- The document provides a recommendation for Whole Foods Market to promote its 365 brand value line through in-store marketing strategies. It analyzes distributing the store flyer "The Whole Deal" through mail subscriptions and pre-clipping coupons. However, observational research found few customers interacted with the flyer in-store. - An alternative proposal is to implement in-store coupons near corresponding products. Research shows coupons increase unplanned purchases and customer satisfaction, boosting sales and store perception. Placing coupons on shelves allows customers to consider savings during purchasing.

1.
To: Ms. Cochran­Lewis and Marketing Team
From: Jessica Shipp, Chase Eastland, Marley McBurney, Macey Pool
Date: May 2, 2014
Subject: Whole Foods Market Recommendation
Company Overview
Whole Foods Market operates in the grocery and health food industries. They became the first
“Certified Organic” company in the United States, and lead America in the natural and organic
food industry. Whole Foods first started operating in 1980, and had their Initial Public Offering
in January 1992. They prioritize their social and environmental obligations above most other
duties. In an interview with FORBES magazine, the CEO stated that “[they] are committed to
making Whole Foods a business that is good for society.” (Ashoka, 2013)
Additionally, Whole Foods Market values ecological sustainability, and prides themselves in
partaking in issues such as; committing to environmental involvement, eliminating plastic,
humane treatment of animals, and eliminating toxins in foods. Although Whole Foods Market
does contain stores in the UK and Canada, about 96 percent of their profits are generated in the
United States alone. Whole Foods Market is the 1​st​
largest natural and organic food retailer and
the 12​th​
largest food retailer overall based 2012 sales rankings offering high­standard, premium
products to over seven million customers a week (Progressive Grocer Super 50, 2013).
Customers
In general, grocery product consumers have varying demographic and socioeconomic
backgrounds. Whole Food’s high­quality products are purchased by educated persons between
25 and 65 years old, which can be described as their core shoppers. A study conducted by Whole
Foods described 43 percent of their as health­conscious. Most shoppers are between 25 and 44
and female and high incomes are common. Customers of Whole Foods usually highly value the
quality of products they put into their body through consumption.
Competitors
According to ​Natural Foods Merchandiser​, various retail channels including conventional
supermarkets, supercenters, limited­assortment and natural/gourmet­positioned supermarkets
sold approximately $99 billion dollars of ​natural​ products in 2013 (Kapperman, 2013). This
sales level is 10 percent higher than sales reported in the previous year most likely due to the
increase of consumer concerns about food purity and safety, environmental concerns, and
1

2.
better­educated consumers concerned with long­term wellness. The ​natural​ product market is
growing steadily, signifying increased competition.
Whole Foods faces four main competitors: Trader Joe’s, Sprouts, Wal­Mart, and The Fresh
Market. Of these four, Trader Joe’s is their greatest competitor, which uses an everyday low
pricing strategy containing a similar high­quality, value image to Whole Foods. Whole Foods
currently holds about 13 percent of the total market share (Whole Foods Market, 2013). Trader
Joe’s trails closely, occupying about 10.5 percent (Trader Joe’s Co., 2013)
The Issue
A price premium is charged because of Whole Food’s above industry standards and dedication to
stocking high­quality products, which come at a cost. Whole Food Market’s exclusive 365 brand
adheres to these values. This brand offers several thousand conventional and organic products at
a value price every day of the year, compared to national organic brands. However, when
comparing 365 products to lower standard conventional brands, it is perceived as high­priced due
to the price premium. Current Whole Foods shoppers are aware of and regularly purchase the
365 brand at 80 percent and 88 percent respectively. Additionally, 86 percent of Whole Foods
shoppers concur that other stores’ private label brands are lower quality compared to the 365
brand. A strong opportunity exists to build awareness of the Whole Foods Market value brand
through newly acquired customers.
Motivation
Based on the situation previously discussed, the fact that Whole Foods does not retain a national
marketing budget, and our knowledge of Whole Foods Market, Inc., its consumers, and its
competitors, our marketing team will focus on promoting the 365 brand within ​The Whole Deal​,
implementing in­store coupons, and creating a new Whole Foods Coupon app to provide
potential solutions for the issue. The research and analysis pertaining to these suggestions is
outlined below followed by a recommendation on how to implement these marketing strategies.
Whole Deal Option
We felt that ​The Whole Deal​ (TWD) did not focus enough attention on the 365 brand. Looking
through it, the 365 brand was not clearly defined and did not stand out among other brands. One
idea we had was to redesign TWD to focus more on the value of 365 products in order to
increase awareness and better educate customers about its benefits. To implement this, we would
enlarge the 365 logo itself, as well as the product photos. Furthermore, we would focus the first
page solely on 365 products, including a what it is and the value it can offer customers.
2

