1. Shared Value Analytical Report
MGMT 366
Spring 2015
Hannah Dion, Keely Griffin, and Olivia Martins
Table of Contents
2. 1. Executive Summary
2. History
3. Business Model
a. Key Partners
b. Key Resources
c. Value Propositions
d. Cost Structure
e. Revenue Streams
f. Customer Segments
g. Communication Channels
4. Value Chain
5. Working Definition of Sustainability
6. Communication Channels
7. Initiatives and Activities
8. Shared Value Opportunities and Recommendations
a. Implementation Steps
9. Conclusion
10. Annex
a. Figures
b. References
Executive Summary
3. Creating shared value offers the opportunity for corporations to utilize their skills, resources, and
the ability for management to lead social progress in order to deliver industry-leading
performance. People’s Market (PM), a student-run co-op at UMass Amherst, is currently
experiencing serious declining revenues and slow growth. Developing a shared value initiative
could be a start in creating a sustainable business model that enhances their competitiveness
while advancing economic and social conditions for the students at UMass Amherst and the
surrounding communities throughout Western Massachusetts. Within creating shared value for
PM, the process of redefining the productivity in the value chain will be completed by several
steps that mainly focus on their partnerships, products, and waste management, all while creating
an incentive program for prospective customers. As a final result, this program will introduce the
countless opportunities creating shared value has, as well as producing brand awareness to
ultimately increase profits, and identifying and expanding connections between societal and
economic progress.
History
Located in the Student Union building at the University of Massachusetts, the People's Market
has long been the community's go-to source for ethically-gathered food, beverages, and personal
care products. Since its founding in 1973, it has been known as the best place on campus for
coffee, herbal teas, fresh bagels, gourmet cheeses, healthy snacks, chilled beverages, yogurt,
chocolate, and women's health products. As one of the oldest student-run businesses on campus,
the People's Market is also a living classroom in cooperative management, mindfulness, and
sustainability. Founded as a collective of women, today the Market consists of folks from all
walks of life. The People’s Market believes in working with one another to achieve collective
goals, striving to foster awareness of privilege, oppression, and identity both in the organization
4. itself and the community. They aim to create a radically just, more equitable world in which the
environment and community can live long, prosperous lives.
Business Model
Key Partners
PM’s key partners include local Dean’s Beans in Orange, MA, All Star Dairy Foods in South
Hadley, MA, Tandem Bagel in Easthampton, MA and other partners such as LXG, Gordon’s
Food Service, Sustainable Indulgence, Conway Kitchens, Polar and UNFI; their most widely
used shipping partner. These partners provide the most popular products bought and sold in PM.
PM’s main activities include providing the UMass Amherst community with alternative product
options such as local, fair trade, vegan, vegetarian, gluten-free and organic.
Key Resources
The people’s market has several key resources that have enabled long-term business success. The
staff at PM are all co-managers, each person provides a vital role in the business. Each manager
is assigned to a particular committee who is in charge of a certain task pertaining to a specific
subset of the business. For example, there is one committee who orders bagels every week and
another who handles advertising for the company. Another valuable resource for the company is
its sustainable image. Their image draws in customers who want a different experience, that is,
the opposite of huge money making corporations. Through this ideology of an alternative
business structure, PM aims to better the surrounding community. PM’s long history at Umass is
also a valuable resource. This aspect of the business creates strong bonds with customers and
trust among new customers and business partners.
Value Propositions
5. Through their resources PM believes their value proposition includes creating a safe space for
their customers, as the market has been deemed free of judgement and a friendly space by their
co-managers. Also, as customers enter the market they are immersed in PM’s culture, which
includes a familial space and high levels of trust between customers and co-managers. Along
with this ideal of a safe space, PM prides themselves on their co-operation run business. In a co-
op, customers are both partners and friends of the business and have equal input in the business’s
decisions.
