Creating the Value: Case of Daylesford Organic Farm

Introduction

The Daylesford organic farm business was initiated in the year 2002 by Lady Bamford and Sir Antony with the aim of producing and selling organic products.  The organic farming model was founded by Carole Bemford about 30 years ago and boasts over 2000 acres of farmland (Daylesford, 2016). They produce all kinds of agricultural products ranging from vegetables to livestock through the organic farming technologies. The company has a strong quality control department that monitors the entire production chain to ensure that their products are entirely organic. In addition, the company buys most of their products from trusted/ dealers that only supplies them with sustainable products. In this regard, the suppliers must have the same commitment to quality and sustainability as their client.

For a long time, the company has heavily relied on the word of mouth to market their products. More than 70% of the company products are sold to the Generation X and Generation Y. However, some portion of the company products is sold to the Baby Boomers. On the same note, more than one third of the company customers earn more than $50,000 annually. Most of the company customers come from the Western and the Midwestern parts of the United States of America (Daylesford, 2016). As part of their policy, the company encourages visits by the people to help them see for themselves how the company does organic farming. By doing this, they pass the technology and knowledge of organic farming to others hence marketing their products. For the short period the company has been in operation, they have also won over 100 national and international awards due to their sustainability farming model.

Potential Market Segment

In order to succeed in any business like the organic farming, it is necessary to consider the potential market segment. In marketing the organic products, there are several factors to consider. Several researchers have lined the purchases of organic products to the consumers in terms of their tastes, quality, freshness, safety and health (Aestsens et al, 2009). Consumer research studies have also shown that most consumers of organic products have high education levels compared to the consumers of non-organic products. In addition, most consumers of these products are urban dwellers with relatively high levels of income. Therefore, the producers of consumer products are confident that they have a solid customer base that can help them sustain their business. These consumers know that it’s very beneficial to purchase and consume organic products than inorganic products. Generally, it is more important for the consumer to purchase organic products due to their convenience, taste, and freshness in addition to health benefits. The other benefit linked to the organic farming is that it reduces environmental pollution and helps to protect and preserve the natural habitats.

The target market of organic products can be linked into two groups. One group is known as the generation X and Y and they account for 72% of the consumers. The other group of organic consumers is known as the Baby Boomers and they account for the 69% of the target market (Leila & Zahaf, 2008). The target marker can also be viewed in terms of the annual income of the consumers. It has been noted that the level of income determines the purchasing power of the consumers. In terms of geographic distribution, most consumers of organic products are found in the western and the Midwestern parts of the U.S. All these elements combined provide a great help in targeting the market potential of the organic products.

Segment Variable Descriptive Information
Geographic Region In terms of geographic penetration, sales penetration can be measured in terms of market potential. The consumers in the New England represent 87% of the market segment. This is closely followed by the consumers in the Pacific Northwest that represents 86% of the market segment. On the other hand, the Mountain west represents about 82% of sales penetration. This is followed closely by the South Atlantic that is represented by 79% of the market potential. Also, the market potential of the West South Central Region is represented by 75%. The above data proves that the market potential for organic products is not limited to some boundaries as the products have high market potential in most places.
City/Metro population In terms of metro population, about 50% of those living in the cities try to include organic products within their diet. On the other hand, about 37% of those living in rural areas try to include organic products within their diet. Therefore, the cities present a bigger segment of organic product consumption than the rural areas. The reason could be that people in the cities are more educated and have more cash to spend on the relatively expensive organic products.
Climate Organic operations seem to be more concentrated in the northern states than the southern states. The north central states account for 32% of the organic operations, while the north eastern states account for 24%. On the other hand, organic operations seem to be less concentrated in the southern states as it accounts for only 8% of the operations. It has been established that the climate of the southern states provides more challenges to organic farming than the climate in the northern states. The challenges of organic farming in the southern states include intensive insect pest infestation, diseases, lack of experience in organic farming, intensive weeds, and limited markets for the organic products. Also, organic farming in the southern American states suffers from extreme weather conditions coupled with poor infrastructure developments.
Demographic Age In terms of the demographic age, the younger Americans are more interested in consuming organic products than older Americans. Survey has shown that close to half of the American population between the ages of 20 years to 24 years tries to include organic products in their table. On the other hand, only 30% of the Americans of age 65 and above try to accommodate organic food in their menu.
Family size In terms of family size, the populations with small family size of 1 to 2 people tend to consume more organic products. This is followed by the family composed of 3 to 4 persons. On the other hand, the family size of more than five persons tends to consume less organic products. The reason why a big family size of more than 5 persons consuming less organic products may be linked to the additional costs of feeding such a larger number of persons.
Annual Income In terms of annual income, organic food consumption seems to be concentrated in the upper income segment. Close to 50% of the upper income class try to include organic foods in their budget. In this survey, the upper income represents those with annual income of $75,000 plus. In comparison, about 45% of the middle level income tries to include organic products in their diet. Finally, about 42% of the lower income segment (under $30,000 annually) tries to include organic products in their diet. The low income segments are the ones who actively try to avoid organic products, possibly due to high costs associated with such products. Generally, it is believed that organic products cost about 20-100% more to produce that it costs to produce the same variety or inorganic products. Therefore, the people avoiding organic products do so with the sole intention of saving money despite the health benefits associated with such products.
Education The consumption of organic products also differs with the level of education. About 50% of organic food users have college education or higher. Only 38% of people with lower levels of education report to use organic products. Therefore, the higher the level of education, the higher the possibility of a customer using the organic products.
Race In a survey carried out in the united states in 2015 by the Organic Trade Association, it was found that the organic buyers differ by race. About 72% of consumers who buy organic products in American are whites followed by 16% Hispanics. Only 12% of organic products consumers comes from the African Americans. Therefore, the whites form a larger proportion of the organic products consumers than the Hispanics and the African Americans (Organic Trade Association, 2016).
Generation It has been established that the perception of the organic products differs across different generations. Generation X and the Millennials prefer healthy foods and are even willing to pay more. In the organic market segment, Generation X is more interested in organic food than the Baby Boomers.
Nationality In terms of Nationality, the people in North America are more interested in organic products than any other region. This is closely followed by the Germans, British, French, and the Italians. The Japanese and the South Americans comes low on the interest for the organic products.