3.
The main way to obtain TWD is from stores. Since most shoppers enter Whole Foods already
knowing what they want to buy, we did not think they would spend their time looking through
TWD, nor seek out its coupons for their purchases. We figured that distributing TWD through
mail subscriptions directly to customers could influence them into planning their shopping trips
around deals they found in TWD. In addition to this new distribution method, we propose
pre­clipping coupons and placing them near the items to which they pertain. This would increase
customer satisfaction because they will not need to spend time looking through TWD when they
walk in. To determine how to compile our ideas in the most productive way, we performed
in­store observational studies at both the Domain and Lamar locations to see how customers
interacted with TWD.
Each of us visited Whole Foods Market separately when conducting our observations. We
conducted our observations in 30 minute intervals, during which time we counted the total
number of people walking in and out, who either did or did not pick up TWD. At the Domain
location, 330 customers walked in, but only three of them picked up TWD; of the 214 customers
leaving, not one picked up TWD. At the Lamar location, of the 104 customers who walked in
plus 107 who walked out, not a single person picked up TWD.
Our results of our observational study did not coincide with what we originally expected to find.
Most shoppers entered Whole Foods with their baskets already in hand, and did not notice TWD
displayed. Along with the grim amount of customers interacting with TWD, we noticed specific
areas in the store that promoted discounted items with TWD displayed nearby. Furthermore, at
the Lamar location, we noticed a display already containing pre­clipped coupons, individually
sorted and ready for customers to pick them up. We concluded that this option was a dead end,
and so we decided to redirect our efforts and solve this problem through an alternative route.
In­Store Coupons Option
Our second idea, implementing in­store coupons, required both secondary research and primary
research. The secondary research, presented first, evaluates the feelings shoppers get when
presented with in­store coupons, as well as their decisions following the reception of those
coupons.
We found that coupons can elicit “smart shopper” feelings among customers. Customers often
feel proud and smart when they believe they are solely responsible for the discount received.
Furthermore, customers are usually more satisfied with their purchases if they utilized a coupon.
Often, discounts can arouse these feelings in shoppers when they view a discount or coupon.
3

