Strategic case 02

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Laurentian University *

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Marketing

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Feb 20, 2024

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Executive summary Blue Apron, an e-commerce pioneer in the meal kit delivery space, has revolutionized home cooking by offering fresh ingredients and recipes for convenient culinary experiences.The company confronts dwindling revenues, a challenge compounded by high customer acquisition costs and retention issues. The case study examines Blue Apron’s operational dilemmas and competitive struggles, emphasizing the need for strategic customer value enhancement, cost- effective marketing, and potential market consolidation strategies to navigate the rapidly evolving food service landscape. Blue Apron wishes to discover a way to differentiate itself from its competition and attraction to a wider range of clients. Introduction In this case study, we examine Blue Apron's development into a cutting-edge e-commerce business in the meal kit delivery industry that has revolutionized American homes' cooking habits. The company's strategy of bringing recipes and fresh ingredients right to customers' homes signaled the beginning of a new age of ease and home cooking. The story, however, takes a complicated turn when Blue Apron encounters serious difficulties, including diminishing sales, difficulties keeping customers, and heightened competition, which force a rigorous assessment of the company's business plans and competitive position. Strategic Profile and Case Analysis Purpose Since its inception in 2012, Blue Apron quickly rose to prominence in the meal kit delivery sector, initially thriving on its fresh ingredients and simple recipes. The business depends on

purchasing directly from nearby farmers, packing them, and delivering them quickly to avoid middlemen. Yet, changing consumer preferences and increased competition from other food and meal delivery companies, the supermarket industry, food retailers, casual dining and quick-service restaurants, wine retailers, and food manufacturers have posed significant challenges. The company, despite leading the market, faces declining revenues and market share, attributed to high customer acquisition costs and low retention rates. Addressing these issues necessitates a deep dive into customer value assessment and the development of strategies aimed at enhancing customer loyalty and marketing efficiency. Key Success Factors:  To secure growth and customer retention, enhance brand loyalty.  To attract demographics that correspond to high-loyalty consumer categories, develop engaging, focused communications.  As a way to stand out from the competition, provide competitive pricing and alluring reward schemes. External Analysis PESTEL Analysis Political Meal kit delivery services need to be able to adapt to new rules about how to handle, package, mark, and distribute food. Laws, tax policies, and lower wage costs that are good for business

could have a positive effect on costs. International trade also affects the ability to get different ingredients, which shows how the business is connected around the world. Economic If the economy goes into a recession or the rates of inflation, unemployment, or family debt go down, it will be harder for businesses to get the money they need, and people will spend less. Social People's eating habits are changing because of changing dietary trends and lifestyle changes. There is a growing demand for vegan, gluten-free, and other specialized meal choices. Meal kit services are also changing to meet the needs of a growing number of customers from different cultures and religions who have different food needs. Technological To stay efficient and ahead of the competition, businesses need to keep up with new technologies and make sure their platforms are easy for users to understand and use. This is essential for smooth operations and happy customers. Environmental As more customers demand eco-friendly packaging and safe food sources, businesses are having to change how they think about these issues and how much it costs to run their businesses. Companies have to deal with both these green demands and the higher costs and more complicated logistics that come with sustainable buying practices. Legal

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Companies need to keep their policies and procedures up to date and in line with changing public health rules and safety standards that are specific to each area in order to lower the chances of being sued for food contamination or allergen exposure. This means that health and safety practices need to be monitored and put into place in a more effective way . SWOT Analysis: Strengths Weaknesses 1. Strong brand recognition 2. Blue Apron has a devoted customer base of folks that love its products.. 3. Investment in a brand-new cutting- edge distribution facility 4. Reasonably priced in comparison to rivals 5. Subscription plans – Two people plan and Family plan 1. Increasing customer engagement expenses 2. Low profit margin. 3. Lack of commitment to retaining and attracting clients over the long term 4. High advertising spending on offline media in comparison to peer companies Opportunities Threats 1. The market for meal kits is expanding quickly. 2. Vegan, ecologically friendly, and gluten-free marketplaces are examples of niche markets. 3. Customers that lead hectic schedules pay more attention to advertisements on online platforms. 4. Increase the price point of your product offerings by using strategic pricing. 5. Collaboration with a physical store to promote food kits. 1. Fuel price inflation or other fees that increase the cost of delivery. 2. There are few obstacles for big, well- known corporations to enter the market for meal kits (Amazon, Walmart) 3. Environmental considerations for food kit packaging 4. Security vulnerabilities that might raise questions about customer information protection. 5. Excessive levels of competition in the food retail industry could lead to price wars

