shared value analytical report

Shared Value Analytical Report

MGMT 366

Spring 2015

Hannah Dion, Keely Griffin, and Olivia Martins

Table of Contents

1. Executive Summary

2. History

3. Business Model

a. Key Partners

b. Key Resources

c. Value Propositions

d. Cost Structure

e. Revenue Streams

f. Customer Segments

g. Communication Channels

4. Value Chain

5. Working Definition of Sustainability

6. Communication Channels

7. Initiatives and Activities

8. Shared Value Opportunities and Recommendations

a. Implementation Steps

9. Conclusion

10. Annex

a. Figures

b. References

Executive Summary

Creating shared value offers the opportunity for corporations to utilize their skills, resources, and

the ability for management to lead social progress in order to deliver industry-leading

performance. People’s Market (PM), a student-run co-op at UMass Amherst, is currently

experiencing serious declining revenues and slow growth. Developing a shared value initiative

could be a start in creating a sustainable business model that enhances their competitiveness

while advancing economic and social conditions for the students at UMass Amherst and the

surrounding communities throughout Western Massachusetts. Within creating shared value for

PM, the process of redefining the productivity in the value chain will be completed by several

steps that mainly focus on their partnerships, products, and waste management, all while creating

an incentive program for prospective customers. As a final result, this program will introduce the

countless opportunities creating shared value has, as well as producing brand awareness to

ultimately increase profits, and identifying and expanding connections between societal and

economic progress.

History

Located in the Student Union building at the University of Massachusetts, the People's Market

has long been the community's go-to source for ethically-gathered food, beverages, and personal

care products. Since its founding in 1973, it has been known as the best place on campus for

coffee, herbal teas, fresh bagels, gourmet cheeses, healthy snacks, chilled beverages, yogurt,

chocolate, and women's health products. As one of the oldest student-run businesses on campus,

the People's Market is also a living classroom in cooperative management, mindfulness, and

sustainability. Founded as a collective of women, today the Market consists of folks from all

walks of life. The People’s Market believes in working with one another to achieve collective

goals, striving to foster awareness of privilege, oppression, and identity both in the organization

itself and the community. They aim to create a radically just, more equitable world in which the

environment and community can live long, prosperous lives.

Business Model

Key Partners

PM’s key partners include local Dean’s Beans in Orange, MA, All Star Dairy Foods in South

Hadley, MA, Tandem Bagel in Easthampton, MA and other partners such as LXG, Gordon’s

Food Service, Sustainable Indulgence, Conway Kitchens, Polar and UNFI; their most widely

used shipping partner. These partners provide the most popular products bought and sold in PM.

PM’s main activities include providing the UMass Amherst community with alternative product

options such as local, fair trade, vegan, vegetarian, gluten-free and organic.

Key Resources

The people’s market has several key resources that have enabled long-term business success. The

staff at PM are all co-managers, each person provides a vital role in the business. Each manager

is assigned to a particular committee who is in charge of a certain task pertaining to a specific

subset of the business. For example, there is one committee who orders bagels every week and

another who handles advertising for the company. Another valuable resource for the company is

its sustainable image. Their image draws in customers who want a different experience, that is,

the opposite of huge money making corporations. Through this ideology of an alternative

business structure, PM aims to better the surrounding community. PM’s long history at Umass is

also a valuable resource. This aspect of the business creates strong bonds with customers and

trust among new customers and business partners.

Value Propositions

Through their resources PM believes their value proposition includes creating a safe space for

their customers, as the market has been deemed free of judgement and a friendly space by their

co-managers. Also, as customers enter the market they are immersed in PM’s culture, which

includes a familial space and high levels of trust between customers and co-managers. Along

with this ideal of a safe space, PM prides themselves on their co-operation run business. In a co-

op, customers are both partners and friends of the business and have equal input in the business’s

decisions.

Cost Structure

PM has a value-driven cost structure, which focuses on value creation and premium value

proposition. Characteristics of the cost structure are fixed costs (rent, payroll, utilities), variable

costs (direct materials, production supplies), and economies of scale.