4.
Placing coupons directly in front of customers gives them a chance to visualize potential savings,
which makes these feelings easier to bring to the surface (Schindler 1989).
According to the Point of Purchase Advertising Institute, 70 percent of purchasing decisions are
made at the purchase point (Point of Purchase Advertising Institute, 1995). Additionally, instant
coupons can increase sales of a brand by 35 percent and increase total purchases by 14 percent
(Heilman, Nakamoto, & Rao, 2002). By coupling coupons on the shelf with their respective
products, Whole Foods Market will allow customers to make their purchasing decision with the
coupon in mind.
Heilman, Nakamoto, & Rao (2002) tested two hypotheses that pertain to our situation, and found
the hypotheses to be true . The first proves that unexpected, in­store coupons increased the total
quantity and overall value of purchases on a certain shopping trips because the consumer
purchased unplanned items rather than sticking to items only on their initial shopping lists. The
second hypothesis proves that customers make more unplanned purchases of products shelved in
close proximity to the item discounted by the in­store coupon.​ ​Additionally, the researchers
concluded that customers who saved with an in­store coupon spent a higher dollar amount on
other unplanned purchases than the amount they saved using the coupon (Heilman et al., 2002).
These increases in unplanned purchases can be largely attributed to an elevation in the
customer’s mood upon receiving the in­store coupon. Heilman et al. (2002) claimed “the coupon
may create a favorable evaluation of the store, possibly causing consumers to switch purchases
from another store in their portfolio to the one that provides the surprise coupons.” The customer
has a favorable impression of the store that provided it with the savings, and is therefore more
likely to make future purchases there. Additionally, company benefits include word of mouth
advertising from the customer sharing his or her pleasant experience with others (Heilman et al.,
2002).
This finding directly combats the high price perception associated with Whole Foods Market.
Through promoting in­store coupons, Whole Foods Market could create and maintain a
favorable opinion within the customer’s mind. This presents Whole Foods with an opportunity to
increase its customer base of individuals who not only shop there for specialty items, but also for
everyday staple products, instead of shopping at a separate grocery retailer for staples.
Our observations consist of collecting and evaluating in­store coupons at HEB. Multiple
examples of the different coupon options that HEB offers include:
● cents off coupons (Figure 1)
● percent off coupons (Figure 2)
● buy one, get one of the same item free (Figure 3)
4

5.
● buy one, get a certain amount of complimentary items free (Figure 4)
These coupons show a wide variety of ways to promote items. By providing customers with
coupons that offer free items, HEB is allowing them the ability to try products that they would
have not necessarily purchased to begin with.
Coupon App Option
Our final idea involves developing a new iPhone/iPad app specifically tailored towards coupons.
Whole Foods Market currently has an app, but it is geared more towards recipes. This current
app does have a category titled ​sales flyers​, but with everything else on the app, it is easily
overlooked. Furthermore, we felt the icon currently used to identify the app was not very
indicative that it belonged to Whole Foods Market (Figure 5). We think app users should be able
to easily identify an app based on the icon used to represent it. So we developed a simple
redesign of the icon as an example to at least include the whole foods logo (Figure 6). In addition
to the icon, we also designed a mock­up of the introductory loading screen to read ‘Coupons’
instead of ‘Recipes’ (Figure 7).
In order to test this hypothesis, we developed a computerized survey and asked a group of typical
whole foods customers to submit responses to our questions (Table 1). First we acknowledged
that 67 percent of our respondents claimed they actively shopped at Whole Foods Market (Figure
8). Of the other 33 percent who said they do not shop at Whole Foods, 36 percent claimed it was
because prices are too high. This information provided us with first hand evidence of the high
priced perception that grocery consumers have towards Whole Foods Market. Next in our survey
we wanted to determined how many people had the capability to use apps. We found that 93
percent of our respondents owned iPhones, and they all claimed to actively using apps during
everyday happenings (Figure 9). Next we wanted to determine if the current customers of Whole
Food were aware of the already existing recipes app. Only 5 percent of our respondents said they
knew about the existing app, but some of which claimed they didn’t necessarily use it. Of the rest
of our respondents who were not aware of the app, 23 percent said they were not interested, but
the remaining 72 percent all said they would be interested to learn more about it (Figure 10). We
view this as an amazing opportunity for Whole Foods Market to address its high price perception
problems by designing a new app that will include ​The Whole Deal​, coupons, sure deals, sales
flyers, etc. We created mock­ups that show a list of certain features the new app could include
(Figure 11), as well as how those individual features would look once tapped (Figure 12). An app
like this could help Whole Foods reach grocery consumers who currently have the perception
that prices are too high but are still interested in learning more about Whole Foods iPhone apps.
Recommendation
5