Value Proposition

Generally, the value of food is equated to the benefits it provides to the consumers. Customers are ready to spend extra dollars provided they get the best quality within the market. In return, the customers will enjoy health benefits and improved quality of life. In this case, the value proposition of organic products can be discussed under the following concepts;

Functional Benefits: The value proposition analysis helps to discuss the benefits of organic-based business and what it offers to the target products. In relation to the functional benefits of the organic products, it is evident that the organic products offer the consumer healthier option when it comes in relation to food consumption. The organic products are produced in such a manner that they lack the dangerous chemicals that may negatively affect their health (Hassan & Craft, 2012). During the production of the organic products, the farmer refrains from using any kind of pesticides, inorganic fertilizers, herbicides, fungicides or any other chemical during the plan or animal development. In this regard, the dangerous chemicals that would endanger peoples’ lives are avoided and people end up consuming healthy foods.

Emotional Benefits: Generally, people are very much concerned about their health and would feel better if they consume healthy products. In this regard, the organic products provide the good and pleasant feeling as the customers are very sure that they have consumed a healthy product. Research has demonstrated that inorganic substances contain about 40% antioxidants than the organic products (Hassan & Craft, 2012). Therefore, the people who consume inorganic products are mostly likely to have health issues. The main motive of consuming organic products is to maintain a healthy body free or toxicants and chemicals. These people end up being physically and emotionally fit for a longer part of their lives. The combination of these factors enhances the emotional feeling of the customers. Also, such customers will feel superior in that they are consuming the best products within the food stores.

Self-expressive benefits: The consumption of inorganic products can also be linked to the self-expressive benefits. The self-expressive benefits are evident when the consumers of organic products display themselves to their friends, family members, and their acquaintances. The pleasant feeling that organic products enhance the health benefits can also be reflected upon other individuals. In this manner, more customers will be attracted to the organic products frenzy and increased consumption of the same products (Aertsens et al, 2009). More and more people will be influenced to consume these products that have immense health benefits.

Conclusion

In conclusion, there is great potential in the organic business. Therefore, organic company like the Daylesford stands to benefit from the good business outlook of organic farming. More individuals are becoming informed and would like to consume healthy foods and shun unhealthy foods. Therefore, it is a perfect opportunity for the company to continue investing heavily in organic production as more customers would translate to more and better sales. From this report, it is evident that the market for organic products is huge and ever growing. Also, more techniques and skills are being invented that would help increase the quality and the quantity of organic products. 

References

 Aertsens, J., Verbeke, W., Mondelaers, K., & Guido, V. H. (2009). Personal determinants of organic food consumption: A review. British Food Journal, 111(10), 1140-1167. doi:http://dx.doi.org/10.1108/00070700910992961  

Daylesford. (2016). Our Story. (Online). Retrieved on 17/09/201 from http://daylesford.com/our-story/

Hassan, S. S., & Craft, S. (2012). Examining world market segmentation and brand positioning strategies. The Journal of Consumer Marketing, 29(5), 344-356. doi:http://dx.doi.org/10.1108/07363761211247460

Leila, H. E., & Zahaf, M. (2008). Decision making process of community organic food consumers: An exploratory study. The Journal of Consumer Marketing, 25(2), 95-104. doi:http://dx.doi.org/10.1108/07363760810858837

Organic Trade Association. (2016). Organic Trade Association unveils new enhanced global organic trade guide. (Online). Retrieved on 17/09/201 from https://www.ota.com/news/press-releases/19245

 

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