food market, it is the

fastest growing category in Australia. The Australian Organic Market Report (2014) reveals the nation’s organic industry is worth $1.72 billion, up by 35% since 2012 and growing by over 15% each year (Australian Organic, 2014). Many farmers who move to certified organic farming are attracted by the high growth rates. The organic meat and dairy sector are success stories but exports overall remain suppressed due to lack of supply (Monk, Mascitelli, Lobo, Chen and Bez, 2012).

The Macro Wholefoods brand is similar to brands like Fresh and Wild in the UK and Wild Oats and Wholefoods in the USA. Consumers are increasingly seeking out organically-produced food, for reasons that range from health concerns, a desire to avoid ingesting chemicals and pesticides, to the conviction that organic food results in improved health and longer life and tastes better
than conventional food. Ethical concerns for animal welfare and altruistic interest in protecting the environment also drive purchase. A longitudinal study that tracks consumer attitudes about
the environment (New South Wales Government, 2006) found that environmental knowledge
and understanding has grown markedly since the first survey in 1994. For food consumers, environmental protection means the food is prepared and packaged in an environmentally friendly way, produced in a way that has not shaken the balance of nature. It also means that food is grown locally to reduce transportation (Lockie et al., 2002), although a lot of organic brands suffer from the issue of ‘food miles’. Other challenges are lack of supply and seasonal fluctuations. Many community-minded organic shoppers prefer to shop at smaller, independent retailers or buy direct from famers through farm gate sales or farmer’s markets. One of the first steps in developing a strategy is to identify the target market. Education, general and science, has a strong impact on consumption. The target market is well-educated, more likely to be white collar than blue collar workers.

There is a clear gender dimension to organic consumption. Women take more responsibility
for feeding children and other family members and are often very concerned about what their children eat than what they eat themselves – particularly if they are pregnant. Income has some effect on consumption. While the price premium associated with organic products may make them less affordable for low income earners, they are still interested in consuming organic food (Lockie et al., 2002). There are some factors that limit the consumption of organic foods. Consumers are concerned about practical issues, such as (Lockie et al., 2002):
• Cost (i.e., not expensive, good value for money)

• Convenience and availability (i.e., quick and easy to prepare, can be cooked very simply, can be bought in shops close to where consumers live, easily available in
shops and supermarkets, easy to eat).

Organic food is sold at a price premium because of lower yields and higher labour requirements. One of the disadvantages of organic production is that the farmer gets less quantity of product
per acre. The mainstream consumer is often unaware of the problems and extra costs involved in organic production techniques. Another study of consumer behaviour (Zanoli and Naspetti, 2002) found that certain attributes associated with organic food deter purchase. These are: ‘expensive’, ‘waste’, ‘perishable’, ‘not easy to use’, ‘inconvenient location’, ‘not easily available’, ‘negative impact on family budget’, ‘lack of time’, ‘visual aspect and packaging’. The market is demand-led and it has developed largely without any major promotion campaigns. Marketing communications will play a role in tackling negative beliefs and making organics more mainstream.

Please read the case and answer the following questions:

1. Give examples of two companies which according to your opinion are currently moving (or will move soon) their products from niche to mainstream.
2. What should that companies take into concideration while forming the strategy?

Explanation / Answer

Q1) Examples of two companies which are currently moving their products or services from niche to mainstream are -

1. Uber - The transportation technology firm which started as a car hire by booking through an app based pn the location of the passenger and the availability of the car started off as niche as people who are tech-literates used to book the cabs. With the advent of smartphone industry and the ease of booking just through a few clicks, more and more passengers have been booking uber through apps. This way, the business started as a niche and emerged as one of the major transportation options in major cities.

2. Netflix - The entertainment company introduced subscription based viewing of content like videos, movies, TV series, sports etc. for an affordable price and has spread its market in US. Now, the market has become mainstream where users are shifting from watching Television to subscribing to online streaming firms like Netflix.

Q2) Below are the key points to be taken into consideration while forming the strategy -

1. The products or service should be niche i.e. they create a new consumer group altogether

2. The business model is not easily imitable and takes time by when it should have established dominance in the market

3. The firm should be the center point of the transformation of niche market to mainstream by continuously adding new consumers

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