6.
Because our original strategy of redesigning ​The Whole Deal​ did not seem like a logical strategy
after our observations, we suggest that Whole Foods Market focus their efforts on remarketing
The Whole Deal​. We believe that the stands in stores displaying ​The Whole Deal ​are not
effective, and require better signage and positioning. Once this is effectively completed, Whole
Foods Market can focus on increased promotion of the 365 brand in ​The Whole Deal.
Secondly, we believe that Whole Foods Market should present their shoppers with in­store
coupons located on the shelf coupled with the promoted product. Whole Foods Market already
offers coupons in ​The Whole Deal​, therefore we believe that it is possible to implement these
in­store coupons at a low cost. This gives the customer the incentive to purchase items that were
not pre­determined on their shopping lists and consequently will increase the value of their total
purchase. Also, this would allow for cross promotion of brands when combined together in one
coupon offer. This is an opportunity to entice customers to try the 365 brand if it is offered as a
free or discounted addition to a name brand item. The “smart shopper” feelings they receive from
the discount will, in turn, will increase Whole Foods Market’s customer retention rate because
the customer will be satisfied with the savings that they received.
Finally, we recommend the creation of a new app marketed specifically as a “ Whole Foods
Market Coupons.” Because of the results gathered from our survey, we believe that there is a
target market that will appreciate and utilize a new app geared towards coupons that could not
have been obtained if only using the current Whole Foods Market Recipes app. This new
customer base stems from grocery consumers who originally thought Whole Food’s prices were
too high, but the new app with all its money­saving features, will work towards changing that
perception.
These three strategies outlined above will allow Whole Foods Market the ability fight the high
priced perception that many consumers have of their products. Additionally, these
recommendations allow Whole Foods Market the ability to specifically market the 365 brand.
6

7.
References
Conscious Capitalism: Q&A with Whole Foods CEO John Mackey. (2013, March 1). ​Forbes​.
Retrieved April 26, 2014, from
http://www.forbes.com/sites/ashoka/2013/03/01/qa­with­whole­foods­ceo­john­mackey­ab
out­conscious­capitalism/
Heilman, C. M., Nakamoto, K., & Rao, A. G. (2002). Pleasant Surprises: Consumer Response to
Unexpected In­Store Coupons. ​Journal Of Marketing Research (JMR)​, ​39​(2), 242­252.
Kapperman, C. (2013, June 7). Infographic: Natural retail's piece of the $99 billion industry. ​New
Hope 360 – Natural Products Industry Business, News & Lifestyle​. Retrieved April 26,
2014, from
http://newhope360.com/nfm­market­overview/infographic­natural­retails­piece­99­billion­i
ndustry
Point of Purchase Advertising Institute (1995), ​The 1995 POPAl Consumer Buying Habits Study.
Englewood, NJ: Point of Purchase Advertising Institute.
Progressive Grocer Super 50. (2013, February 1). ​Progressive Grocer Super 50​. Retrieved April
26, 2014, from ​http://www.stagnitodigitalmedia.com/super50/slider­landing­page/21
Schindler, R. M. (1989). The Excitement of Getting a Bargain: Some Hypotheses Concerning the
Origins and Effects of Smart­Shopper Feelings. ​Advances In Consumer Research​, ​16​(1),
447­453.
Trader Joe's Co. 2013. (2013, August 5). ​Supermarket News Home Page​. Retrieved April 26,
2014, from​ ​http://supermarketnews.com/trader­joe­s­co­2013
7

8.
Whole Foods Market, Inc. (2013, November 22). ​Form 10­K​. Retrieved from
http://www.sec.gov/Archives/edgar/data/865436/000086543613000134/wfm10k2013.htm#
s078E229F63DEE2AE736DA7B1779F7D1B
8

9.
Appendix
Figure 1. ​An H­E­B example of cents off coupons.
Figure 2. ​An H­E­B example of percent off coupons.
9

10.
Figure 3. ​An H­E­B example of buy one, get one of the same item free.
Figure 4. ​An H­E­B example of buy one, get a certain amount of complimentary items free.
10

