Sanitarium Health Food Company Strategic Management

Sanitarium Health Food Company: Strategic Management

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Sanitarium Health Food Company: Strategic Management

1. Company Overview

Sanitarium Health Food Company is a business headquartered in in Berkeley Vale, New South Wales, Australia founded in the year 1898. The company produces its products locally emphasizing on the need for Australians to eat healthy (Good, Butter, Delights, & Chicken, 2021). Sanitarium happen to be the trading name for two sister companies namely, New Zealand Health Association Ltd and Australian Health and Nutrition Association Ltd and it is entirely owned by the SDA Church. The company’s portfolio includes products such as Light ‘n’ Tasty wholegrain cereal, UP&GO liquid breakfast, So Good Soymilk, Marmite, and Weetbix. Sanitarium’s mission statement is “to inspire and resource our community to experience happy, healthy lives” and its objective is the provision of healthy foods that would improve the health and wellbeing of the community. The company also aims to offer nutrition information that is easily understandable and practical health advice to the community. As of 2021, Sanitarium’s revenue is over $300 million and employs over eight hundred people. The company focuses on the health and welfare of all Australians through its drive to ensure that people are healthy emotionally, physically, and mentally. The idea is to ensure that people live well and make healthier choices through a wide array of products including vegetarian meals, beverages, snacks, and peanut butter. By having a variety of healthy foods that appeal to different user groups and for different needs, Sanitarium Food promotes overall health and welfare of its users from across the world. 2. Analysis

2.1 Sanitarium Business-Level Strategy

Sanitarium Food Company’s business-level strategy aims to achieve a sustained a competitive edge. The business strategy is strong and sound to ensure that the organization is successful in the long run (Muhvic, 2012). The company has continuously used what is known as a wholiciuos strategy by positioning health and wellbeing at the heart of its brand. More importantly it invests in sustainability strategy, branding, website strategy, social media strategy, and cost-based and value-based pricing strategies to ensure it stays at the edge. The cost-based pricing strategy enables Sanitarium to use the product’s cost to set their prices (Muhvic, 2012). For example, the cost of the organic Weet-Bit is higher than the original products. Also, the company uses the Weet-Bit’s perceived value to set the prices. For instance, the product is perceived as convenient by the consumers, therefore, it is relatively more expensive because many of them prefer to pay more for products they perceive as convenient. Other business level strategy that the company uses in order to ensure its success include:

2.1.1 Good Mood Food Strategy

According to researchers by Sanitarium, the consumers’ moods can be affected by their eating styles. So that is why they decided to produce more “supporter foods” to enable the consumers improve their moods and manage their anxiety (Praestiin, 2020). Therefore, they promote their products by encouraging people to eat healthy including taking breakfast that consist of cereals and wholegrains and to drink.

2.1.2 Sanitarium initiates Artificial Colors Elimination

The company initiated the elimination of red food color from some products in which it was used within Sanitarium’s range (Praestiin, 2020). So Good Strawberry and Strawberry flavored which used some artificial colors at increased levels is now milk-like in color and at the same time, the strawberry flavor is still maintained. The company has reformulated those products and have included new packaging that reflected those changes.

2.1.3 Removal of additives and minimization hyper actives

Latest studies have revealed that additive inclusion in foods is a belligerent issue particularly among parents who are concerned that artificial additives cause behavioral issues in children (Praestiin, 2020). Another study that was published in Lancet journal has suggested that some artificial preservatives and colors can proliferate hyperactive behaviors among children. In the study, children were given a mixture of different additives in quantities that represented a child’s normal daily intake. Based on this study, Sanitarium is committed to remove additives from all of their products that contain them (Praestiin, 2020). Although some studies such artificial additives to be safe for consumption, Sanitarium still advice their customers to minimize their additive consumption. Rather, consumers are advised to eat more wholegrains, vegetables and fruits, seeds, nuts, and legumes.

2.2 Business Model

Sanitarium was created as a part of SDA Church in Australia. The establishment’s aim was to produce and promote healthy foods based on the belief that plant-based diets and whole foods are in support of optimal health (VIAR, 2017). Across the globe, the Seventh-day Adventist Church are known to operate several health food industries and healthcare entities which align with their philosophy to care and support the health of the community. This is the same philosophy that Sanitarium operates on in its business model. Today, the company’s whole food plant-based approach to healthy eating is supported by years of scientific evidence and research on the plant-based diet’s health benefits (Thomas, 2015). Therefore, the company is committed to help Australians enjoy healthy eating and healthy lives. The company’s business model is backed by its purpose to change everyday lives through the health of the whole person. That is why they make nutritious foods and in addition they offer health education programs, free digital nutrition resources, and free nutrition expert advisory services to the community. In order to further their purpose, the company has partnered with various charities to inhibit nutrition and food insecurities and has helped many communities in times of disaster.

