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ISSUE:

Market Segmentation Go Organic Foods, based in Omaha, Nebraska, is one of the newest package foods companies to jump on the organic bandwagon. Go Organic offers a variety of products that can be found in grocery stores, specialty health food stores, and even some restaurants and other food-service establishments. One of the best-selling brands in their product line is Go Organic frozen food. This was the brainchild of founder Robert Sierra, who learned of a method called “flash frozen,” where you can maintain all the nutrients in the food even though it is frozen. Mr. Sierra was tremendously excited about this process since he believed that it would solve a larger problem in America, that of obesity. Mr. Sierra had studied America’s eating habits for years and realized that much of the country’s diet consisted of high fat and sodium frozen food meals. In fact, Mr. Sierra had seen his own mother and father gain considerable weight and later develop heart disease as a result of poor dietary habits. All Mr. Sierra could remember was that their diet was driven by frozen food. So, Mr. Sierra used this new technology to develop a line of frozen dinners that were low in fat, sodium, and cholesterol, and high in nutrients. Even with this seemingly large breakthrough, grocers were reluctant to carry the items. They didn’t believe that there was a large consumer demand for natural or organic foods. They told Mr. Sierra that it was a niche item. Undaunted, Mr. Sierra finally convinced the president of a small independent chain of high-quality stores to carry the product. Sales of the Go Organic dinners began to take hold. The flavor of Go Organic products exceeded expectation and soon those who wished to eat a low-fat, nutritious meal without sacrificing flavor were flocking to the brand. Retailers who had previously been reluctant to carry the brand began to call Go Organic. Although men tend to eat frozen dinners more often than women, the Go Organic line of frozen dinners was aimed primarily at women over the age of forty. However, the company soon learned that men also liked the Go Organic dinners as well. This popularity spurred Go Organic to expand their product line to include more frozen dinners, some breakfast items, and even desserts.

Naturally, the competition in the frozen food category did not stand still while Go Organic captured market share. They also focused on health in their advertising, and soon introduced their own organic or part organic frozen food products. The frozen food marketplace was becoming an organic and natural foods battleground. Carol Hart, the vice president of marketing for Go Organic, looked at the trends of the business with some trepidation. The competition had significant capital compared to the small, privately held, Go Organic. Carol was concerned about the growth of the brand and if they could keep up with the constant battle for market share. While she was mulling things over, Mr. Sierra entered her office and tossed an article on her desk. He said that this article summed up the market segment that he felt was still untapped by his brand. He asked Carol to read the article and to provide him with a point of view on the best way to develop consumer segmentation for the brand.

THE ARTICLE PROVIDED THE FOLLOWING INFORMATION

According to a recent government report, obesity among adults had doubled since 1980, while being overweight had tripled among adolescents. One study cited rates as high as 15 percent of teenage boys and girls being overweight. Hispanics and African Americans had a much higher prevalence for being overweight than the Caucasian population. Women were more likely to be obese compared to men. Mr. Sierra turned to Carol and said, “Look at these statistics. We need to rethink our market segmentation strategy. Why, homes that have teens and ethnic audiences are totally untapped markets for us. I would like a report on how we segment our future market within the next week.” As Mr. Sierra left, Carol felt very conflicted. She knew that he was passionate about wanting to help people who had a high proclivity for being obese, yet she was looking at other demographic information on frozen food purchasers and organic food buyers that was very different from this information. Given the recent amount of competition in the marketplace, she knew that they had to be right in how they segmented the market. She began to quickly review the data and assemble a presentation. She hoped that she was right.

QUESTIONS

1. Do you think that the information about segmentation is enough to develop a segmentation scheme for the brand?

2. Which information do you consider more valuable, the trends Carol was looking at or the facts in the article? Why?

3. What trends would you consider as you developed a segmentation strategy?

4. Do you feel that the segmentation strategy should be based on adding new purchasers to the brand or adding frequency to current buyers?

5. What would be the ideal information to have to make this decision?

6. Would you go with the information you have, or recommend that you take more time and do primary research on the market before making a decision?