Cost Structure
PM has a value-driven cost structure, which focuses on value creation and premium value
proposition. Characteristics of the cost structure are fixed costs (rent, payroll, utilities), variable
costs (direct materials, production supplies), and economies of scale.
Revenue Streams
PM customers currently pay for products purchased at the market with either debit, credit, or
cash. A majority of the customers are students, and they would prefer to pay with YCMP card
swipes offered through the university. PM customers are paying for a variety of products such as
fair trade coffee, local bagels, and organic beverages. Customers also pay for an experience
through PM. The market is set up to provide each customer with a unique experience brought on
by the co-managers. The revenue stream contributes to the overall revenue because the main
customers of the company are not willing to pay for products out of pocket. This leads to poor
revenue and partly causing the current financial situation of the market.
Customer Segments
Millennials
The target market for People’s Market is Millennials, with a focus on college students. In the US
6. today, Millennials (ages 18-36) surpassed the Baby Boomer generation for the largest percentage
of the population. According to Mintel, there are 78.3 million millennials, which is nearly 25%
of the population in the United States (e.g. see fig. 1).
Values
Millennials value working together in a team and being part of a cause, as well as having strong
views on accomplishing goals and expressing their opinions and ideas. In a recent study by the
Boston Consulting Group (BCG), Millennials are divided into six different groups based on their
values and lifestyle choices. One third of the generation is defined as a “Hip-ennial” which is
comprised mostly of women who are either students or homemakers. They are “globally aware,
charitable, and information hungry.” This particular segment of Millennials is a significant group
for PM to aim their promotion towards (e.g. see fig. 3).
Outreach
Millennials are the most technologically savvy generation because they grew up during the
digital age. They gain most of their knowledge online and through social media platforms.
According to the Mintel report on leisure trends, Millennials are most likely to be informed of
and become engaged in non-profit organizations online and via social media. At 65%, websites
are the most preferred platform for Millennials to learn about non-profits (e.g. see Fig. 4).
LOHAS Consumers
Lifestyles of Health and Sustainability (LOHAS) is a “marketplace for goods and services
focused on health, the environment, social justice, personal development, and sustainable living.”
Core values shared are transparency, honesty, and love for mankind and the planet, among
others. LOHAS consumers make up about 15% of adults in the US. According to the National
Marketing Institute (NMI), the LOHAS market in the US is estimated to be about $290 billion
7. with continued growth (e.g see fig. 5). One aspect of the segmentation in Figure 5 that is
particularly important for PM is the ‘Personal Health’ sector since it accounts for $117 billion of
the market, which is the highest out of the six segments. This sector covers natural and organic
products, which is the industry PM is involved with.
Purchasing Habits
Of the different generations in the US, Mintel states that Millennials are expected to buy green
more often than those who are 35+ years old. One of the reasons behind this is that Millennials
grew up during a time where there was more knowledge of environmental matters such as
recycling, global warming, etc. Millennials are also more likely to buy green because they feel
the need to do the right thing in buying sustainable products. They hold the highest percentages
in the super green and true green categories for green purchasing. In this case, super green refers
to the most committed of the green green consumers, which means those consumers that almost
always buy green products. As for the true green type of consumer, they are the group that
purchase green products regularly (e.g. see fig. 6).
Value Chain
The inbound logistics for PM refers to sourcing ethically-gathered food, beverages, and personal
care products, while engaging in cooperative management, mindfulness, and sustainability.
These packaged products are locally transported to PM, where they are then taken out of the
packaging and into their designated section for retail purposes. PM operates only at their UMass
location, and is operated as a student-run-co-op. The largest part of their operation includes
product partnerships with local business, such as Deans Beans and Tandem Bagel. Within
8. outbound logistics, there is no presence of intermediaries in product selling. Products are sold in
their own throughout PM’s store. Their marketing and sales includes social media content, but
there is little presence on developing new marketing strategies to gain customers and an overall
brand awareness. Within human resource management, the company’s committed workforce is
considered a key attribute in the company’s success and value over the years. Another key part
of their value chain is their work culture, which is what keeps them motivated and work
efficiently as a business.