Revenue Streams

PM customers currently pay for products purchased at the market with either debit, credit, or

cash. A majority of the customers are students, and they would prefer to pay with YCMP card

swipes offered through the university. PM customers are paying for a variety of products such as

fair trade coffee, local bagels, and organic beverages. Customers also pay for an experience

through PM. The market is set up to provide each customer with a unique experience brought on

by the co-managers. The revenue stream contributes to the overall revenue because the main

customers of the company are not willing to pay for products out of pocket. This leads to poor

revenue and partly causing the current financial situation of the market.

Customer Segments

Millennials

The target market for People’s Market is Millennials, with a focus on college students. In the US

today, Millennials (ages 18-36) surpassed the Baby Boomer generation for the largest percentage

of the population. According to Mintel, there are 78.3 million millennials, which is nearly 25%

of the population in the United States (e.g. see fig. 1).

Values

Millennials value working together in a team and being part of a cause, as well as having strong

views on accomplishing goals and expressing their opinions and ideas. In a recent study by the

Boston Consulting Group (BCG), Millennials are divided into six different groups based on their

values and lifestyle choices. One third of the generation is defined as a “Hip-ennial” which is

comprised mostly of women who are either students or homemakers. They are “globally aware,

charitable, and information hungry.” This particular segment of Millennials is a significant group

for PM to aim their promotion towards (e.g. see fig. 3).

Outreach

Millennials are the most technologically savvy generation because they grew up during the

digital age. They gain most of their knowledge online and through social media platforms.

According to the Mintel report on leisure trends, Millennials are most likely to be informed of

and become engaged in non-profit organizations online and via social media. At 65%, websites

are the most preferred platform for Millennials to learn about non-profits (e.g. see Fig. 4).

LOHAS Consumers

Lifestyles of Health and Sustainability (LOHAS) is a “marketplace for goods and services

focused on health, the environment, social justice, personal development, and sustainable living.”

Core values shared are transparency, honesty, and love for mankind and the planet, among

others. LOHAS consumers make up about 15% of adults in the US. According to the National

Marketing Institute (NMI), the LOHAS market in the US is estimated to be about $290 billion

with continued growth (e.g see fig. 5). One aspect of the segmentation in Figure 5 that is

particularly important for PM is the ‘Personal Health’ sector since it accounts for $117 billion of

the market, which is the highest out of the six segments. This sector covers natural and organic

products, which is the industry PM is involved with.

Purchasing Habits

Of the different generations in the US, Mintel states that Millennials are expected to buy green

more often than those who are 35+ years old. One of the reasons behind this is that Millennials

grew up during a time where there was more knowledge of environmental matters such as

recycling, global warming, etc. Millennials are also more likely to buy green because they feel

the need to do the right thing in buying sustainable products. They hold the highest percentages

in the super green and true green categories for green purchasing. In this case, super green refers

to the most committed of the green green consumers, which means those consumers that almost

always buy green products. As for the true green type of consumer, they are the group that

purchase green products regularly (e.g. see fig. 6).

Value Chain

The inbound logistics for PM refers to sourcing ethically-gathered food, beverages, and personal

care products, while engaging in cooperative management, mindfulness, and sustainability.

These packaged products are locally transported to PM, where they are then taken out of the

packaging and into their designated section for retail purposes. PM operates only at their UMass

location, and is operated as a student-run-co-op. The largest part of their operation includes

product partnerships with local business, such as Deans Beans and Tandem Bagel. Within

outbound logistics, there is no presence of intermediaries in product selling. Products are sold in

their own throughout PM’s store. Their marketing and sales includes social media content, but

there is little presence on developing new marketing strategies to gain customers and an overall

brand awareness. Within human resource management, the company’s committed workforce is

considered a key attribute in the company’s success and value over the years. Another key part

of their value chain is their work culture, which is what keeps them motivated and work

efficiently as a business.

