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Value Analysis :: Sliced Apples
PowerHouse Section – Team 1
Team Members
Richard Eggett
Burke Powers
Monte J. Shaffer
Marious D. Tcherpokov
EXECUTIVE SUMMARY
We prepared a comprehensive market value analysis of fresh-cut sliced apples for Fresh Express
with the intent of creating an actionable strategy for point of sale marketing. Our analysis
focused almost exclusively on single serve packages and identified behavioral usage as the
critical factor in determining our target market.
Our analysis indicates this is a good product with strong market potential. Apples are a staple
commodity—consumed several times per week by most people. Additionally, the market
segment, representing those that love apples, is a significant portion of a growing population that
values convenience and health.
Our recommendations include ways in which to improve the packaging to make it more
appealing and effective at the point-of-sale. Focus-group participants pointed out a number of
ways to improve on the current design. We also recommend some distribution channels be
added to the current mix. Particularly with a commoditized product like apples, it is critical to
manage as many distribution channels as possible in order to penetrate the market and secure
market share. Finally, Fresh Express’s “Stay White” technology will give a significant
penetration advantage based on consumer trial.
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INTRODUCTION
The current $243 million market for retail fresh-cut fruit is estimated to be a $1 billion segment
by the year 20081. Fresh Express, in August 2002, launched a division to capitalize on this
emerging market. Seasonality and availability of melon-based product have been barriers to
create a stable, year-round business. Other alternatives are being considered. One such
alternative is the sliced apple, estimated to be a $300 million segment. Dole, Fresh Del Monte,
Ready Pac,2 and others are trying to capitalize on this new market opportunity.
For over 8 years, industry analysts have predicted that the sliced apple segment would have a
high consumer demand.3 Apples4 are a commodity fruit with great health benefits.5 Delivering
sliced apples is an appealing convenience to consumers. The major barrier for this segment has
been the immediate “browning” issue of the sliced apple. Thanks to a non-exclusive patented
technology, Nature Seal6, the sliced apple can have a maximum shelf-life of 21 days, with a
median shelf-life of about 14 days.
FRESH EXPRESS
Fresh Express began in the 1930s as a fresh produce grower in the California’s famous Salinas
Valley. In 1989, Fresh Express pioneered the retail packaged salad industry when they
introduced a ready-to-eat garden salad. Their company has grown to meet the consumer demand
for convenient salad products. Today, Fresh Express and Dole are the market leaders in the
Value-Added Salad Industry (“bagged salad”), combining for over 70% total market share (Fresh
Express leading with over 40%). Fresh Express offers a variety of Garden Salads, Salad Blends,
recipes for Salad Blends, and even Salad Kits to make the Caesar experience quick and easy.
To maintain a leadership position, Fresh Express has focused on improving its core
competencies. Fresh Express has maintained its roots in the growing of produce and over time
has expanded its processing capabilities and its distribution channels as a wholesaler. Fresh
Express has developed “Tender-Leaf” processing technologies to keep the salad products fresh
longer than their competition. This process technology coupled with their patented “KeepCrisp” bag has given Fresh Express a strong leadership position in the fresh-cut produce market.
Revenues in 2003 for Fresh Express were about $933 million, with expectations for 2004 to be
around $1.2 billion7.
Such success does not go unnoticed. Performance Food Group (PFG, stock symbol – PFGC), a
fortune 500 distributor, acquired Fresh Express in 2001, purchasing the company for $300
million from the 3rd generation of family owners. At the time, Fresh Express was preparing to
capitalize on a new division in their Emerging Business Group.
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Fresh Express wanted to leverage their core competencies to enter the fresh-cut fruit industry and
expand their leadership position in fresh-cut produce. During the preparations for acquisition,
the “go-ahead” was given by PFG to continue in the capitalization and launch of this new
division.
In August 2002, the fresh-cut fruit division was operational, with an initial focus on providing
melon-based fruit to retail grocery stores. In addition, opportunities presented themselves to
become a provider for Quick-Serve Restaurants (QSRs) for both the fruit and salad products:
McDonald’s, KFC, Pizza Hut, Subway, Taco Bell and others.
