Dole and Chiquita's product differentiation strategies in the banana market

Dole and Chiquita - Organic Bananas

Production Differentiation

Going (Organic) Bananas

When it comes to bananas, Dole has long been at a disadvantage. Dole is association for most Americans with pineapples and with various shady dealings in Hawai'i. If you want to go bananas, you go to Chiquita.

This paper examines the marketing strategy currently employed by Dole Bananas, asking how well this company is doing against others in the banana business as well as asking from what other directions Dole might face competition in the future and how well it is prepared to meet those challenges.

Chiquita is indeed Dole's major competitor at least in terms of banana sales (it is not a significant competitor in terms of pineapples, for example) and the two companies have clearly tried in recent years to differentiate themselves from each other so as to grab a larger share of the market. This is difficult for the two companies to do because - without meaning to disparage the curving yellow fruit that nutritionists and kids both find to be close to the perfect food - what both companies are selling is basically the same.

What Dole and Chiquita have had to do, as a result (as would any two other companies in their situation) is to try to find a way to convince the public that their products really aren't the same after all.

The structure of a market - of any market - is affected by the extent to which those who buy from it prefer some products to others. In some industries the products are regarded as identical by their buyers; this is true of nearly all basic farm crops. (It is, of course, also true that in some markets the products are in fact differentiated in some way so that various buyers prefer various products - some people want to drive VW Bugs, others SUVs, for example).

Often (and arguably this may nearly always be true) that the criterion or criteria that cause people to choose one product over another is a subjective one or a group of subjective ones. Buyers' preferences may have little to do with tangible differences in the products but are related to advertising, brand names, and distinctive designs (www.tradeport.irg).

People may, for example, buy Chiquita bananas because they really loved that woman with her cool fruit-bowl hat when they were kids. Or they may refuse to buy Dole bananas because of the company's shameful role in overthrowing the Hawai'ian royal family.

Going (Organic) Bananas

Despite the fundamental similarity from one banana to the next, Dole and Chiquita work to differentiate themselves and have in fact done so along at least a few key axes. Chiquita, for example, at the end of last year announced that the company had:

achieved a major milestone in its work with the Rainforest Alliance's Better Banana Project (BBP) - the certification of 100% of its owned banana farms in Latin America. The Better Banana Project is the leading international certification program for environmental and social standards on banana farms, and is managed by the Rainforest Alliance, an U.S. non-governmental organization (NGO) dedicated to protecting endangered ecosystems and the people and wildlife that live in them.

Chiquita is the only global banana company to have undertaken and met the strict, voluntary environmental and social standards of the Rainforest Alliance's Better Banana Project. Chiquita has achieved certification on more than 71,000 acres (29,000 hectares) of its 127 company-owned farms in Colombia, Costa Rica, Guatemala, Honduras and Panama. An additional 30% of independent farms supplying bananas to the company have also been certified. Together, the certified Chiquita bananas amount to 15% of the exported bananas from Latin America. Today, BBP-certified bananas make up more than 90% of Chiquita's total volume to Europe and approximately two-thirds of the volume to North America (www.chiquita.com).

Dole does not, and one assumes therefore cannot make such a comparable claim, and in a marketplace in which consumers are increasingly concerned about the impact of their actions on the earth around us, this is a significant boost for Chiquita.

Dole is able to boast that it offers organic bananas (www.mindfully.org).Thiswillno doubt help it to some extent among younger buyers who are more likely to be concerned about the environmental impact of the foods that they eat. However, Chiquita too offers organic bananas, and so Dole is unlikely to be able to impress those consumers whose major goal is food that is good both for themselves and for the planet; Chiquita simply has the stronger claim in this area.

Dole, along with Chiquita, emphasizes the healthfulness of its offerings. This is Chiquita's take on the goodness of bananas:

According to the FDA, "Diets containing foods that are good sources of potassium and low in sodium may reduce the risk of high blood pressure and stroke."

Chiquita bananas meet the FDA's criteria for foods claiming potassium-related health benefits. A medium-sized Chiquita banana provides 400mg of potassium, or 11% of the recommended daily value. Potassium is essential for the body's growth and maintenance, including regulation of blood pressure, response to nerve stimulation, contraction of muscles, and cellular enzyme function (www.chiquita.com).

Dole's pitch is very nearly the same, stressing the importance of incorporating fruit into the entire range of one's diet with the now-standard advice to eat five servings of fresh fruit or vegetables a day (www.dole.com).Byemphasizingthe eating of bananas within a total diet plan, Dole may help to shift people's perception of bananas as something only for children or to cut up on cereal.

One are in which Dole does seem to have the advantage is in its selling to the European market (www.headlinewatch.com).WhiletheClinton administration had structured a deal that would have favored Chiquita in the European banana market (which was just reopened to American-based companies), the Bush administration is more inclined to favor the Dole company's particular take on open markets and free trade (www.europe.cnn.com).Doleshouldbe able to parlay its current political closeness to the current administration into better tariff arrangements.

Chiquita" may still say banana to most Americans, but Dole's current marketing plan is an intelligent one with a good potential for making it far more competitive.