Working Definition of Sustainability

PM’s working definition of sustainability is instilled in the business practices and depicted in

their mission statement. PM believes that small business practices provide the best definition of

sustainability. These practices include composting, buying local products, and providing

incentives for their customers to behave sustainably. They work to achieve collective goals and

aim to promote the knowledge of social issues in the community and market. PM also believes

that being a sustainable business involves educating the community about political and social

issues in the food industry. To show their support for sustainability issues, they have put up

stickers and other materials around their store (e.g. see fig. 7 and fig. 8).

Communication Channels

PM currently communicates to their customers through direct contact within their store, their

own website, as well as using social media platforms like Facebook, Twitter, Instagram,

Youtube, Foursquare, Yelp and Tumblr. Their communication toward the public and their

subscribers is focused around sustainability within the UMass campus and the surrounding

community of Amherst (e.g. see figure 9).

Initiatives and Activities

According to Porter and Kramer there are three methods to create shared value (CSV) for a

company. These are reconceiving products and markets, redefining productivity in the value

chain, and enabling local cluster development. The initiatives and activities associated with PM

include providing an alternative to big name corporations while supplying sustainable, healthy,

and local products. The market only sells products that are non-conflict. Other larger brands like

Walmart and Target do not provide some of the local products that PM sells, which allows PM to

appeal to a niche market. PM’s strong locally-focussed buying initiatives allows a drop in cost

for the company and carbon emissions for the environment due to shorter distances travelled. PM

also has a “bring your mug” for a discounted coffee initiative, which cuts back on waste and

provides low-income college students with a cheaper source of coffee. The employees as co-

managers also enable CSV within PM. However, PM does not currently have any initiatives in

place that involve the outside communities.

Shared Value Opportunities and Recommendations

People’s Market has several opportunities to implement shared value within their organization.

Specifically focussing on reconceiving new products and markets. This can be done by lowering

the costs of a popular product (i.e. bagels), accessing new markets, and meeting social needs by

better serving the target market. PM states that they want to promote awareness surrounding the

multitude of social and environmental problems. They do this by purchasing socially-conscious

products, eliminating products that do not meet their social justice standards, and buying locally.

However, they do not have any initiatives in place to promote sustainability in the local context.

The proposed plan (outlined below) will give PM the opportunity to create shared value within

the community by raising awareness around food waste and the homeless community, while also

providing students with lower prices, which will in turn increase awareness, foot traffic and

revenue for the business.

Campaign Overview

People’s Market will partner with Tandem Bagel to put their food waste from bagels to a more

productive use. Rather than simply throw away unsold bagels at the end of the day, the owners of

Tandem Bagel and the co-managers at PM will donate the bagels to schools, shelters, and other

non-profit organizations as part of their new initiative, A Bagel for Every Table. Also, PM and

Tandem will show their strong commitment to being fair to their customers by offering a 50%

discount on a customer's next purchase of a bagel and cream cheese contingent on the customer

promoting the campaign prior to their purchase.

Promotion

External (Customers)

In order for their customers to get a 50% discount on their next bagel and cream cheese purchase,

customers must take a picture inside PM or Tandem with the proper materials (e.g. bagel props

and campaign banner) and then post the picture with the proper hashtag (e.g.

#ABagelforEveryTable) and handles (e.g. @peoplesmarket73) on Facebook, Twitter, and

Instagram. The customer must then show the cashier the picture that they shared on social media

at the time of their next purchase of a bagel and cream cheese.

Internal (PM & Tandem)

People’s Market and Tandem Bagel will also be in charge of promoting the campaign through

their own social media platforms. They will need to design a campaign that incorporates their

customers participation while also promoting further participation in the campaign itself (e.g. see

fig. 10). To further enhance their online promotion, PM should also create a new page on their

website titled, “community” explaining their new food waste initiative, A Bagel for Every Table.

This page should be constantly updated with tangible information such as the amount of bagels

donated, key partners and campaign participants, and the places donated to.

Conclusion

This new shared value initiative will raise awareness about a sustainability and social justice

issue, involve the local UMass community and the outside communities that Tandem Bagel

caters to, provide economically-strained college students with a cheaper breakfast option,

provide meals for the homeless community, decrease the cost of food waste disposal for both

Tandem and UMass, and most importantly, raise awareness about People’s Market itself, which

has the potential to increase foot traffic and revenue.