Like most new markets, the “first to market” has increased risks and capitalization costs. Fruit is
a different produce item than salad-based products, and the learning has been painfully valuable.
By January 2004, the new division was considered a “train wreck.” The explanation for the
predicament was based on the seasonality of the melon-based fruit and the overall quality issues
associated with “landing it” into retail grocery stores—getting one bad chunk of fruit in a
premium fruit platter was not good for customer satisfaction.
John Johnston (Director of Emerging Business) reassigned the original two team leaders and Jeff
Lemmon (VP of Sales) was given the ball to resurrect this division. Jeff began analyzing the
current market in relation to consumer interests and internal competencies. Taking the success
of providing8 Apple Dippers for McDonald’s, Jeff began researching strategies to launch sliced
apples in retail grocery stores.
Apples appear to be a more year-round consumer purchase with good market potential and
steady demand. Jeff also believes that diversifying products in this early growth stage are crucial
to stabilizing the division.
In September 2004, PFG announced it had retained Goldman Sachs to explore strategic
alternatives to sell Fresh Express, and that within six months it will act upon explored
alternatives. PFG is one of 2500 companies in the fragmented food distribution industry, with
the leader Sysco (stock symbol – SYY) maintaining only a 12% market share. In 2001, PFG
purchased several companies, and the current Fresh Express division is a consolidation of those
purchases.
Some claim PFG is exploring the opportunity to sell Fresh Express because the volatility of fresh
produce doesn’t match the “slow growth” expectations of shareholders in the food distribution
industry. The P/E multiple for PFG has traditionally been lower than SYY and other leaders in
their industry. The financials also show that the Interest Expense / Cash Outlays for PFG have
dramatically increased as the balloon payments for their 2001 acquisitions are coming due.
Ironically, PFG will probably sell their best money-making business in 2005.
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Such an announcement places even more pressure on “questionable” divisions to perform, yet
also reduces some hurdles of taking risk. Seldom do top management teams stay in place once
an acquisition occurs, and even more seldom when the division is suffering.
With increased boldness, Jeff decides to aggressively “roll the dice” and pursue penetration in
this new fresh-cut fruit market by providing other products with limited access to new resources.
With this in mind, he has begun doing market research for the launch of Sliced Apple products.
Anticipated launch for the initial products will be February 1, 2005.
Exhibit A shows the Market Research Objectives given us by Fresh Express.
Exhibit B shows the Proposal we created to meet the Objectives.
Exhibit C shows the Apple Trends and favorite U.S. Apple Varieties.
Exhibit D shows a Market Gap Analysis.
THE CONVENIENT SLICED APPLES
Our value analysis focuses on the determining the
consumer preferences for apples,
consumer usage behaviors in regards to sliced apples,
consumer “hurdle” of freshness, shelf-life, believability of “Stay White” claim, and
consumer benefits of this convenience.
To measure these elements, we first collected information. We researched topics about apples,
sliced apples, Fresh Express, PFG and its financials, etc. on the Internet. We informally
interviewed persons to understand why they love apples, what they love about them, what
familial usage situation memories are tied to their love, etc. We interviewed a McDonald’s
manager about his perspectives on the Apple Dippers (performance, perception, consumer
awareness, etc.). We interviewed a store manager of one of the BYU creamery’s to discuss
consumer behaviors in a grocery store, and specifically, observations on apple purchase
behavior. We had several discussions with Jeff both formally and informally about the fresh-cut
fruit division over the last 2 ½ years. We formally interviewed Jeff to understand the Human
Resource impact of launching this division. Based on the initial information, we then prepared
two focus groups and an initial survey. From those initial results, we performed a follow-up
final focus group and plan on doing a larger scaled surveying campaign before the end of this
year.
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Qualitative Analysis
Apple consumers love apples for many reasons. Preferences vary among consumers, but quality
attributes are the primary factors in this choice:
Does it look good?
What kind of apple is it?
Does it taste good?
Is it crisp?
Is it fresh?
The underlying values of loving apples are many times tied to specific familial memories and
traditions:
Burke Powers has memories of eating popcorn with sliced apples and cheese.
Bryan Sudweeks has a formula of creating a semi-fresh fruit salad. Open a can of
fruit cocktail, drain the juice, and add fresh sliced apples and sliced bananas. Add a
cup of orange juice to slow the browning, drain the juice, and serve to the kids.