Working Definition of Sustainability
PM’s working definition of sustainability is instilled in the business practices and depicted in
their mission statement. PM believes that small business practices provide the best definition of
sustainability. These practices include composting, buying local products, and providing
incentives for their customers to behave sustainably. They work to achieve collective goals and
aim to promote the knowledge of social issues in the community and market. PM also believes
that being a sustainable business involves educating the community about political and social
issues in the food industry. To show their support for sustainability issues, they have put up
stickers and other materials around their store (e.g. see fig. 7 and fig. 8).
Communication Channels
PM currently communicates to their customers through direct contact within their store, their
own website, as well as using social media platforms like Facebook, Twitter, Instagram,
Youtube, Foursquare, Yelp and Tumblr. Their communication toward the public and their
subscribers is focused around sustainability within the UMass campus and the surrounding
community of Amherst (e.g. see figure 9).
Initiatives and Activities
9. According to Porter and Kramer there are three methods to create shared value (CSV) for a
company. These are reconceiving products and markets, redefining productivity in the value
chain, and enabling local cluster development. The initiatives and activities associated with PM
include providing an alternative to big name corporations while supplying sustainable, healthy,
and local products. The market only sells products that are non-conflict. Other larger brands like
Walmart and Target do not provide some of the local products that PM sells, which allows PM to
appeal to a niche market. PM’s strong locally-focussed buying initiatives allows a drop in cost
for the company and carbon emissions for the environment due to shorter distances travelled. PM
also has a “bring your mug” for a discounted coffee initiative, which cuts back on waste and
provides low-income college students with a cheaper source of coffee. The employees as co-
managers also enable CSV within PM. However, PM does not currently have any initiatives in
place that involve the outside communities.
Shared Value Opportunities and Recommendations
People’s Market has several opportunities to implement shared value within their organization.
Specifically focussing on reconceiving new products and markets. This can be done by lowering
the costs of a popular product (i.e. bagels), accessing new markets, and meeting social needs by
better serving the target market. PM states that they want to promote awareness surrounding the
multitude of social and environmental problems. They do this by purchasing socially-conscious
products, eliminating products that do not meet their social justice standards, and buying locally.
However, they do not have any initiatives in place to promote sustainability in the local context.
The proposed plan (outlined below) will give PM the opportunity to create shared value within
the community by raising awareness around food waste and the homeless community, while also
10. providing students with lower prices, which will in turn increase awareness, foot traffic and
revenue for the business.
Campaign Overview
People’s Market will partner with Tandem Bagel to put their food waste from bagels to a more
productive use. Rather than simply throw away unsold bagels at the end of the day, the owners of
Tandem Bagel and the co-managers at PM will donate the bagels to schools, shelters, and other
non-profit organizations as part of their new initiative, A Bagel for Every Table. Also, PM and
Tandem will show their strong commitment to being fair to their customers by offering a 50%
discount on a customer's next purchase of a bagel and cream cheese contingent on the customer
promoting the campaign prior to their purchase.
Promotion
External (Customers)
In order for their customers to get a 50% discount on their next bagel and cream cheese purchase,
customers must take a picture inside PM or Tandem with the proper materials (e.g. bagel props
and campaign banner) and then post the picture with the proper hashtag (e.g.
#ABagelforEveryTable) and handles (e.g. @peoplesmarket73) on Facebook, Twitter, and
Instagram. The customer must then show the cashier the picture that they shared on social media
at the time of their next purchase of a bagel and cream cheese.
Internal (PM & Tandem)
People’s Market and Tandem Bagel will also be in charge of promoting the campaign through
their own social media platforms. They will need to design a campaign that incorporates their
customers participation while also promoting further participation in the campaign itself (e.g. see
fig. 10). To further enhance their online promotion, PM should also create a new page on their
11. website titled, “community” explaining their new food waste initiative, A Bagel for Every Table.
