2010
Marketing plan
Shupu Jiang
Shruti Jindal
Seth Hauben
Anshuman Wagh
University of Rochester, Simon School
5/24/2010
EXECUTIVE
SUMMARY
Wegmans Food Market is a regional super market chain in
Mid-Atlantic region. It has ranked among top 10 food
retailers and is recognized with the best grocery store
award. It began branding its own products in 1979, offering
basic commodities with high quality but comparatively low
price. At the end of 2009, the company has two main
product lines: Wegmans Yogurt, which is gaining popularity,
and Wegmans Super Yogurt, which is newly introduced in
three markets for testing.
This document provides a marketing plan and long-term
direction for Wegmans in the Yogurt category. It discusses
the challenges faced by Wegmans Regular Yogurt and
Wegmans Super Yogurt and provides a solution in the form
of a strategic marketing plan.
First, we perform a market analysis to identify market
trends and learn what the driving factors in the yogurt
industry are. After we look at the company Wegmans and
their current market position, we evaluate the consumer
and look into the competition to best understand where the
greatest opportunity for Wegmans Super Yogurt lies.
After an in depth look at the market we offer our
recommendation for a new long term strategy for the
Wegmans Super Yogurt Brand. This long term strategy is
followed by a three year schedule of activities that includes
our short term strategy and details how we will implement
our long term strategy.
Last we look at projected market shares after our strategy is
implemented.
Market Summary
Current Yogurt Market Trends
In 2009 yogurt sales hit $4.1 billion and they are projected to reach $5.2 billion in 2014(Fig.1). This
increase in yogurt sales is projected to rise because more Americans are becoming aware of yogurts
health benefits. This growth is being driven by new product trends such as natural and organic,
functional, just for kids and indulgent dessert yogurts.
Fig.1 Sales
Sales in bn
$5.60
$5.20
$4.80
$4.40
$4.00
2009
2010
2011 2012
Years
2013
2014
Other trends in the yogurt market are that small premium brands and private labels are driving growth
at the expense of the market leaders. This is in part due to the recent economic turmoil. Women are
currently the core yogurt users, but usage among men is growing. Also, interest in probiotic yogurt is
growing despite the consumer’s current confusion on what exactly they are.
The distribution channels of yogurt are currently dominated by supermarkets which make up
97% of sales.
The popularity of yogurt is increasing because of the varied products provided. This variety
allows consumers of many different market segments the opportunity to buy a yogurt that fits
their specific needs.
The 3 C’s
Company
Wegmans Food Markets, Inc. is a family-owned 75-store U.S. regional supermarket chain with
stores in the mid-Atlantic region, including New York, Pennsylvania, New Jersey, Northern
Virginia, and Maryland. Founded in 1916 in Rochester, NY, Wegmans ranks #5 on FORTUNE
magazine’s 2009 list of the “100 Best Companies to Work For.” Wegmans has appeared on
FORTUNE’s list for 12 consecutive years and has ranked among the top 10 for seven years
running and among the top 5 for five years in a row. We will focus our attention on the
Rochester, Buffalo, Syracuse, Philadelphia and Washington DC markets.
Wegmans currently has two products in yogurt category: Wegmans Regular Yogurt in the low
price category and Wegmans Super Yogurt in the high price organic category. Note that Super
Yogurt is only currently in three of the five markets.
Regular Yogurt
Super Yogurt
Table3
Wegmans Regular
Wegmans Super
Product
Fruit on the Bottom/Blended
High end organic
Price
from $.48 to $.52
from $.74 to $.80
Awareness
Loyal brand following
Gaining
Market share
32% to 48%
17% to 27%
Wegmans introduced super yogurt recently and this product is gaining the awareness and has a
market share of 17% - 27% while the regular yogurt has a loyal brand following and has a
market share of 32% - 48%.
Market share: (table7)
Market share
Yoplait
Stoneyfield
Dannon
Wegmans
Regular
Weg
Super
Rochester
0.21
0.04
0.16
0.32
0.27
Buffalo
0.19
0.04
0.20
0.41
0.17
Washington DC
0.35 NA
0.10
0.28
0.19
Philadelphia
0.67 NA
0.08
0.25 NA
Syracuse
0.24 NA
0.20
0.48 NA
highest
lowest
(Market share taken as an average of all market shares with all competitors in the market)
Wegmans Yogurt has the highest market share in Rochester, Buffalo and Syracuse accounting 32%, 41%
and 48% respectively while the share in Washington DC is 28% and the share in Philadelphia is 25%.