Gary Rhoads wants to eat healthier and knows apples would support this objective.
The convenience of having sliced packaged bags of apples would reduce guilt in two
ways: 1) wasting fruit he bought but never used because it wasn’t sliced and prepared
and 2) “not eating healthy like my doctor tells me and all other Baby Boomers.”
Marcia Stevenson shares childhood memories of eating apples on the core with her
sister which is primary reason she still loves apples and eats them frequently.
Sliced apples can provide convenience and other benefits that core apples cannot provide, if the
slices can “Stay White” for a reasonable amount of time:
Many times a partial apple is wasted because it could not all be consumed.
A sliced apple package could have a mixture of apple varieties, like eating half a Gala
and half a Granny.
Sliced apples are immediately ready for consumption for all ages and circumstances
(i.e. there are about 4 million children who currently wear braces9)
Slices can leverage brand quality of the varieties as well as the attribute qualities.
Sliced Apples are more social and inclusive than Core Apples.
Exhibit E shows additional qualitative analysis based on Focus Groups, Interviews, Surveys, etc.
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TESTING “HURDLES” THROUGH DISCOVERY
Apples naturally brown. Based on our segmented methodologies in focus groups and surveying,
we learned that this “hurdle” has strong marketing potential to increase product awareness at
launch. Further, discovery of the product’s ability to “Stay White” through a natural blend of
calcium and Vitamin C (calcium ascorbate) creates mixed results with apple consumers. This
distinction helps differentiate between the Apple LOVE Group and the Sliced Apples LOVE
Group.
Focus Groups
Focus Group research suggests two methodologies of mediation. One suggests asking lots of
predefined questions and having the members of the Focus Group write down their results. The
other suggests entering the Focus Group with some general questions and let the Focus Group
determine the direction of the discussion.10
Using the Six Hat methodology,11 we conducted two Focus Groups with 10 members in each, all
BYU students. Burke conducted the first group with a traditional paper-and-pencil methodology.
Monte conducted the second group simultaneously with a general framework; however, the
question-answer responses were more spontaneous. Literally, Monte’s group was given blank
sheets of different colored papers. Results showed more captured results with the traditional
methodology; however, the spontaneous group had greater collaborative discussion and
evaluative process.
Exhibit F displays Burke’s formal framework which was informally used by Monte.
Exhibit G summarizes findings from first two focus groups 12.
With the initial qualitative results, we began to prepare a survey to measure Sliced Apple
potential in a grocery store. We interviewed a McDonald’s Store Manager to determine his
overall perception of the Apple Dippers. From him, we gathered insights concerning usage
situations he has observed. Mothers are generally very occupied with their children, and
resultantly, don’t make a lot of choices when ordering for their children. When McDonald’s
advertises the “healthy” substitute for French Fries, the demand goes up. Looking at his ordering
averages, he clarified that the low weekly demand was 4 boxes, with an average of 6 boxes, and
a high of 9 boxes (each box contains 40 individual packages). He also mentioned that the local
owner (owning 3 stores in the area), has given permission to the store managers to allow adults
to substitute apples for fries in the Value Meals.
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We also interviewed two grocery store managers to see if we could survey within the store. The
Day’s Market carries Fresh Express bagged salads, yet the store manager said he would not
allow us in the store because his customers would pressure him to provide the product, and he
can’t provide it yet (Sliced Apples will not be available until February 1, 2005). He also made it
clear to us that even though his store is a “local market,” many of the decisions to allow
surveying to occur is determined by a centralized office; specifically for him, Associated Foods.
With a recommendation letter from the marketing director of the Marriott School of Business in
hand, we then went to the meet with the store manager at the Creamery On Nine East, and he
was much more accommodating than the Day’s Market store manager. Giving him a few
coupons for free salads13, and a few samples of the McDonald’s and Sliced Apples, he gave us
permission to survey in his store, and even spent about 30 minutes answering questions about
grocery shopping behavior, specifically with his student customers purchasing fresh produce.
