Calgene Case Study on how to change customer perceptions

Tomatoes are currently a commodity product. Calgene is trying to bring in differentiation in a commodity market through a differentiated product using genetic modification methods. Calgene intended to market the genetically modified tomatoes under the brand name of Mac Gregor Tomatoes to end consumers and the seeds under the FLAVR SAVR brand to the farmers. As the first bioengineered produce to clear regulatory hurdles, the Flavr-Savr required governmental agencies to adapt their current standards to a new realm of food and agriculture and to consider how genetically altered foods fit into the United States regulatory scheme. The FLAVR SAVR story reveals how difficult it can be to bring genetically engineered products to market, how objections with little or no scientific merit can influence the outcome, and how important public opinion is in determining commercial success.

Reasons for creating the genetically modified tomato:

The reasons for creating genetically modified tomatoes were because of the potential advantages of genetically modified foods.

Currently, vegetables and fruits are not commercially cultivated merely for the local market, but are intended for shipping over long distances to nation-wide and international markets.

Ripe fruits and vegetables have soft skins and can easily be damaged during handling and processing. They can also rot in the time taken to ship and get them to the shops.

In order to ensure easier handling and longer shelf-life, vegetables and fruits are harvested when still green and then artificially ripened with ethylene gas. The drawback of doing so is that the artificially ripened fruits and vegetables do not have the taste and flavour of their naturally ripened counterparts.

A SWOT analysis for the company Calgene along with FLAVR SAVR Tomatoes is given below:

TABLE 1: SWOT ANALYSIS FOR CALGENE AND FLAVR SAVR TOMATOES

The consumer perceptions regarding the various attributes of the existing tomatoes and the attributes that Calgene hoped to better using FLAVR SAVR tomatoes in order to gain a competitive advantage are discussed in the table given below.

TABLE 2: PERCEPTIONS – REGULAR TOMATOES VS FLAVR SAVR

ATTRIBUTES

ARTIFICIALLY RIPENED TOMATOES

FLAVR SAVR TOMATOES

CUSTOMER PERCEPTION

TEXTURE

Soften as they ripen, hence mushy

Firm

Firmness is measure of freshness. Softer tomatoes are expected to be rotten.

COLOUR

Pale red

Redder

Redness measure of ripeness

TASTE AND FLAVOUR

Tasteless, Flavourless

Preserves original taste

People definitely want tastier tomatoes

FRESHNESS

Less fresh(more damage prone)

Fresh

Fresher implies healthier and preservation of nutritional contents

PULP CONTENT

Less Juicier(picked early)

Juicier

Juicier tomatoes are tastier and more flavourful

CHEMICAL TREATMENT

Treated with ethylene

Free from treatment

Preference for natural and organic foods

PRICE

Standardised

30-100 percent premium

Trade-off: Will customers be ready to pay premium for better taste?

RIPENING PROCESS

Artificially Ripened using ethylene

Naturally Ripened on the vine

Longer ripening gives more flavour

AVAILABILITY

Freely Available

Low; only in California and Mid west

People will not be ready to wait in case of commoditized products

RESISTANCE TO DAMAGE

Low

High

Easier to handle

SHELF LIFE

Less

More

More shelf life encourages bulk

NATURAL

Traditionally Grown

Genetically Modified

Consumers are concerned and conservative about GM foods, not readily accepted

STAKEHOLDER PERCEPTIONS

Eight stakeholder groups have been identified in this case and their individual perceptions are discussed in the figure below.

FIGURE 1: PERCEPTIONS OF STAKE HOLDERS

STRATEGY AND POSITIONING TO CHANGE PERCEPTIONS

FIGURE 2: TARGET STAKEHOLDER GROUPS

From the stakeholder groups identified, we have decided that to concentrate on the stakeholder groups identified in Figure 2 in order to ensure the commercial success of FLAVR SAVR tomatoes and seeds.

END CONSUMERS

Consumers are the single largest and most important segment to be targeted for perception change. Consumers are concerned and conservative with regard to genetically modified foods mostly due to potential health issues raised with other GM foods in the past such as BGH. Calgene should work with its customers, to insure safety and quality, to promote confidence in its product. Calgene can achieve this through providing accurate and detailed information regarding its products available to the public. More acceptance leads to more sales, which will generate more revenue for Calgene. Also, consumer acceptance of FLAVR SAVR can be carried forward to other experiments of Calgene such as cottonseed, rapeseed, etc.