2.3 Corporate level strategy

Sanitarium is a company that sells its products to grocery shops, retail stores, and online stores as well for buyers’ convenience across Australia. As mentioned, the company makes use of the competitive pricing strategy due to the increasing competitive nature of the food industry (Thomas, 2015). The set prices tend to range from $1 to $10 due to the differences in quantity, size, and flavors. Through the years, the prices have remained competitive due to the greater threat of substitutes from corporates such as Nestle, House Brand, Uncle Toys, and other small scale marketers and producers. It should be mentioned that Kellogg’s has marketed Cheerios, Nutri-grains, Nesquick, and Coco Pops in the Australian market (Sanitarium, 2021). This implies that the competition continues to be stiff and that is why Sanitarium has kept its prices affordable for all consumers irrespective of their socio-economic status.

2.4 International level strategy

Sanitarium has a big fabrication site in New South Wales with over one hundred years of experience in the business of healthy foods. In addition, the company exports its products to more than thirty countries globally including but not restricted to China, the United Kingdom, the United States, New Zealand, and the South Pacific (Muhvic, 2012). Weet-Bix has come to be recognized as one of the most popular breakfast names not only in Australia but also in other countries. Sanitarium has positioned itself internationally as a company that produces high-fiber breakfast biscuits with high nutrition in the case of Weet-Bix and is consumed by people of all ages especially children. The company exports many Weet-Bix to many countries across the globe and because of the high volumes of exports, Sanitarium has simplified the exportation procedure.

2.4.1 Export Strategy

In this state of affairs, the company has chosen to use export mediators. As Sanitarium fabricates the merchandise, they implement the simplest way to export their products and that is through export mediators. The latter is responsible for researching and identifying international markets for Sanitarium’s products (Sanitarium, 2021). This implies that Sanitarium has entrusted export intermediaries to sell for them their products internationally. Through these mediators it is easy for the company to increase their gross revenues because they are able to sell their merchandise internationally efficiently and faster through the experience of export intermediaries. In addition, Sanitarium has been able to salvage some costs by engaging export mediators. This this method, the company has established international subdivisions and employees to help research foreign markets (VIAR, 2017). Under such circumstances, Sanitarium has salvaged costs of direct channels. In international trade, Sanitarium has also salvaged the load of capital which promotes the volumes of export. Finally, Sanitarium Health Food Company’s cereal merchandise have been exported in many countries across the world. To accomplish increased gross revenues, Sanitarium has employed an effective market entry manner by collaborating with Export Management Companies.

3. Proposal for a Change in Strategy

Sanitarium should change is business-model strategy. Instead of constantly promoting its products based on their policies and beliefs, they should actively implement the below the line promotional strategies. While they communicate the company’s values and the importance of consuming healthy foods, Sanitarium should allow their target audience to try their products before they buy (Singh & Ahuja, 2017). It is not uncommon to see salespersons within supermarkets encouraging the customers to try their products and provide their feedback. Many companies across the country and beyond have implemented on ground marketing and Sanitarium should do the same. As far as consumers as concerned, for food products, nothing is more important that the taste and its quality. So as much as Sanitarium promote their merchandise as healthy products, they need to give the customers the chance to try and share their feedback (Singh & Ahuja, 2017). Evidently, the company has already its reputation of producing healthy and quality food products, thus, they should let the potential customers taste and but it after the have confirmed the product’s quality.

4. Justification and Reassurance

For years, the company has continued to expand is operations across Australia and beyond due to the efficient network of distribution and supply chain. That is why Sanitarium supply its products to commercial and retail stores (Sanitarium, 2021). In this way, the company’s market rate has increased especially for its weet-bix products and many customers have been attracted to the brand as a result. In addition, it has focused on efficient supply of its products because the utility of time and place plays an important role in the food products’ success.

In order to minimize the costs of this form of promotion, Sanitarium can inform the technicians to reduce the size of some products such as the Weet-Bix. Some of its big competitors have not applied this kind of strategy (Singh & Ahuja, 2017). This is probably because they find it to be time-consuming and the budget that it involves. Although it is relatively expensive, Sanitarium can implement this strategy for say two weeks in the major supermarkets across the country. From the feedback they get, they will know whether or not to continue with this strategy. If more customers are attracted to their products and buy them, then Sanitarium can consider doing in-store promotions in many more supermarkets and stores across Australia and beyond its borders.