Combining these anecdotal interviews with personal interviews of Focus Group members and
others, an original survey was created. The structure of the survey and the questions match
interview responses and focused on criteria given by Fresh Express.
Exhibit H displays a sample copy of the distributed survey.
The survey (“all groups” n=59) was given to three unique groups with a coupon for a free Fresh
Express salad as an incentive to fill out the survey. The first group (“sample group” n=14)
consisted of a small group who were given samples and then filled out the survey. The second
group (“store group” n=30) consisted of customers who randomly entered the Creamery on the
Monday/Tuesday afternoon before the Thanksgiving holiday. This group did not ever see the
packaging, price, or product. The final group (“focus group” n=15) consisted of members of a
final Focus Group who went through a full product taste comparison to regular Sliced Apples.
This final group met the screening criteria proposed by Fresh Express, and occurred on the
Tuesday before Thanksgiving. This final Focus Group lasted two hours; the participants
received a complimentary meal and $50 for their time.
Exhibit I displays Importance of Apple Attributes / Performance of Sliced Apples Grid.
Exhibit J displays general information about the focus group participants.
Exhibit K details the process of the final Focus Group.
Exhibit L summarizes the responses of the final Focus Group.
Based on exposure but not saturation, we feel that the “sample group” best represents the
relationship between Apple Attribute Importance and Sliced Apples Performance. Taste/Flavor,
Crispy/Texture, Overall Quality, Color/Appearance, and Freshness are key attributes of Apples
that also perform well for the Sliced Apples. This data serves as initial evidence that there is no
real difference as to why a consumer loves an Apple or a Sliced Apple.
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The movement in Importance/Performance of the “Stay White” claim based on consumer
exposure anecdotally demonstrates that this “hurdle” is easily overcome through trial. The
methodology of the final Focus Group allowed for the members to discover this “Stay White”
claim. Comparing the Importance/Performance of “Stay White” in the store (8.48, 6.00) to the
final Focus Group (9.64, 9.27) demonstrates how trial dramatically affects inherent assumptions.
The curiosity of consumers may become a key behavior to leverage in the launch of Sliced
Apples. Many may try it just because they will not believe the claim that indeed the Sliced
Apples “Stay White.”
Exposure by saturation represents a trial belief of the quality of the “Stay White” nature of the
Sliced Apples and more. This can be demonstrated by following the “Shelf Life” performance
ratings from the store (5.66, 7.55) to the final Focus Group (9, 8.4).
The LOVE Group :: HI-HI
The Sliced Apple LOVE Group will consist mostly of Apple lovers who value the Healthy
Convenience14. Based on the responses given by all of the survey respondents, we calculated a
mean of all Importance and Performance items. These means became the basis of determining
how a consumer would respond to Sliced Apples. High Importance correlates to a Love for
Apples in general; High Performance represents the value of Sliced Apple Convenience; that is,
“everything you love about apples with convenience.”
Exhibit M details a segmented example of Preference Variation in the Adult Serving
The HI-HI consumers represent the Sliced Apple LOVE Group—they love apples and love the
convenience of sliced apples. Based on 59 surveys, 27% fell in this group. Generally, this group
has a diverse favorite variety of apple, prefers sliced apples with skin, would purchase both
sweet and tart slices, and believe about 15% of the apple core is waste.
They would want 6 slices (~2.5 ounces) in a Child Serving and would pay between
$0.70 (median) and $0.93 (mean) for such a serving.
They would want between 10-11 slices (~4.2 ounces) in an Adult Serving and would
pay between $1.00 (median) and $1.36 (mean) for such a serving.
They would want a 16 ounce Bulk Serving package (~50 slices) and would pay
between $3.25 (median) and $4.12 (mean) for such a serving15.
All price range perceptions for this group are high relative to the other groups. This group would
prefer a Caramel condiment, would be willing to pay extra for the condiment, and would want
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the Caramel in a dipping cup. They would prefer a re-sealable bag for all product sizes; banding
would be the preference for bundling a three pack. This group by far consumes Apple Slices
more frequently than any other group. This group prefers the benefits of Apple Slices, are
willing to pay for the Convenience, and would purchase frequently. LOVE group is an
appropriate name for such a group.