Market share of Wegmans Super Yogurt in Rochester is 27%, in Buffalo is 17% and in Washington DC it is
19%. We see from the market share positions that the Wegmans Brand has a very strong brand in the
New York Area.
SWOT analysis of Wegmans yogurt: (table8)
Positive
Negative
Internal
Strengths
• Strong distribution
• Price
• Wide variety
Weaknesses
• Private brand
• Difficult to find in other
stores
• No advertising
External
Opportunities
• Strong Brand name
• Potential to capture greater
market
Threats
• Competitive market
The strengths of Wegmans yogurt: as an in-house brand it has a strong distribution channel.
Wegmans offers the best price in the low end and high end categories and it has a wide variety
of product, fruit on the bottom, blended, low fat and with Super Yogurt the now offer Organic
The weakness of Wegmans yogurt: it is a private brand and it is very difficult to find Wegmans
yogurt in other stores. So, if any consumer is not brand loyal then it might go for easily available
brands. Also, other brands do a lot of advertising to attract customers, while Wegmans relys on
brand loyalty.
The opportunity for Wegmans yogurt: it has a very strong brand name, especially in the New
York market. This brand recognition gives it the potential to capture greater market share.
The threat for Wegmans yogurt: is the competitive market which has seen over 1,200 new
products launched in the U.S. since 2005.
Consumers
The biggest consumers of yogurt are families with children and adults in their thirties, which is
likely related to the fact that yogurt is convenient and that children enjoy the many available
flavors. We have also found that yogurt consumption declines among older adults.
 0–14 years: 20.2%
 15–64 years: 67.0%
 65 years and over: 12.8%
Yogurt makers need to introduce innovative ideas to ensure the public keeps reaching for their
products. Consumers buy yogurt not only for its health benefits but also for the flavors.
Yoghurt consumers were categorized into four segments, based on the pattern of their utility
values:
'Health seekers' (33%) want healthy yoghurts, but are not willing to sacrifice taste,
'Product lovers' (24%) eat yoghurt because of the health benefits,
'Anti healthy devotees' (36%) are driven by the total taste, textural, and situational experience of
consuming yoghurt, whereas
'Flavor cravers' (7%) are loyal to their brand, and influenced by endorsements from health
agencies.
Competition
There are three major competitors for Wegmans in the yogurt category. As you will see from
the table below the competitors vary by price, product, awareness and market share. The
market share in the graph below is given in a range because it varies among the five markets we
were given data for. So in its least penetrated market Yoplait has 19% and in its most
penetrated market Yoplait has 67% of the market and the other three markets fall in
between(For complete market share graph please look at the market share table 7 in the
Company section).
Table8
Yoplait
Dannon
Stonyfield
Product
•
a wide variety of
flavors in nonorganic
•
a full product
line from low
fat to Organic
•
Offers
healthy
organic
yogurts
Price
•
from $.56 to $.65
•
from $.61 to
$.67
•
from $.82 to
$.87
Awareness
•
strongest brand
recognition
•
Loyal following
•
Less known
with niche
following
Market
share
•
19% to 67%
•
8% to 20%
•
4%
The data is evident that Yoplait with its range in market share from 19% to 67% is the major
competitor for Wegmans yogurt. The reason Yoplait is able to have such a large market share is:
Yoplait introduces itself as the only leading yogurt with vitamin D in every cup! Retailers: Yoplait valuesized products in warehouse club stores like Sam’s Club, BJ’s and Costco. Various type of packing: family
pack, fridge pack, single pieces, value-size. The packaging of Yoplait is different, attractive and makes it
easily recognizable on the shelf. They have huge variety of flavors in each category ranging from 3 to
more than 20 and they advertise heavily in the mass media..
Dannon also has a full product range and it ranges in mid price. Its grip on the market is firm
and has got highest loyal consumers. As we see later when the high end brands like Stoneyfield
and Super yogurt enter the market Dannon’s market share basically stays put. This shows us
that Dannon has a unique position in the market place that either indicates that it has a loyal
following or that its yogurt is looked at as being a different type of product
Stonyfield has its focus on high price organic market and has a smaller market share with a
niche following.
