Segmentation
Whole Foods is a grocery retailer. They operate in a single operating segment according to their Form 10-K, which is "natural and organic food supermarkets." Within this single business, there are multiple customer segments that Whole Foods seeks to serve. Using different segmentation methods, such as demographic, psychographic, geographic and behavioral, this paper will seek to better understand how Whole Foods is segmenting the grocery market. The company's positioning can be understood in the context of its mission statement: "…devoted to the promotion of organically grown foods, healthy eating and the sustainability of our entire ecosystem." There are hints in there about the nature of Whole Foods' business. Implicit in this is also the reality that natural and organic foods are often more expensive to produce, and as a result cost more at the retail level.
Geographic
Probably the easiest of Whole Foods' segmentation to tackle is the geographic segmentation. The company operates mainly in the United States, with almost all of its revenues being domestic. International operations are only in three cities -- Toronto, Vancouver and London. The company website notes that there is some correlation between the size of a state and the number of stores that it has. California has 69 stores, by far the most, and even with its large population this is a high number of stores. Colorado also has a disproportionate number of stores, as does Massachusetts. The company seems to clearly target specific states, and it will require closer examination to determine why this is.
Looking at specific geographic regions, it is easy to see how Whole Foods engages in geographic segmentation. A quick look at South Florida shows that there are stores in the following locations: Plantation, North Miami, South Beach, Boca Raton, Coral Gables, Pinecrest, Aventura, Fort Lauderdale...
I chose this region because it has a high level of income and ethnic disparity -- the locations where Whole Foods is located are generally upper middle class areas that skew Caucasian. Large areas population by African-Americans, middle-income Hispanics and other groups do not have a Whole Foods. Whole Foods has nationwide reach, but in terms of geography targets areas that match its demographic and psychographic profile.
Demographics
In general, the Whole Foods consumer fits a certain demographic -- Caucasian, middle or high income, college education, lives in an urban or suburban area, and has a reasonable level of disposable income. Females are a large part of the Whole Foods demographic as well, disproportionate. However, the key is that Whole Foods does not actively use demographic segmentation to understand their market. They feel that psychographic and behavioral segmentation is more important. Demographics, for Whole Foods, are more of a proxy for the behavioral and psychographic traits that they target.
Behavioral Segmentation
Whole Foods explains its segmentation process. The company believes that customers form a strong brand relationship with Whole Foods, and that has helped it to maintain its sales even during times of economic hardship (2012 Form 10K). The company's four segments are conscionables (support environmental initiatives), organic shoppers, foodies, and experientials. The conscionables are understood to be people to prefer to shop at Whole Foods because the chain shares with them common values. This group is believed to be the most loyal of all consumers, spending most of their monthly grocery bill. This customer is likely to be well-educated, and this contributes to a high level of awareness about social issues. The organic shopper is a similar segment -- there is some overlap -- but the organic shopper will…
