Marketing Strategies For Organic Products

Employed By Small And Medium Retailers in Bangkok

Chusak SuvimolstienSecond Supervisor

Developing

Chusin Mateechaipong Presenter

Prof. Dr. Sven PruserFirst Supervisor

Table of contents

Introduction

Thesis Statement

Research Methodology

Results

Discussion

Conclusion, Outlook and Future Works

2

Introduction

3

4

Organic VS Non-organic

Sustainable environment

Good soil

No chemicals

5

VSCaged Chickens

Free Range Chickens (Organic)

6

Organic Agriculture in Thailand

7

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20110.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

6,281.415,510.13 10,524.01 13,419.25

55,992.32 69,748.72 86,871.89135,634.33140,939.98119,722.81105,967.10

192,220.03

219,390.66

Land under Organic Farming in Thailand

Land under organic farming in Thailand

Year

Land

und

er o

rgan

ic fa

rmin

g in

Tha

iland

(1

/10

hata

res)

2003 2004 2005 2006 2007 2008 2009 20110.00

10.00

20.00

30.00

40.00

50.00

9.3815.22

23.01 23.70 24.42

20.15

33.86

44.98

Thai Organic Value

Value (€mil)

Year

Org

anic

Valu

e (€

mil)

ONLY 0.21% of the whole area in Thailand8

Thesis Statement

9

• To find outstanding characteristics and reactions in the marketing mix (4Ps) of organic consumers in Bangkok

• To identify strength, weakness, opportunity and threat of organic agriculture business in Thailand.

• To develop the marketing strategies and marketing practices for organic small and medium organizations/retailers in Bangkok

Thesis Statement

10

Methodology

11

Quantitative Method

Standardized surveys of438 Respondents

A. Demographic

B. Purchase & Consumption of organic products

C. Consumer’s Satisfaction & Decision on choosing 4Ps of organic products

Qualitative Method

Semi-structured interviewof Six Key Experts

• Marketing Mix Strategies• Obstacles• Future

1. Green Net2. Aden3. Thai Organic4. Rangsit Farm5. Health Society (Lemon Farm)6. Thai Ministry of Commerce

• Marketing Strategies• SWOT

• Marketing Strategies12

Quantitative Method

Standardized surveys of438 Respondents

A. Demographic

B. Purchase & Consumption of organic products

C. Consumer’s Satisfaction & Decision on choosing 4Ps of organic products

• Characteristics of organic consumers• Marketing Strategies

13

Qualitative Method

Semi-structured interviewof Six Key Experts

• Marketing Mix Strategies• Obstacles• Future

1. Green Net2. Aden3. Thai Organic4. Rangsit Farm5. Health Society (Lemon Farm)6. Thai Ministry of Commerce

• SWOT• Marketing Strategies

14

Results & Discussion

15

<20 years

20-30 years

31-40 years

>40 years

22.20%

17.30%

11.80%

10.60%

77.80%

82.70%

88.20%

89.40%

AgeOrganic non-buyers Organic Buyers

Male

Female

17.40%

13.50%

82.60%

86.50%

GenderOrganic non-buyers Organic Buyers

Yes

No

11.00%

16.40%

89.00%

83.60%

Children in the household

Organic non-buyers Organic Buyers

Organic Consumer Demographic

16

Have you ever buy organic products? (n=438)

Yes (371) No answer (1) No(66)

85% Buy Organic Products

38% Buy Organic For 2-5 Years

34% Buy Organic Once a month

Purchase of Organic Products

17

Reasons to buy organic products

better taste

fresher than the other products

good for my health

good for my children

not contain pesticides / have lower residues

want to try somethcing new

good for the environment

trendy/fashionable to buy organic products

I have a record disease

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

129

209

339

194

316

214

58

55

43

309

228

99

240

118

221

375

380

380

YesNo

18

Knowledge-based society and Social Contribution Network

Loyal Consumers

Advocate Consumers

Consumers

Prospect Consumers

Suspect Consumers

Building Trust and Consumer-Producer/Retailer Network

Development of Household Economic and Boost consumption (Reduce

production/logistics cost )

Health and Environment Campaign

Educate about organic via mass media

Strategies for Different Organic Consumer Segments

Daily/once a week>10 yrs

5-10 yrs Every week

Once per month2-5 yrs

<1 yr Once every few months

19

Marketing Mix

20

Product: Which strategies should we use?

Fruits&Vegetable74%

Eggs5%

Rice&Cereal5%

Milk2%

Bread&Pasta1%

Meat1%

Juice2%

Never buy12%

Which organic products do you buy the most?

82% said Brands and Labels are important in choosing organic products

Cross Promotion

• Characteristics & Service

• Controlling production standard

• Packaging & logo

21

Willing to pay more Percent

1-3% 25.8

5% 25.8

10% 23.5

20% 11.6

30% 1.8

40% 1.4

High Cost of Production &Fair Trade

Price: Which strategies should we use?