Perceptual map of the current competition
Analysis
As we see from this perceptual map we believe Super Yogurt is currently mis-perceived by the
market. This results in Super Yogurt stealing market share from Stoneyfield, Dannon and Yoplait
but also cannibalizing shares from Wegmans Regular.
All of our analysis and recommendations are based on the data we were provided which
spanned 2.5 years. We felt comfortable splitting the collected data into two markets, first the
New York Market which includes Rochester, Buffalo, and Syracuse. Second, the Non New York
Market, which includes Washington DC and Philadelphia.
The graph below shows that in the New York market consumers are not very clear about the
distinction between Wegmans regular yogurt and Wegmans super yogurt. As a result the
market share of Wegmans Yogurt, super and regular combined, in Rochester and Buffalo is
same as it is in Syracuse where only Wegmans regular yogurt is present and super yogurt is not
introduced. This indicates to us that people are purchasing Super Yogurt because of their strong
brand loyalty to Wegmans and not because of the attributes of Super Yogurt.
The graph below also shows a very successful launch of Super Yogurt in Washington DC. As we
see the market share of Wegmans regular stay consistent while the Super Yogurt took share
from Wegmans competitors. We interpret this as the buyers in the Washington DC are
purchasing Super Yogurt because of its attributes and not because of brand loyalty which is
naturally less in DC than New York where Wegmans was founded.
The graphs below shows the reaction of the three markets that Super yogurt was introduced in.
This graph reiterates what we said above and really emphasizes the problem that Super Yogurt
faces. Because these finding are so important we will analyze the New York market together
and the Washington DC market separately. It is important to note the graph also includes the
entry of Stoneyfield into the market. To see the specific reactions of the market with the super
yogurt launch please look at appendix graph 1.
Rochester and Buffalo: In Rochester we see that Super Yogurt is able to capture a 27% market
share. This market share comes from a 9% market share loss by Yoplait and a 17% loss by
Wegmans Regular (also shown by appendix graph 1). Stonyfield loses 2% of its market share it
has gained with its launch and Dannon losses 2% of its market share. This is a clear sign that
people are buying super yogurt because of their loyalty to Wegmans and not because of the
product attributes. If purchases were being made based on attributes there is no reason Super
Yogurt should take such a large amount of market share from the yogurt that is positioned as
low end non organic. We see very similar results in the Buffalo market as well.
Washington DC
The launch of Super yogurt in Washington DC has much different results. Super yogurt is able to
capture 19% of the market while stealing shares mostly from Yoplait. Stonyfield is not offered in
Washington DC so we can see the change in the market from the original competitors, Yoplait,
Wegmans Regular and Dannon. With the launch of Super yogurt Dannon’s market share stays
consistent at 10%. Wegmans losses 4% in market share which is much less that the 19% it lost
in New York markets. Yoplait loses 14% of its market share an increase from the 9% it lost in the
Rochester Market. We believe this result is caused by the lack of such a strong brand loyalty to
Wegmans and attribute it to consumers in Washington DC purchasing Super yogurt because of
its attributes and price point and not because of it being a Wegmans brand. We believe this
explains why Wegmans regular only lost a small percentage of its market share. This is also an
indicator that there is a market for high end organic yogurts with a low price.
These figures provide convincing evidence that in the New York market Wegmans Super yogurt
is not correctly positioned and consumers perceive it close to Yoplait, Dannon and Wegmans
Regular. Super yogurt in the New York market is cannibalizing Regular yogurt shares and is not
allowing Wegmans to maximize its potential profits. We will use this Washington DC example as
supporting evidence for our short term and long term strategies.
Long Term Strategy
On the basis of the above analysis the long term strategy we are suggesting for Wegmans is to
rebrand Super Yogurt so it will have clear distinctions that separate it from Wegmans regular.
By creating a distinct high end organic brand we believe we will be able to change the
perception of super yogurt by the consumers which will lead to Wegmans being able to
maximize their potential profit in the yogurt category. By having two distinct brands, Wegmans
regular and Wegmans Super we believe Wegmans Super Yogurt will be able to obtain market
share from Yoplait, Dannon and Stonyfield while limiting the amount of shares taken from
Wegmans regular. By achieving this we feel Wegmans Regular can regain some of its lost
market share while Super Yogurt begins to get its market share from Wegmans Competitors.