The reason for this proposal is because the most important component in the customers’ point of view is taste, flavor, and health. Therefore, the satisfaction of the customers’ demands should be Sanitarium’s core purpose (Njagi, 2016). Satisfied customers are those that not only turn into loyal customers but also recommend others to buy the products. By conducting active instore activations, customers can realize the benefits and good hygiene factors of Sanitarium products as well as their good taste. Weet-Bix Family products for instance have a variety of flavors including but not limited to apple with high-fibre flavor and honey with coconut flavor (Njagi, 2016). This strategy gives the customer the chance to taste the different flavors that the company offers. Afterwards, they are able to identify their favorite flavors, in turn, the promoters can tell which flavor is liked best by the majority of customers. The company will not only make profits, but they will also improve flavors and technologies based on the customers’ feedback.

5. Implementation

The company manages its various business units and divisions systematically. Several framework elements are changed easily through the structure. Sanitarium’s business level plan clearly articulates the company’s values, mission, and vision (Muhvic, 2012). One of its policies is to promote its products to children. According to the company’s slogan, they believe that Australians have the potential to be healthy mentally and physically. This slogan assures good nutrition for everybody and it aims to successfully attract many consumers. Sanitarium is still 100% Australian owned. Its largest manufacturing site and head office is located on the NSW Central Coast. Also, they have food manufacturing facilities in Western Australia and Queensland (Sanitarium, 2021). The sales team services all territories and states and exports its products to more than forty countries globally. As an organization that is wholly owned in Australia, Sanitarium’s business operations benefit the Australian economy and community. Their contribution to the economy of Australia is through buying Australian ingredients like almonds, sorghum, and wheat. They also work with several businesses in Australia to move and promote products through the supply chain. In addition, Sanitarium has been registered as a charity and is an endorsement of the Australian Charities and Not for Profit Commission (ACNC) and is exempted from paying taxes by the Australia Tax Office. However, Sanitarium should change is business-model strategy. Instead of constantly promoting its products based on their policies and beliefs, they should actively implement the below the line promotional strategies. While they communicate the company’s values and the importance of consuming healthy foods, Sanitarium should allow their target audience to try their products before they buy.

The proposal to implement below the line promotional strategies would positively impact the company. The strategy is realistic, strategic, and achievable. The proposed strategy will be implemented through focusing on search engine marketing, catalogs, and trade shows. Brand promotion activities will also be conducted. The reason for choosing these avenues is that they are more interactive and enable an opportunity for the brand to connect to consumers on a more personal level. Because the company focuses on ensuring people are matched to their best and healthiest option, personal relationships are recommended.

6. Conclusion

Sanitarium Health Food Company is a business headquartered in in Berkeley Vale, New South Wales, Australia founded in the year 1898. The company produces its products locally emphasizing on the need for Australians to eat healthy. The company also aims to offer nutrition information that is easily understandable and practical health advice to the community. By having a variety of healthy foods that appeal to different user groups and for different needs, Sanitarium Food promotes overall health and welfare of its users from across the world. The company’s whole food plant-based approach to healthy eating is supported by years of scientific evidence and research on the plant-based diet’s health benefits. Sanitarium should change is business-model strategy. Instead of constantly promoting its products based on their policies and beliefs, they should actively implement the below the line promotional strategies.

References

Good, S., Butter, P., Delights, V., & Chicken, P. B. (2021) Gut healthy foods for living a long and healthy life.

Muhvic, Z. (2012, October 12th). Marketing Plan Summary. Retrieved from https://www.dlsweb.rmit.edu.au/bus/public/MKTG1329_Managing_Teamwork/resources/Mktg%20plan%20sample%20-%20Sanitarium%20Weet-Bix.pdfNjagi Christopher, N. C. (2016). The Marketing Research Practices And Performance Of Fast Moving Consumer Goods Manufacturers In Kenya (Doctoral dissertation, University Of Nairobi).

Praestiin, J. (2020). Sanitarium Health and Wellbeing, South Pacific Division. Retrieved from https://encyclopedia.adventist.org/article?id=A842

Sanitarium. (2021). Helping Australians eat well since 1898. Retrieved from sanitarium.com.au: https://www.sanitarium.com.au/products

Sanitarium. (2021). Sanitarium Health Food Company. Retrieved from https://www.onlymelbourne.com.au/sanitarium-health-food-company

Singh, H., & Ahuja, S. S. (2017). Improving FMCG Distribution in Peripheral Areas of Emerging Smart Cities: The Case of Gurgaon (Gurugram), India. South Asian Journal of Management, 24(4).

Thomas, J. (2015, October 29th). Marketing Planning and Control: Sanitarium. Retrieved from http://marketingplanningandcontrol./2015/10/648-marketingplanning-and-control.html

VIAR. (2017). DATE-BIX – A SIGNIFICANT STRATEGIC. Retrieved from https://www.bybiz.com.vn/contents_2017_bybiz/files/datebix-strategy.pdf