The SWOT analysis shows that BA needs to use its well-known brand to beat the growing competition and adapt to changes in customer behavior and product demand. Long-term, BA will be successful and keep making money if it changes to meet the needs of its customers, including those who want to change how they receive its goods and packages. Competitor Analysis Blue Apron faces competition from other meal kit companies, big food stores and online shopping sites, and several delivery services. Direct Competitors: HelloFresh is the market leader with 77% of the market share thanks to its global reach and targeted marketing. Other companies, like Marley Spoon, Dinnerly, and Purple Carrot, offer niche-focused meal options and compete with Blue Apron by offering a range of prices and food options. Grocery and online shopping: Amazon and Walmart use their large customer bases and logistics networks to offer meal kits and partnerships. These make the battle tougher by making meal solutions more accessible and allowing fast delivery. Delivery Services: Uber Eats and other similar apps offer restaurant meals directly to customers, which makes the food delivery market more diverse. These apps compete indirectly with meal kits by putting an emphasis on speed and ease. Blue Apron has a lot of rivals, and each one uses a different approach to get people interested in the convenience-driven food delivery market.

Internal Analysis Originally, Blue Apron was a meal kit delivery business with the aim of building a brand in a consumer lifestyle category and offering an emotional cooking experience. Nevertheless, despite the revenue increase, there were problems with operations, quality, and losses. There were modifications to fulfillment strategies, introduction of cost-cutting initiatives, and changes in leadership. In addition, Blue Apron's competitive environment was becoming more and more competitive, which made growing more difficult for the company. To regain its lost appeal in the meal kit industry, the meal kit company must address its internal problems, adapt to market conditions, and innovate. The key pillars of Blue Apron's value chain include effective marketing, efficient operations, a subscription-based business model, sourcing high-quality ingredients, and customer service. It creates original recipes, sources fresh ingredients, and oversees logistics to ensure prompt delivery. Marketing initiatives increase consumer loyalty and brand identification. Technology is utilized to provide user-friendly platforms and data analytics. Human resources comprise customer service representatives and trained cooks. Blue Apron wants to remain competitive in the meal kit delivery market by making every step as efficient as possible. Alternatives In my opinion, there are certain other ideas that Blue Apron (BA) can use to reduce customer acquisition expenses and increase customer retention, hence increasing BA's overall customer profitability.

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These plans include:  Analyzing consumers who belong into the high-loyalty category and creating new strategies to promote retention in the low-loyalty section will help the company emphasize its efforts on customer retention rather than new acquisitions.  By providing specialized items under alternative brands like BA Vegan, BA Organic, and BA Quick Prep, you can broaden your market reach into specialist market segments.  Allocate funds to improve the quality of their products, their website, or to train their retail personnel to provide better customer service.  The global pandemic has made everyone more concerned with their health. In light of that, Blue Apron may utilize that information to change their marketing approach, modify the product packaging to make it more appealing, and demonstrate to customers how concerned the firm is about their health.  Blue Apron should make technological investments to improve its user interface and operational effectiveness. This might entail streamlining the ordering process, maximizing delivery routes via the Instacart alliance, and using data analytics to customize meal recommendations.  Rather of going up against grocery chains directly, Blue Apron might look at forming alliances with them. This would entail making special meal kits available in-store, making use of the grocery store's infrastructure and clientele while giving Blue Apron a physical presence. Decision Criteria The following selection criteria have been used to evaluate the suggested alternatives to ascertain how BA can compete in the market position and regain market share.  Reduce the expense of acquiring new customers.  Improve customer retention.  Boost consumer loyalty to the brand.  increase market share.

 broaden the target market to include new clients; and increase overall income and profitability. Recommendation After looking at the whole case, I think BA should focus on keeping customers instead of getting new ones. A group of loyal BA customers has a high retention rate, a good customer term value, and low costs to acquire new customers. Also, they can create a new strategic plan to reduce their marketing plan by their Executive team with input from marketing and sales teams. i. Look at the group of very loyal customers: The executive team can do a lot of study on the current high loyalty category to learn more about the types of customers that make up this group. With help from the marketing and sales departments, the executive team may use the information gathered from studying the group of customers with a high level of loyalty to specifically target customers in certain areas in new strategic marketing plans. We suggest cutting the marketing budget in half so that the extra money can be used to start a new program to keep customers coming back. ii. Utilize the details gained from studying the group of customers who are very loyal to help you specifically target customers who fit those descriptions. We suggest cutting the budget for marketing by half so that the extra money can be used to make a new customer reward program.

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Strategic case 02

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