This will allow Wegmans to maximize their potential profits.
In order to successfully undertake this repositioning of Wegmans Super Yogurt we must first
define the market segments that we are trying to attract for regular as well as super yogurt.
Segmentation:
Wegmans yogurt
Demographic
Family head, teenager or young
professional, looking to improve
their or their children's eating
habits, has a limited budget
Motivational
Trying to create a healthier
lifestyle, looking to purchase many
items at once, looking for a variety
of flavors, decision is based on
Wegmans Super
yogurt
Young Professional to adult who lives
a Healthy lifestyle and has
disposable income
Enjoys living a healthy lifestyle,
prefers things which are made
with the best ingredients,
decides based on attributes,
Behavioral
price
not price
Eats as a healthy snack, prone to
deals and is loyal to the Wegmans
brand
Eats for breakfast or a healthy
snack, not prone to deals but is
responsive to marketing of
health attributes
As you can see from the table above we want to target the demographic in the right column
with Super Yogurt. We define this demographic as being young professionals to adults that live
healthy lifestyles and have disposable income. We believe their motivation that drives their
purchase is because they enjoy living this healthy lifestyle, they prefer things which are made
with the best ingredients and they make their decisions based on attributes and not price. The
behavior of this consumer is they eat super yogurt for breakfast or as a healthy snack, they are
not prone to deals but are responsive to the marketing of health attributes.
The left column explains the segment we want Regular yogurt to attract. We currently believe
that Wegmans Regular is doing a great job at capturing this segment and we will focus our
energy on our strategy of re positioning Wegmans Super Yogurt.
Targeting:
Now that we have defined the segment we want to attract and have concluded that there is a
measurable, substantial and accessible market for us to target. The potential of this market was
shown in the Washington DC launch of Super Yogurt.
Positioning:
The clear positioning of the Super Yogurt will help Regular Yogurt to gain its previous market
shares and will allow Super Yogurt to pull market share from the high end market, where it
actually belongs. The below perceptual map shows the attributes where we want to position
Super Yogurt closest to.
The two fold benefits of repositioning:
Regular yogurt: Regain original market shares
Super yogurt: Capture market shares in high end organic market while stealing shares from the
mid priced market as well.
As you can see from the perceptual map we really want to position Super yogurt far from the
regular market. We will do this by targeting the people who life healthy lifestyles, who might
eat Super yogurt as breakfast and really value the wellness benefits offered. We also believe
that since it will the best value position among high end organic brands that it should be able to
take market share from the mid end yogurts, Yoplait and Dannon as well as capturing a large
percentage of the high end yogurt buyers.
We suggest positioning Super Yogurt on the below attributes

High end organic product that has real health and wellness benefits

Best value position – being the lowest priced product in the high end yogurt market

Consumed as breakfast or a healthy snack

Associated with a healthy lifestyle

Organic "Food You Feel Good about” – focusing on Wegmans tagline

Offers all of the health benefits and flavors its competitors do, just at a lower price
To best capture the market the positioning statement for Wegmans Super Yogurt will be:
For consumers who enjoy eating the healthiest most beneficial yogurts, Wegmans Super Yogurt
offers a unique combination of health benefits and great taste. Made organically this product
helps improve immune functions and lower cholesterol through Synergies of Prebiotics and
Probiotics all at a low price compared to other high end organic yogurts in the market.
The below perceptual map shows the market with the new repositioned SuperYogurt.
Short Term Decisions
Implementation of the 4 P’s
Product:
We believe the product is strong and are not making any suggestions on how to better improve
taste or ingredients. As we have seen in all markets Super yogurt has been able to capture and
sustain market share which implies the product is being well received.
Price:
We feel the price is currently well positioned to establish the best value position in the Market
among the high end organic yogurts. We therefore are suggesting keeping the current Price
steady. We also feel that consumers have already built a reference Price for super yopgurt and
would react negatively if the Price was increased.
Promotion:
Our promotion will be changed so the packaging will be more inline with the message we are
trying to get across. This means the packaging will be changed to give the product a more
organic look. Also the health attributes will be placed on the packaging as well as their being an
emphasis on the nutritional benefits.