The SWING Group :: HI-LO
The HI-LO consumers represent the Sliced Apple SWING Group—they love apples yet don’t
appreciate the convenience of sliced apples. Based on 59 surveys, 15% fell in this group.
Generally, this group has a diverse favorite variety of apple, prefers sliced apples with skin,
would purchase sweet slices only, and believe about 15% of the apple core is waste.
They would want 5 slices (~2.5 ounces) in a Child Serving and would pay between
$0.81 (mean) and $0.99 (median) for such a serving.
They would want 8 slices (~3.5 ounces) in an Adult Serving and would pay between
$1.35 (median) and $1.36 (mean) for such a serving.
They would want a 16 ounce Bulk Serving package (~50 slices) and would pay
between $3.00 (median) and $3.46 (mean) for such a serving.
Snack product price willingness for this group is substantially higher relative to the other groups.
This group would prefer a Caramel or Peanut Butter condiment, would be willing to pay extra
for the condiment, and would want the condiment in a dipping cup. They would prefer a resealable bag or a cup for single serve products; banding would be the preference for bundling a
2-3 pack for a Child bundle and 1-2 pack for an Adult Bundle. This group consumes an average
amount of Apple Slices. This group prefers the benefits of Apple Slices, are willing to pay for
the Convenience, and would purchase frequently. This group wants more specific attributes,
more choices, and overall a more premium product. Convincing them of the value of
convenience would be beneficial to improve demand; however, preference sensitivity is higher
with this SWING group than the LOVE group. (NOTE: Income did not show significant correlation in
either the SWING or LOVE group. The only telling demographics in these groups are married females—with and
without children, which may change following the final survey.)
The HATE Group
The LO-HI, LO-LO consumers represent the Sliced Apple HATE Group—they eat apples, but
are not especially loyal. Based on 59 surveys, 58% fell in this group (15% and 43%
respectively). Generally, these consumers do not like apples but love bargains. They would
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purchase the product when the retailer would discount it as the products expiration date
approached. Details of usage are irrelevant to discuss since this group is not a valuable
marketing target. They are very price sensitive, are un-loyal spinners, and are difficult to satisfy.
MECCA STRATEGY16
With a full understanding of our target groups (LOVE and SWING), a directed MECCA strategy
can be created. Research strongly suggests that MECCA strategies are more effective in driving
the message home to the consumer than conventional Marketing strategies17. Further,
communicating the marketing strategy to an advertising agency has been found to be easier using
MECCA strategies.
The foundation of a MECCA strategy18 is based upon the attribute-consequence-value laddering;
that is, product attributes are only the “tip of the iceberg” to consumer rationale to purchase a
product. If the underlying consequences and values can be understood, it is easier to identify
why Sliced Apples are important to consumers.
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Hierarchical Value Map
The HVM19 below shows the laddering chains available for Fresh Express to pursue with Sliced
Apples. (NOTE: This HVM for Apples ties to the four realms of personal values: health, hedonism, personal
success, and the environment.)
The HVM does not consider other values associated with familial usages; namely, the values of
LOVE and FUN. Many people who love apples have childhood memories of family settings in
which the apples were enjoyed. What’s more, a major influencer in Sliced Apples as a Child
Snack is the FUN element. If the child likes the experience, Moms will be more than happy to
purchase the product. The entire “child experience” includes the packaging, the “coolness”
factor around peers, and the quality of the Sliced Apples.
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Brand Essence
Fresh Express should leverage its current brand-image position of quality and freshness as it
launches this new product: Convenient Healthy Fun. The Fun element is new to Fresh Express’
image and needs to be carefully positioned to the Child Segment, to prevent it from deteriorating
the overall Fresh Express Brand20. The Brand Essence for Fresh Express can be identified as
“Improving Quality of Life” (iQoL.com is available) with the “Charismatic” Brand Personality,
as seen in the Brand Identity Model. This value represents:
familial love,
human connectedness,
health,
responsibility,
time,
success,
trust, etc.
Exhibit N links the Brand Identity Model and the Brand Design Schematic.
Further, research indicates that there is a large potential to own apples, which could further
increase the value of this expanding division. The only perceived owner of the Apple Brand
could be Tree Top21, yet in the minds of the consumers, the only current brand of apple is tied to
its variety: Gala, Granny, Jonagold, etc.
