Power Point assignment/management

Andrea Hall

MGT500

Week 3 Assignment

January 28, 2023

Hello Fresh: Strategy and Structure

Hello Fresh has a different business model than those of retailers or grocers. With their “Pull Model”, they focus on working upstream, which essentially eliminates the need for wholesalers or distributors. After determining which produce is in season and finding the most cost-effective prices, Hello Fresh works closely with its growers and producers to ensure customers receive fresh, seasonal, and healthy ingredients for their meals (1). Since the majority of their deliverables are perishable, Hello Fresh keeps a low inventory model to reduce waste. From here, customers are able to choose which options they want in their meal kits, whether it be family friendly or a vegan option. Customers have the option of the base meals that are included in their original pricing, or they can upgrade certain meals for more premium items. Offering the upgrades is a smart strategy to use, who can pass up an upgrade to premium steak for only $4?

With almost 7.5 million subscribers, its hard to imagine growing from this point. But Hello Fresh has a growth strategy that is based on 3 main levers:

Total addressable market (TAM) penetration - growing the core business and increasing the penetration in all existing markets

TAM expansion: Launching new geographies, internationalizing our existing brand portfolio, and expanding our offering by building new ventures or acquiring further companies

Better monetization of our customer base: Expanding our product range to other categories and previously non-penetrated meal occasions such as lunch and breakfast (2)

Hello Fresh is working on other avenues with meal kits, such as breakfast and lunch and also options that offer the meals already prepared. Capturing a larger part of consumers food budget is one of their optimal goals. Adding options like the Hello Fresh Market, where customers can add on side dishes and desserts has become wildly popular. Hello Fresh uses science, cold hard data, and experience to drive their decision making. Whether it be a product decision or market launch, Hello Fresh is not doing so without the analytical data and evidence. But what about their competitors and how they fare in the same market. Let’s take a look at Blue Apron and see how their strategies compare.

Blue Apron, Hello Fresh and Plated all hit the US market around the same time. In 2017 Blue Apron hit the market with a 1.9-billion-dollar valuation. That soon changed and the days of billion-dollar valuations are gone as the expected demand for meal kit services was not met. With Covid-19 and businesses being closed, especially restaurants, meal kit services were on the rise. However now the company’s management team is trying to right-size the business while keeping pace with shifting consumer trends and advancing technologies (3).

In an interview with Food Business News, Linda Findlay, President and CEO of Blue Apron said “We're using technology to create curated experiences that have a long-term great margin profile.” Blue Apron knows they need to focus on innovation, quality and the customer experience if they are to compete in the market as it is now. Like Hello Fresh, they are also adding ready to go meals, breakfast items and other add on to increase the satisfaction of customers. During the pandemic, Linda knew that this boost wouldn’t last and decided to focus on innovation while other companies were focusing on the demand only. “Prior to the pandemic cooking at home was growing, but the pandemic spiked everything,” Ms. Findley said. “Post pandemic it has settled, but it has settled at a higher level.” (4)

Hello Fresh and Blue Apron are surprisingly similar in their strategies and business models. However, Hello Fresh has made a bigger splash with their marketing campaigns and has made brand awareness explode. I know I do not see ads for Blue Apron very often, if at all. What I do see is Hello Fresh, everywhere. Pricing seems to be almost equal for what is offered after any promotions of course. What consumers should be looking at most in these types of situations, is quality. Who has the better product and who can maintain the quality of that product over a lasting period of time. So now I ask, who do you choose?

References

1. Goel, S. (2022, September 17). Healthy business model & marketing strategy of HelloFresh. The Strategy Story. https://thestrategystory.com/2022/09/17/hellofresh-business-model-marketing-strategy/

2. (2022, October 19). Growing HelloFresh - Strategy, Expansion & New Product Development. Hello Fresh Group. https://www.hellofreshgroup.com/en/newsroom/stories/growing-hellofresh-strategy-expansion-and-new-product-development/

3. Nunes, K. (2022, September 29). Blue Apron moving beyond meals to selling experiences. Food Business News. https://www.foodbusinessnews.net/articles/22312-blue-apron-moving-beyond-meals-to-selling-experiences

4. Nunes, K. (2022, September 29). Blue Apron moving beyond meals to selling experiences. Food Business News. https://www.foodbusinessnews.net/articles/22312-blue-apron-moving-beyond-meals-to-selling-experiences