This will help us accomplish branding Super yogurt as an organic high end product for busy and
working people.
By adjusting the packaging essentially allowing us to rebrand the Super Yogurt image we will be
able to make a clear distinction in the consumers opinion between Super yogurt and Regular
Yogurt.
Placement:
We will keep Super Yogurt in its current shelf position as well as adding a Super Yogurt display
in the organic section of Wegmans. This will help establish the brand as an organic product as
well as give consumers who only shop in the organic section an opportunity to make purchases.
This will allow shoopers an extra opportunity to be exposed to the new message and an extra
opportunity to purchase.
Schedule of activity of brand for next three years
Our first suggestion is to Introduce Super yogurt in Philadelphia. The data shows us that
launching Super yogurt in the Philadelphia market should result in a similar reaction as the
Washington DC market did.
Second,
The series of activities related to repositioning:
1. Give super yogurt an organic look by changing the packaging of super yogurt in order to
reinforce its image and message on consumers
2. Reposition Super Yogurt in the organic section along with keeping its current shelf space
location
3. Ingredients and health benefits mentioned on the packaging
4. Focus on advertising or promotion by issuing coupons
5. Reinstate/re-launch product in current markets
The graph below shows the estimated figures after following the recommendations which
shows Regular yogurt has regained its earlier shares and Super yogurt is capturing market
shares without cannibalizing Regular yogurt and attracting consumers from competitors.
Market Share Projections:
The below graphs show our projected increase in market share by launching Super Yogurt in
Philadelphia as well as re positioning the Super Yogurt Brand. The increase in market share
comes from Super yogurt as well as the market share regained by offering two distinctly
separate products.
The top graph shows the current market situation and the bottom graph show our projected
market shares.
As we see from the graphs we are predicting the Rochester overall market share (Wegmans
Regular + Wegmans Super Yogurt) to rise from 59% to around 68%. In Buffalo we are predicting
a rise from 58% to around 65%. In Syracuse we are predicting a rise from 48% to roughly 63%.
In Washington DC we are predicting that market share will stay right around 47%. Lastly in
Philadelphia we are predicting a rise from 25% market share to around 45% market share.
Conclusion:
Currently Wegmans is not maximizing their profit. This stems from Super Yogurt being
perceived by Wegmans shoppers as a similar product to Wegmans Regular Yogurt. This leads to
market share of Wegmans Regular being taken by Wegmans Super Yogurt. This problem stems
from the consumer not being able to clearly distinguish between the two products. Our
solution is to leave Wegmans Regular alone and reposition Wegmans Super Yogurt brand as a
high end organic brand with health and wellness benefits to consuming it. We believe creating
a clear distinction between the two products will stop the cannibalization of shares by Super
Yogurt on Wegmans Regular and allow Wegmans to maximize its total market share (Wegmans
Regular + Super) and thus maximize its total profits.
Appendix
Graph 1) Reaction of market shares to entry of Stonyfield and then Super Yogurt.
Before Stony Field and wegmans super entered Entered
Market share Yoplait Stonyfeild Dannon Wegmans Regular
Rochester
0.36 NA
0.18
0.47
Buffalo
0.29 NA
0.17
0.55
DC
0.49 NA
0.10
0.32
Philly
NA
NA
NA
NA
Cuse
NA
NA
NA
NA
Weg Super
NA
NA
NA
NA
NA
After Stonyfield enters No Super
Market share
Rochester
Buffalo
DC
Philly
Cuse
Yoplait
0.30
0.24
NA
NA
NA
Wegmans
Regular
Weg
Super
0.49 NA
0.55 NA
NA
NA
NA
Wegmans
Stonyfeild Dannon Regular
0.04
0.16
0.04
0.20
NA
0.10
NA
0.08
NA
0.20
Weg
Super
Stonyfeild
0.06
0.03
NA
NA
NA
Dannon
0.15
0.17
NA
NA
NA
NA
NA
NA
After Super enters
Market share
Rochester
Buffalo
DC
Philly
Cuse
Yoplait
0.21
0.19
0.35
0.67
0.24
0.32
0.41
0.28
0.25 NA
0.48 NA
0.27
0.17
0.19