Creating a sub-brand, like POME, could be a method to define the emerging fresh-cut fruit
division into a long-term strategy. POME in Latin means both “Apple” and “Fruit.” Word plays
(poem, pom-pom, it’s a pomb, palm, pom for mom, etc.) could be a creative technique to build
sub-brand awareness.
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Usage Situations
Overall segmentation of Sliced Apple usages can be grouped into three segments (group usage,
adult usage, child usage) with the following usage situations:
Party Platter
Family Snack
Adult Lunch
Adult Snack
Toddler Snack
School Lunch
After-School Snack
Baking situations are also possibilities (Granny Smith Sliced Apples to make a Fresh Apple Pie);
however, such a situation is occasional compared to possible daily usages of Adult and Child
servings with this commodity product.
Exhibit O displays the Usage Situation Distributions.
Exhibit P examines General Produce Shopping Behavior.
MECCA action plan
An advertising action plan has a laddering bridge for the overall marketing strategy and a copy
strategy to pass along to the Advertisement Agency. With the laddering bridge, we choose
elements of the HVM and determine strategies to use to strengthen Fresh Express or weaken its
competitors.
Not only we Fresh Express compete with other food processors who will offer Sliced Apples to
consumers, they are also competing against Apple lovers who will slice the apples themselves
and consumers who would choose other fruit and snack offerings. The message Apples only
Better best reinforces Apple positioning in the fruit/snack markets.
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With this in mind, most strategies should directly Reinforce strengths of Apples and seen in
HVM (positive strategy) while strongly inferring the weaknesses of competitors to Sliced
Apples. The modified HVM reflects what we need to do to play to our strengths:
Refocus to Add Link between Delicious/Exciting and Feels Good.
Reinforce Vitamins / Healthy for Adult Snack (as an example)
Reinforce Taste Good / Pleasure for Child Snack (as an example)
Exhibit Q clarifies Laddering Strategies.
Exhibit R suggests some advertisement ideas.
Exhibit S demonstrates a ladder bridge and copy strategy for Adult Snack.
Exhibit T demonstrates a ladder bridge and copy strategy for Child Snack.
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SYNTHESIZED MARKETING STRATEGY
Delivering the Convenient Sliced Apple in a retail market has strong potential. The core
competencies of Fresh Express are aligned to grow this niche of the fresh-cut produce. Further,
it makes sense to build their fresh-cut fruit division around the staple apple.
Product
Based on usage demand, Fresh Express should target three initial core products:
Child Snack Size (~6 slices, 2.5 ounces)
Adult Snack Size (~10 slices, 4.25 ounces), and
Bulk Size (~50 slices, 1 pound).
Apple Variety
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The core attribute of the product is the brand essence Improving Quality of Life and the Sliced
Apple has several Tangible Benefits and Augmentation opportunities, with variety condiments
being the most immediate. There is a demand in the LOVE Group for mixed apples, with
brand22 being more relevant than sweet or tart. There is demand for a condiment, with caramel
being the staple in this area; over time, the SWING Group will want more condiment options.
Further product development can include Mixed Options: Red Grapes, White Grapes, Raisins,
Nuts (Walnut, Almond, and Pecans— sliced?). As will be discussed below, these mix options
should have more of a salad packaging (minimum of a cup).
Bundling may be a consideration, but it appears that variety preferences should allow for the
consumer to pick their own bundles. Natural store promotions (2-for-$, 3-for-$, etc.) could
create bundles.
Positioning
Again based on situational usage, a clear positioning strategy can be described. Leveraging
Fresh Express’ brand essence, the product can be positioned primarily towards married females.
As mentioned earlier, a strong influencer on the Child Snack product will be children, with their
product adding a FUN element. This needs to be done carefully to prevent deterioration of the
overall brand.
For married females, sliced apples are a healthy family snack because it improves
the family quality of life even though it needs to overcome the natural “Stay
White” disbelief.