FARMERS

Hesitancy toward genetically engineered crops is culturally based. Farmers are opposed to the idea of mono-crops in agriculture and giving up the notion of season. Farmers are used to not having all fruits and vegetables at their peaks 365 days a year, and social norms dictate certain times of the year to yield the best flavors of different products. Tomatoes are “supposed” to be best in the summer, so it is strange to think of January as a time for fresh “summer” produce.

In order to target farmers, Calgene can decide to build vertically integrated operating businesses. This strategy will provide access to agricultural input markets where Calgene would sell the genetically altered seeds.

MEDIA

Media played a big role in shaping the environment of agricultural technology. Calgene’s objective was to have an informed national press. Maintaining cordial relations with media enabled Calgene to know beforehand of protests by activist groups such as Rifkins Pure Food campaign and be prepared to take proactive reaction. Media was also a platform to influence consumer perceptions on a massive scale.

FIGURE 3: ASSOCIATIONS

The ultimate goal of any company is to increase sales in order to maximise profits. More sales can be generated only through customer awareness and increased customer acceptance of our product. In order to do so, Calgene as a GM based company cannot succeed in breaking the link between GM foods and FLAVR SAVR tomatoes. Other products of Calgene include experiments with cottonseed, rapessed, etc. Hence, it can increase efforts in reducing the association between health risk, carcinogens, etc and GM products. This can be achieved through media promotions for which it is first necessary to gain support from the media.

The predominant fear is that engineers will create exotic or monster plants that will have the ability to do things that could never occur in nature and that can have uncertain effects upon those who eat the products of such plants–or at the very least, that plants could become weed-like, resistant to disease and pesticides, and spread.

First, the genetic engineering process is often considered different from traditional plant breeding. While conventional plant breeders regularly attempt to introduce desirable genes from wild varieties into promising commercial varieties of food crops, they usually do so by transferring large numbers of various genes, and the results are often fairly unpredictable. In contrast, genetic engineers transfer very few genes (in the case of the Flavr-Savr, only one gene), bringing changes that are very clearly defined and predictable.

Since the FLAVR SAVR tomato maintains the essential characteristics of traditionally developed tomatoes, FDA will not require special labelling. However, in order to calm fears about genetically engineered tomatoes and price increases, purchase labelling would be provided about GM and the tomato, along with disclosure of the nature of the product on labels as well as P-O-P displays and in detailed brochures at vegetable counters. The tomato-shaped, open-out brochure that accompanies the tomato states that they are grown from Flavr Savr seeds and provide summertime taste year round. Consumers are asked not to store the tomatoes in the refrigerator to preserve flavour. On the back of the brochure, there is an explanation of how the Flavr Savr was developed.

However, customers need not always be ready to go through detailed brochure to find out product details. This is where the role of the media kicks in. Through various promotional activities in the media we can increase consumer awareness and at the same time weaken the link between cancer and GM foods. Thus the media can be used as a platform to address the health concerns over the safety of GM foods.

Another method of mass acceptance is through obtaining the certification through regulatory bodies such as FDA. In the course of its path toward USDA approval, the Flavr-Savr followed two steps –

Grant of a permit for “introduction” of the organism

Grant of non-regulatory status for FLAVR SAVR tomatoes

Certification by a national level regulatory authority such as FDA will help calm down the public hysteria concerning risks associated with GM foods to a large extent.

Thus, by ensuring round the year availability of tomatoes which are perceived to generally be a summer produce and offering better tasting and flavourful tomatoes than are currently available, Calgene can expect to change the perceptions about GM foods in the minds of the customers by weakening the first two links and strengthening all the other links in Figure 3 through the methods mentioned above.

REFERENCES

http://coolreferat.com/Business_Analysis_Essay_Research_Paper_Calgene_IncCalgene

http://articles.latimes.com/1990-02-26/business/fi-1071_1_plant-genetics/3

http://leda.law.harvard.edu/leda/data/140/ayoelson.html