Groceries = Medicine – the Strategy
What does this image stir up memories of? Yummy yogurt? Breakfast? Or … what can we trust nowadays?
Yogurt improving digestion? Maybe. But my favorite pop boasting to have antioxidants? Something is fishy.
But the trend proves to be an important growth strategy for some companies according to “The Healing Power of Groceries”, an article by Julia Belluz in the October 20 issue of Macleans.
Strategy vs. Tactic
Is this turn in marketing simply a tactic to change consumer’s perception of the goods or is it a strategy that requires the coordination of many parts? I sway towards the latter because companies like Nestle have started a research and development facility called “Nestle Institute of Health Sciences” to develop truly healthy food products. This is a fundamental shift for the attitudes and values of food companies, moving beyond a simple marketing technique. It is now generally accepted that food is not merely for subsistence and taste but is essential for fending off sicknesses and living a fulfilling life. Production lines will also have to make adjustments in changing ingredients to match the new healthy goal. And of course, costs, healthy natural and organic ingredients are often more expensive, these extra costs need to be reflected in new pricing – requiring the accounting department. Evidently, this health focus for food companies is a strategic action instead of a tactical one, including the coordination of not only marketing, but research and development, production and accounting departments.
The opportunity for this strategy arouse from customers new needs. It is a form of needs-based positioning. This positioning however, requires trade-offs. By moving the company forward towards health, the company will incur higher costs, thus higher prices. This means that the company may in the long run lose customers. Is this worth it? If this strategy provides a welcomed advantage for consumers and successfully distinguishes firms who adopt this strategy from others, it is bound to succeed.