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Pricing
This new product launch in an emerging market should have Offensive Growth strategies. Due
to the realization that very little is known about the competition (when they plan on introducing
Sliced Apples, how they plan on positioning it, packaging it, etc.) and little is know about the
customer (the disadvantage of begin removed directly from the customer), the Cost Plus Pricing
strategy should be implemented. This pricing model will guarantee margins to both Fresh
Express and the retailers, yet also allow for rapid volume growth.
Consumers are willing to pay a premium price for the convenience of the Sliced Apples,
especially in the LOVE and SWING Groups. There will be considerable price-sensitivity among
“bargain” shoppers, and their trial of the product will occur as retailers need to sell product that
is about to expire.
Child Serving – consumers will pay $1.00 for 2.5 ounces
Adult Servings – consumers will pay $1.50 for 4.2 ounces
Bulk Package – consumers will pay up to $5.00 for a pound12
The relationship appears to align between the Cost Plus Pricing strategy of Fresh Express and
the Perceived Value Pricing of consumers. Fresh Express solicited this marketing research to
determine this alignment. Further rationale suggests that this is the best price from the consumer
is still slightly biased to the benefit of the consumer.
Placement
Revenues are generated based on Price and Quantity. As discussed, the price needs to give the
retailer a margin and be based upon the Cost Plus Pricing Strategy. This means that everything
reasonable needs to be done to penetrate the market with Quantity.
Fresh Express is going to rely on its current Distribution Channels to launch this product. These
channels need to be improved and enlarged. A full understanding of how to maintain and
improve relationships at the regional level is the first priority. Direct selling through sells
representatives who educate Produce Managers about the new and upcoming products would be
beneficial in increasing awareness. This will have impact on in-store promotions, displays, and
floor space. Representatives can also maintain relationships with central offices to guarantee the
stores can carry Fresh Express products. This will not only benefit Fresh Express in the launch
of the Sliced Apples, but will strengthen relationships for the core business of “bagged salads.”
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Fresh Express needs to enlarge its distribution channels. The Convenience of Sliced Apples
should be readily available. Not only should they be placed in traditional retail grocery stores,
but efforts should be made to create distribution alliances that will allow them to be placed in
convenience stores, gas stations, vending machines, schools, airports, and aquariums.
One final consideration for placement is to improve information exchange between the retailers
and Fresh Express. Since the shelf-life is only about two weeks, orders may need to be placed &
filled more than once per week. This responsiveness would improve the quality of the product
for the consumer and consequently the overall relationship between Fresh Express and the
retailers.
Promotion
Fresh Express’ conservative approach to marketing needs to be taken into consideration when
discussing promotion. Leveraging what has worked to help Fresh Express achieve market
leadership in “bagged salads,” we can create a simple promotional strategy for Sliced Apples.
As mentioned previously, improving relationships with retailers can naturally improve sales.
Awareness and Trial are the two keys for going to market. Getting refrigerated produce space
for the Sliced Apples, offering quality packaging, and other Point-of-Sale displays and
promotions are essential to penetrating market awareness.
One of Fresh Express’ strengths in competing with Dole is its packaging. Offering a similar
product in the produce section of a grocery store, Fresh Express’ packaging competes against the
strong brand of Dole. Thus, packaging for Sliced Apples will play to Fresh Express’
promotional competencies.
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Packaging
The Green package with Crisp lines, Bright Colors, and large vegetable images give Fresh
Express a substantial advantage over Dole at the Point-Of-Sale. Playing to this strength, the
packaging for Sliced Apples needs to be improved. The current test package for Child Servings
do not meet the necessary criteria.
The nutritional information needs to match basic Apple Nutrition and include fiber
for “skin-on” slices, even if it is a small percentage.
“Stay White” Claim needs to be more noticeable. Similar to the standard “Why
We’re So Fresh!” create a “Why We Stay White!” This will get consumers to look at
the product and ask themselves, “How does Fresh Express make those Apples look so
Good?” With this in mind, they will pick up the package to learn why; it needs to be
clearly available for them to see. Having the consumer pick up the bag is half the
battle of getting them to put it in their cart.
As the product line is augmented, re-sealable bags, cups, mini-serving trays, and other
packaging alternatives need to be considered.
Single Serving / Bulk Packaging should be as close to “bagged salad” packaging as
possible (only miniature for single serving).
Use Apple colors, not blue, as the primary packaging color.