This page should be constantly updated with tangible information such as the amount of bagels
donated, key partners and campaign participants, and the places donated to.
Conclusion
This new shared value initiative will raise awareness about a sustainability and social justice
issue, involve the local UMass community and the outside communities that Tandem Bagel
caters to, provide economically-strained college students with a cheaper breakfast option,
provide meals for the homeless community, decrease the cost of food waste disposal for both
Tandem and UMass, and most importantly, raise awareness about People’s Market itself, which
has the potential to increase foot traffic and revenue.
Annex
Figures
(Fig. 1)
12. Figure 1 shows the breakdown of the U.S. population by generation.
(Fig. 2)
Figure 2 shows the mean income of household by generation and age.
(Fig. 3)
(Fig. 4)
13. Figure 4 shows what information about the non-profit that Millennials would share on Facebook,
and cool events is at the top of the list with 74%.
(Fig. 5)
Personal Health
$117 billion
Natural, organic products
Nutritional products
Integrative health care
Dietary supplements
Mind body spirit products
GREEN BUILDING
$100 billion
Home certification
Energy Star appliances
Sustainable flooring
Renewable energy systems
Wood alternatives
ECO TOURISM
$42 billion
Eco-tourism travel
Eco-adventure travel
NATURAL LIFESTYLES
$10 billion
Indoor & outdoor furnishings
Organic cleaning supplies
Compact fluorescent lights
14. Social change philanthropy
Apparel
ALTERNATIVE TRANSPORTATION
$20 billion
Hybrid vehicles
Biodiesel fuel
Car sharing programs
ALTERNATIVE ENERGY
$1 billion
Renewable energy credits
Green pricing
The table above shows the six six different segments of the LOHAS consumer.
(Fig. 6)
Figure 6 shows the
breakdown of green purchasing habits by age. Millennials hold the highest percentages in the
super green and true green categories for green purchasing.
(Fig. 7)
15. Figure 7 is a picture of different sustainability promotional materials that can be found inside the
storefront.
(Fig. 8)
Figure 8 shows
a sign that was
placed
outside one of the
beverage
fridges. The sign reads, “Hello lovely customers & friends! You are probably wondering why we
have no tropicana & naked juice .. well tropicana + naked juice are owned by a little company
known as PEPSI CO. (JK they’re huge) And PEPSI CO. purchases conflict palm oil which in
turn aids in destroying rainforest habitats & driving subsistence farmers into poverty. You can
read more at www. ethicalconsumer.org We are currently searching for subsitutres.
Suggestions?”
16. (Fig. 9)
The following pictures depict PM’s current social media standing on Facebook, Twitter and
Instagram.
Facebook:
Twitter:
18. (Fig. 10)
The image above is an example of the type of social media content that People’s Market and
Tandem will post throughout their social media campaign. Each customer will take a picture of
their purchased bagel with the customized PM and Tandem Bagel deli paper. They will then use
the hashtag #ABagelforEveryTable. This will catch people’s attention and create a buzz in the
online community.
References
20. https://sharedvalue.org/groups/shared-value-initiative-community/what-does-creating-shared-value-mean-
nonprofit-sector
FSG - http://www.fsg.org
Pfitzer, M., Bockstette,V.,& Stamp, M. (2013). Innovating for Shared Value. Harvard Business Review,
91(9), 100–107.
Porter,M. E., Hills, G., Pfitzer, M., Patscheke,S.,& Hawkins, E. (2011). Measuring Shared Value (pp.
1–22). FSG. Retrieved from http://www.fsg.org
Kurucz, E.,Wheeler, D.,& Colbert, B. (2013). Reconstructing value: Leadership skills for a sustainable
world. University of Toronto Press.
http://managementhelp.org/organizationalsustainability/
http://gogreenplus.org/nuts-and-bolts-guide/performance-nuts-and-bolts-guide/sustainability-
management/sustainability-plans/
