Introduction
The current business case write-up examines the history and current obstacles of Zespri – the largest kiwifruit exporter. Over twenty-five years since its establishment, the company from New Zealand has experienced numerous financial challenges, and the current analysis provides insights into the three relevant decision points for the organization. Namely, the case study focuses on brand creation, the present business model, and the conceptual approach to product differentiation. The current work shows that these three key decision points have significantly improved Zespri’s organizational model and allowed the company to stay relevant in the global market of kiwifruit.
Industry Crisis and Brand Creation
The first crucial issue in the current case study is the disruption of the kiwifruit production industry and the consequent establishment of the Zespri brand. The “fruit” crisis in 1992 primarily occurred due to the sudden decrease in fruit prices in Europe, resulting in numerous bankruptcies of fruit manufacturers globally (Alvarez & Shelman, 2012). It was a relevant problem for the New Zealand kiwifruit industry, which, at the time, consisted of the New Zealand Kiwifruit Growers Incorporated (NZKGI) institute and associated representatives (Alvarez & Shelman, 2012). However, this business model proved to be ineffective, and the establishment of Zespri in 1997 was the first pivotal point for the New Zealand kiwifruit industry.
In the context of a case study, the most critical detail is the impact of brand creation. Zespri became the representative of the whole industry, which allowed New Zealand to retain its position as one of the most notable kiwifruit exporters globally (Alvarez & Shelman, 2012). This decision was an intelligent marketing move, and the research shows that emphasis on brand management can significantly improve the company’s (or the country’s in the current case) influence (Mihajlovic & Trajkovic, 2020). Further analysis demonstrates that the shift from the public business model to a brand allows for improving the organization’s reputation and public image (Mihajlovic & Trajkovic, 2020). It was particularly critical for New Zealand’s kiwifruit industry because of the distant location and the high costs of shipping (Alvarez & Shelman, 2012). Hence, emphasis on brand management enabled additional strategies, such as premium pricing product differentiation, due to the growing international presence. It was arguably the most effective method to stay relevant in the market, and the only potential recommendation was to choose a more appropriate and memorable brand name.
Business Model and Risks
The crucial concepts in this discussion include a grower-oriented business model, customer experience, and sustainability. After establishing the brand, Zespri faced two challenges related to internal and external risks (Alvarez & Shelman, 2012). The former concerns the grower-oriented business model where every kiwi grower is a company shareholder and has a voice in the decision-making. The current case study acknowledges this approach as a viable strategy because it adheres to food safety and high quality, leading to the possibility of premium pricing differentiation (Tort et al., 2022). It removes numerous internal risks which are relevant for more corporate-oriented food companies globally (Tort et al., 2022). However, it is advisable to find an appropriate balance between the demand and supply of kiwifruits. In other words, implementing a more demand-driven approach could potentially mitigate the internal risks of supply-driven chains and logistics (Tort et al., 2022). As mentioned in the case, it is one of the immediate threats to Zespri supply chain management, and changing the approach might be beneficial for the company.
The second risk in this discussion concerns customer expectations and experience. The company needs to emphasize these aspects because it requires a notable international presence to stay relevant in the global market (Alvarez & Shelman, 2012). The current paper proposes sustainable marketing as the solution to this issue. In other words, the company could take advantage of its grower-oriented business model and focus on the highest quality and safety of kiwifruits. This approach supports the growing trend of sustainable development, implying that more emphasis on environmental/social issues can result in profitability (Barnett et al., 2022). Moreover, it shows that corporate responsibility can significantly improve the public image of the company, which is particularly crucial for Zespri.
Production Differentiation and Premium Pricing
Consequently, it is essential to discuss Zespri’s approach to product differentiation since it is another critical factor in staying relevant in the global market. Zespri is responsible for the marketing and selling process of New Zealand kiwifruit (see Picture 1); hence, it was crucial for the company to implement an intelligent advertisement and product differentiation strategy. As mentioned several times in the case, Zespri needs premium pricing due to the high costs of shipping to other parts of the world, and it is cheaper for Europe and The United States to import from Chile and Italy. The research shows that product differentiation based on a premium pricing strategy improves customer retention and loyalty (Subrahmanyam & Arif, 2022). Hence, the current case write-up proposes that Zespri should invest more in research and development to produce tastier kiwifruit cultivars. This approach will create an additional competitive advantage in premium product differentiation, and it might be specifically advantageous for Zespri because the company already focuses only on kiwifruits. Ultimately, R&D emphasis can help the company to further improve the existing kiwifruit cultivars and improve its position in the global market.
Conclusion
The current case study write-up identified three critical challenges and decision points in the history of Zespri – brand management, business model, and premium pricing. Zespri has succeeded in creating a notable brand that enabled its future success; however, for the latter two issues, the current paper proposed several recommendations. Namely, the risks of the grower-oriented model could be mitigated by switching to a more demand-driven approach. It does not mean that the company should ignore growers’ concerns, but it should find an appropriate balance between the internal sustainable model and generating profits based on global demand. Lastly, additional emphasis on premium product differentiation could be beneficial for Zespri since it is a company that exports only kiwifruits.
References
Alvarez, J. B., & Shelman, M. (2012). Zespri. Harvard Business School. Web.
Barnett, M. L., Henriques, I., & Husted, B. W. (2022). Salvaging corporate responsibility: Going beyond the business case. Edward Elgar Publishing.
Mihajlović, L. S., & Trajković, S. (2020). Branding and brand management in international business. Journal of Process Management and New Technologies, 8(2).
Subrahmanyam, S., & Arif, S. A. F. (2022). Premium pricing strategy and customer Retention – An analysis. International Journal of Early Childhood, 14(03), 2022. Web.
Tort, Ö. Ö., Vayvay, Ö., & Çobanoğlu, E. (2022). A systematic review of sustainable fresh fruit and vegetable supply chains. Sustainability, 14(3), 1573. Web.