Center the packaging just like the “bagged salad” packaging, getting rid of the nonsymmetrical oval “swoosh.”
Apple varieties should be branded in the center of the package with an image and
brief description of the qualities; e.g., FUJI – super-sweet / Jonagold – tangy/sweet.
Promote condiment options on the product
Crisp plastic can have advantages over the Cheap Alternative.
Exhibit U contains samples of Packaging.
Exhibit V details Personal Observations of each team member.
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ENDNOTES
1
Current: http://www.findarticles.com/p/articles/mi_m0DGM/is_21_25/ai_111482243
Future: http://www.freshcut.com/fc2004.htm#fc30
2
Competitors
http://www.dole.com/health/fruits/apples.jsp
http://www.freshdelmonte.com/content.cfm?pageID=24
http://www.readypacproduce.com/products/
3
8 years ago: http://virtualorchard.net/glfgn/october1996/fresh-cut.html
January 2004: http://www.freshcut.com/fc2004.htm#fc1
4
General Apple Facts
http://en.wikipedia.org/wiki/Apple_(Fruit)
http://wwwiz.com/issue26/html/article6.html
http://www.newint.org/issue212/facts.htm
http://www.sallys-place.com/food/columns/herbst/apples.htm
5
Health Information
http://www.whfoods.com/genpage.php?tname=foodspice&dbid=15
http://my.webmd.com/content/article/95/103343.htm
http://www.5aday.com/html/industry/industry_home.php (Link from Fresh Express Web Site)
6
Nature Seal
http://www.greeen.msu.edu/articles/FreshAppleSlices.pdf
7
The fresh-cut fruit division reported about $18 million in Revenues in 2003 (in the red), anticipating about $36
million in 2004 (in the black).
8
Fresh Express is one of three providers of McDonald’s Apple Dippers.
9
http://www.pick-a-dentist.com/Braces.htm
10
Practicing Focus Group Mediators prefer having a few principle based questions; however, most companies
generally want a specific list of questions to be addressed; for more information see:
http://www.amstat.org/sections/srms/brochures/focusgroups.pdf
http://www.mapnp.org/library/evaluatn/focusgrp.htm
http://www.gday-mate.com/customer_service/focusgroup.html
http://www.mnav.com/getmore.htm
http://www.mapnp.org/library/grp_skll/focusgrp/focusgrp.htm
http://www.infospan.ca/qualquan.htm
http://www.km-review.com/cgi-bin/melcrum/eu_content.pl?docurl=article%20cc%20prepare%20focus
http://www.mnav.com/bensurf.htm
11
Summary of the Hat Game is available here: http://cispom.boisestate.edu/murli/cps/sixhats.html
12
Not displaying the “plastic” packages prevented bias in the focus groups (plastic phobias).
13
He even considered letting Associated Foods know that he would like Fresh Express salad back (currently Dole).
14
Nutritional value of Apples with additional health benefits of extra Vitamin C.
15
The primary focus of this value analysis study was single serve packaging. Consumer assumptions of “Bulk
Discounts” will be a natural hurdle. In the final survey, asking how many slices rather than how many ounces may
yield more comparable data, but bulk packaging and discounts will need to be analyzed differently. A major
concern revealed in our analysis is the conflicting interest between premium single serve packages and consumer
psychology of “Bulk Discounts.”
16
Means-End Conceptualization of the Components of Advertising Strategy.
17
Conventional vs. MECCAS marketing – http://ideas.repec.org/p/hhb/aarmap/0074.html
1984 Reagan Campaign – http://www.populus.com/techpapers/download/laddering_meccas.pdf
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18
MECCA strategy focuses on targeting the heart of the customer by identifying personal values; the argument is
that traditional marketing targets the mind through attributes.
19
HVM image came from Dane Apple research written in 2000
http://130.226.203.239/pub/mapp/wp/wp74.pdf
20
Fresh Express is a strong brand and a brand moms recognize and trust. Tom James, CMO, Pizza Hut.
http://www.pizzahut.com/about/publicrelations/2004/20040225_01.asp
21
http://www.treetop.com/corp4.htm
22
Gala is an example of an Apple Brand. Seasonality and Locality could also be addressed.
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