Annex

Figures

(Fig. 1)

Figure 1 shows the breakdown of the U.S. population by generation.

(Fig. 2)

Figure 2 shows the mean income of household by generation and age.

(Fig. 3)

(Fig. 4)

Figure 4 shows what information about the non-profit that Millennials would share on Facebook,

and cool events is at the top of the list with 74%.

(Fig. 5)

Personal Health

$117 billion

Natural, organic products

Nutritional products

Integrative health care

Dietary supplements

Mind body spirit products

GREEN BUILDING

$100 billion

Home certification

Energy Star appliances

Sustainable flooring

Renewable energy systems

Wood alternatives

ECO TOURISM

$42 billion

Eco-tourism travel

Eco-adventure travel

NATURAL LIFESTYLES

$10 billion

Indoor & outdoor furnishings

Organic cleaning supplies

Compact fluorescent lights

Social change philanthropy

Apparel

ALTERNATIVE TRANSPORTATION

$20 billion

Hybrid vehicles

Biodiesel fuel

Car sharing programs

ALTERNATIVE ENERGY

$1 billion

Renewable energy credits

Green pricing

The table above shows the six six different segments of the LOHAS consumer.

(Fig. 6)

Figure 6 shows the

breakdown of green purchasing habits by age. Millennials hold the highest percentages in the

super green and true green categories for green purchasing.

(Fig. 7)

Figure 7 is a picture of different sustainability promotional materials that can be found inside the

storefront.

(Fig. 8)

Figure 8 shows a sign that was placed outside one of the beverage fridges. The sign reads, “Hello lovely customers & friends! You are probably wondering why we have no tropicana & naked juice .. well tropicana + naked

juice are owned by a little company known as PEPSI CO. (JK they’re huge) And PEPSI CO. purchases conflict palm oil which in turn aids in destroying rainforest habitats & driving

subsistence farmers into poverty. You can read more at www. ethicalconsumer.org We are currently searching for subsitutres. Suggestions?”

(Fig. 9)

The following pictures depict PM’s current social media standing on Facebook, Twitter and Instagram.

Facebook:

Twitter:

Instagram:

(Fig. 10)

The image above is an example of the type of social media content that People’s Market and

Tandem will post throughout their social media campaign. Each customer will take a picture of

their purchased bagel with the customized PM and Tandem Bagel deli paper. They will then use

the hashtag #ABagelforEveryTable. This will catch people’s attention and create a buzz in the

online community.

References

http://academic.mintel.com/display/695048/


http://www.marketingcharts.com/traditional/demographic-stats-about-us-millennials-40016/

http://www.forbes.com/sites/prospernow/2012/07/05/the-new-millennial-values/

http://www.millennialmarketing.com/2012/04/at-last-a-millennial-segmentation/

http://www.pewsocialtrends.org/2014/05/14/young-adults-student-debt-and-economic-well-

being/

http://academic.mintel.com/display/654452/#figure49

http://nces.ed.gov/programs/digest/d13/tables/dt13_105.20.asp

https://www.census.gov/compendia/statab/2012/tables/12s0278.pdf

http://www.lohas.com/about

http://www.lohas.com/regional-events

http://www.lohas.com/about





"People's Market." People's Market. Umass, n.d. Web. 18 Apr. 2015.

<http://www.umass.edu/rso/peoples/>.

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Q&A interview with the staff at the “All-Staff” meeting

The business model canvas and other course content materials

Shared Value Initiative - http://sharedvalue.org/

https://sharedvalue.org/groups/shared-value-initiative-community/what-does-creating-shared-value-mean-

nonprofit-sector

FSG - http://www.fsg.org

Pfitzer, M., Bockstette, V., & Stamp, M. (2013). Innovating for Shared Value. Harvard Business Review,

91(9), 100–107.

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1–22). FSG. Retrieved from http://www.fsg.org

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world. University of Toronto Press.

http://managementhelp.org/organizationalsustainability/

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shared value analytical report

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