22

Carrefour27%

Villa20%

Tops15%

Lemon Farm13%

Au Tor Kor Market15%

Bon-mache Market

6%

Royal Project1%

Food Land1%

Organic Retailer1%

Never Buy and no answer1%

Where do you buy organic products?

Close to home27%

Reliable18%

Variety of products6%

Fair price6%

Good service

3%

Fresh products18%

Certified products

11%

No answer11%

Why do you choose to buy organic products at the above places?

Strategic LocationHybrid Marketing Channel

Place: Which strategies should we use?

23

Domestic Consumers

Producer

Membership System- CSA

- Vegetable Basket

Home Delivery- Phone- Internet

Retail

Wholesale

Trade Fair

Product Management

Product Collector

Green Market

Organic Restaurant

Organic Retailer

Thai Airlines

School

Department storeHotel and

Restaurant’s Kitchen

Hospital

Consumer Outside Thailand

Health Concerned

Teachers and Students

Patients

Order

Order

Order

Place: Hybrid Marketing Channel

24

Promotion: Which strategies should we use?

TV48%

Radio1%

Books and Magazines9%

Social Media11%

SMS1%

Organic Exhibition8%

Internet6%

Ads Board2%

Asking specialist in

the shop4%

Shop Booth8%

No answer2%

Which channels are the most effective for you in knowing about organic

products?

Home Delivery29%

Giving Information about organic

23%

Specialist in the shop11%

Product replace-

ment5%

Discount21%

Suggestion box1% No answer

10%

Which services do you like the most?

Advertisement > Online > Mass Media

Delivery > Provide Information > Discount

25

IMC Tools: Advantages VS Disadvantages IMC Tools Advantages Disadvantages

Advertising

PR

Direct Marketing

P.O.P

Personal Selling

Sale Promotion

Event

Sponsorship

Online Marketing

• Access to wider audiences• Create image• Able to control message

• High cost

• Low cost• Access to wider audiences

• Low cost• Access to specific group• Able to control message• Successful sale

• Low cost• Access to sale point effectively• Arouse buying decision at sale point

• Access to specific group effectively• Successful sale

• Arouse buying decision effectively

• Access to specific group effectively• Create image

• Access to wider audiences• Create image

• Access to specific group effectively• Create image

• Not able to control message

• Not able to access wider audiences• Not able to create image

• Not able to access wider audiences• Not able to create image

• Not able to access wider audiences• Not able to create image

• Not able to create image

• Not able to access wider audiences

• High cost

• Able to access only online users

Advertising• Access to wider audiences• Create image• Able to control message

• High cost

PR• Low cost• Access to wider audiences

• Not able to control message

Online Marketing• Access to specific group effectively• Create image

• Able to access only online users26

SALE

S

Intro-duction

Growth Maturity Decline

Factors in Setting IMC: Product Life Cycle

TIME 27

TIME

SALE

S

Introduction

Growth

Maturity

Decline

Advertising, PR Direct Marketing,

P.O.P, Personal Selling, Event &

Online Marketing

Sale Promotion, Advertising, PR

Direct Marketing, P.O.P, Personal Selling, Event &

Online Marketing

Sponsorship,PR Direct Marketing,

P.O.P, Personal Selling, Event &

Online Marketing

Personal Selling,P.O.P & Online

Marketing

Factors in Setting IMC: Product Life Cycle

28

STRENGTHS

Consumer demand: growing consumers

Audition and certification bodies: supportive

Strong green network and export organization

Organic legislation: Act number 11

Thailand as an agricultural country: kitchen of the world

WEAKNESSES

Consumer confusion: pesticide free vs organic

Producer Motivation: transition from conventional to organic farming

Price barrier: expensiveness

Insufficient agriculture research

OPPORTUNITIES

Rising domestic market: government support

Mounting export market: EU, USA, Japan, Asian countries

Environmental leadership: sustainability movement and green role model

Consumer education: online marketing

THREATSInformation and choice overload: brands, labels, certifications

Demand over supply: demand more than supply

Global trade barriers: complication of auditions and certifications

Conflicting voices: misinformation in the media

SWOT Analysis of Organic Business

Consumer demand: growing consumers Consumer confusion: pesticide free vs organic

Price barrier: expensiveness

Consumer education: online marketing

Information and choice overload: brands, labels, certifications

Demand over supply: demand more than supply

29

Conclusion, Outlook and Future Works

30

• Retailers should take the characteristics of the organic consumers into consideration to better understand consumers’ need and to execute proper marketing strategies

• Retailers should make their products in high standard with perfect quality control and certification along with strong logo and packaging

• Retailers should educate consumers about the benefits of the organic food as well as clearly explain the reasons that the prices of the organic products are high (e.g. due to additional environment and social cost)

• The selection of distribution channel should be prioritized the consumers’ convenience. However, the organic organizations need to consider their company size, readiness and limitation

Conclusion and Outlook

31

• Expansion of the organic consumers’ survey• Additional survey on the economic costs and viewpoints of

organic brands• The consumer survey could be conducted through a

research on the subject of psychology

Future Works

32