11.
Figure 5.​ The current icon for the Whole Foods Market Recipes app.
Figure 6​. The potential icon for new Whole Foods Market Coupon app.
11

12.
Figure 7. ​A mock­up of the home screen of the new “Whole Foods Market Coupons” iPhone
application.
12

13.
Figure 8. ​Percentage of people who answered yes or no to the question “Do you shop at Whole
Foods Market?”
Figure 9​. Percentage of people who answered yes or no to the question “Do you own an
iPhone?”
13

14.
Figure 10​. Percentage of people who answered …???
Figure 11. ​A mock­up of potential features of the new “Whole Foods Market Coupons” iPhone
application.
14

15.
Figure 12​. Three mock­ups of potential features once tapped in the new “Whole Foods Market
Coupons” iPhone application.
15

16.
Do you
shop at
Whole
Foods
Market
?
If no, why? Do
you
own an
iPhone
?
Do you
use
applicatio
ns (apps)
on your
iPhone?
Are you aware that Whole Foods has an app? Which features do you use on the
app?
Yes Yes Yes No, but I would be interested to learn more about it
Yes Yes Yes No, I'm not interested in it None
Yes Yes Yes No, but I would be interested to learn more about it None
Yes Yes Yes No, but I would be interested to learn more about it Store Locator
Yes Yes Yes No, but I would be interested to learn more about it None
Yes Yes Yes No, but I would be interested to learn more about it Store Locator
Yes Yes Yes No, but I would be interested to learn more about it
No Prices are
too high,
Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it None
No Prices are
too high
Yes Yes No, I'm not interested in it None
Yes Yes Yes No, but I would be interested to learn more about it
Yes Yes Yes No, but I would be interested to learn more about it
No Location is
out of the
way
No No No, I'm not interested in it
Yes Yes Yes No, but I would be interested to learn more about it
No Location is
out of the
way
No No No, but I would be interested to learn more about it
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it None
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it None
16

17.
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it Store Locator, Recipes
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it None
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it Store Locator, Guides, Store
Events
No Prices are
too high
Yes Yes No, I'm not interested in it Store Locator, Recipes, My Recipe
Box, Shopping Lists
Yes Yes Yes No, but I would be interested to learn more about it Recipes, Shopping Lists
Yes Yes Yes No, but I would be interested to learn more about it None
Yes Yes Yes No, but I would be interested to learn more about it
No Location is
out of the
way
Yes Yes No, I'm not interested in it None
Yes Yes Yes No, I'm not interested in it None
No Location is
out of the
way
Yes Yes No, but I would be interested to learn more about it Recipes, My Recipe Box, Meal
Planner, Shopping Lists
Yes Yes Yes No, but I would be interested to learn more about it
No Prices are
too high
Yes Yes No, but I would be interested to learn more about it Sales Flyers
No Prices are
too high
Yes Yes No, but I would be interested to learn more about it None
Yes Yes Yes No, I'm not interested in it
Yes Yes Yes No, but I would be interested to learn more about it Store Locator, Recipes, Meal
Planner, Shopping Lists
Yes Yes Yes No, but I would be interested to learn more about it None
Yes Yes Yes No, but I would be interested to learn more about it Store Locator, Recipes, Shopping
Lists
Yes Yes Yes No, but I would be interested to learn more about it
Yes Yes Yes No, but I would be interested to learn more about it
Yes Yes Yes Yes None
17

18.
Yes Yes Yes No, but I would be interested to learn more about it Store Locator
Yes Yes Yes No, but I would be interested to learn more about it None
Yes No Yes No, I'm not interested in it
Yes Yes Yes Yes Store Locator
Yes Yes Yes No, I'm not interested in it None
Yes Yes Yes No, I'm not interested in it
Yes Yes Yes No, but I would be interested to learn more about it
Table 1. ​The questions and respective responses to a survey crafted to tailor towards iPhone
users and assess interest for a new Whole Foods Market Coupons application.
18