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HelloFresh meal kit innovation

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HelloFresh meal kit innovation

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Introduction

The process of innovation within businesses determines how well they are able to operate profitably in a competitive environment. The focus towards innovation may take many forms but it should always result in improved performance which guarantees an entity competitive advantage. This is attained through the implementation of new ideas that ensure the entity is able to adapt in spite of the dynamic nature of the market. Innovation alone cannot result into long-term success since it is not the end goal but rather the process through which entities can guarantee their future. However, greater success can be obtained from an innovation that directly relates to the core functions of a business since this helps towards the build-up of strategies that fully exploit the market advantages brought about by the innovation. This paper focuses on HelloFresh and its innovative approach towards food kit deliveries and how the strategy has ensured its success in the market.   

Background

HelloFresh was founded in 2011 with the thought of becoming a meal kit provider which was still a new concept at the time (HelloFresh, 2019). Starting out by supplying close friends allowed the founders enough time to learn the basics of managing the supply chain in terms of seeking supplies and delivery the meal kits to their customers. One of the significant promises that users of the services hoped to get is avoiding the hustle that comes with deciding what meal to prepare and what portions are enough for a certain number of people. By using the service, the customers would be in a position of ensuring very minimal food wastages that come as a result of having bought too much of a particular product. Having the meal kits delivered to customer location would free them to undertake other chores hence increasing their efficiency.

The society has gravitated towards online shopping which allows speedy deliveries of purchases to customers in areas served by a particular company. HelloFresh employing a similar strategy placed the company in a favourable position as the concept of shopping for products online is quite a normal approach as to how business reach their customers (Chaffey, 2015). However, the company was more of a pioneer when it came to meal kits where they have expanded their offering to over ten countries. The philosophy of the company has been to enable people to cook their own meals with the least amount of hustle as through regardless of whether one is a vegetarian or not. The success of the company can be seen in its continued expansion into new markets which has led to not only increased sales volume but also better economies of scale when it comes to the sourcing of supplies (Furseth & Cuthebertson, 2016).

HelloFresh meal kit program operates on the basis of subscriptions where each meal is prepared and packaged according to the eating habits of a particular region or cuisine. The company takes it upon themselves to prepare the food and package it in a manner that all that remains is the cooking process. To make it easier for their customers, the company includes a recipe which is detailed enough for even a first time cook. The subscription model employed by HelloFresh has ensured that they are able to collect a huge volume of data which translates to better matching of meal contents to customer preferences (Helm, 2018). Moreover, the data is significant towards the management of the supply chain as products have to be sought in adequate volumes way before a customer places their order. The services is operated using three plans which includes Classic, Veggie and Family plan that helps ensure better coverage of potential market (HelloFresh, 2019).

Diffusion of innovation theory

The theory examines the flow of ideas within a social system where certain conditions tend to increase the likelihood of adoption. Innovations have to go through a process of review to determine how well they serve the need of a particular target group (Furseth & Cuthebertson, 2016). The sooner that such benefits become apparent the quicker the adoption given that people are always looking for ways to better their experiences. The adoption of an innovation means that people now will start doing things differently hence new behaviours tailored around the innovation will emerge (Johnson, et al., 2017). While online shopping had been in existence even before, there was no major player offering meal kit services which created an opportunity for the founders of HelloFresh. However, the process of adopting new innovations is gradual and it takes time to get everyone on board hence the need for companies to understand their target market expectations.

Adopter categories

Innovators- this refers to the people that are first in trying out a new invention. In the case of HelloFresh, this include family and friends who were eager to try the new service that was being offered. Given their knowledge of each other and the relationship they shared, they did not require much convincing to be interested in the project. This illustrates how people react to innovations that come from sources they are already familiar with whereby the familiarity encourages them to take risks (Antonelli, 2006). In addition, they are more likely to overlook initial shortcomings of the service offered since through the relationship shared they assume they are invested in the whole process. This group is critical to the success of an innovation since it allows the originators of the idea to work on improving their offering in an environment with much less pressure.

Early adopters- this refers to people who are among the initial adopters of an innovation. However, they have no direct relationship with the originators of the product and tend to rely on their opinion in order to make decide whether to support an idea or not. The major characteristics of this group is that they embrace opportunities that are likely to result in a change within their immediate environment (Johnson, et al., 2017). HelloFresh presented an idea that was new to the market and hence was guaranteed the support of early adopters given their comfort towards adopting new ideas. One of the ways that the company was able to appeal to this group includes the provision of recipes with their meal kits which eased their understanding of the benefits of the new concept. The company continues to provide recipes with its products hence even those who are just curious about certain dishes have an opportunity of trying them out.

Early majority- this refers to people who adopt new innovation s only after they are certain that there is some evidence that they actually do work. The segment includes people who will not be among the leading group but will make the decision to adopt a particular innovation before the average consumer in the target market (Chaffey, 2015). This represents an important segment during the expansion of a company through the adoption of an innovation as it serves as testing grounds on how services can be scaled up as more people become regular users of the company’s offering. HelloFresh had to rely on this segment to ensure that they could effectively plan the amount of a particular produce that would be required and in what form. In addition, the increased numbers ensure greater accuracy in estimation of quantities through data analysis from existing customers.

Late majority- this refers to people who are sceptical of a particular innovation hence show no hurry towards its adoption (Johnson, et al., 2017). Companies have to be ready to encounter such people within their target market regardless of how promising the idea presents itself to other sectors. This group represents a significant portion of potential sales hence steps have to be taken to ensure that scepticism towards the idea is eliminated. One of the strategies that HelloFresh would have employed includes engaging in marketing strategies that indicate how other people are already using the services effectively (Helm, 2018). This group is largely waiting for the validation of the service from people who have already adopted it. This indicates the possibility of word of mouth being an effective tool where they can learn more about the idea from their peers. The perception that many other people are using the service successfully will instantaneously encourage them to adopt (Gloor, 2017).  

Laggards- this refers to people who share conservative views about change hence are less likely to adopt an idea that introduces too much change in their current way of life. The level of scepticism is much higher with this group where it is possible to find that such people hardly make online purchases (Chaffey, 2015). This means a company that wishes to include such individuals into their client list has to invest more in showing them the advantages of adopting their idea in addition to using other services. Effective strategies to be employed by a company such as HelloFresh with such a category includes using statistics to show them how much more efficient they would be able to manage their cooking by relying on meal kits. Other strategies include the use of fear appeal where they could be told the much they are losing for not joining the rest of the society in adopting the service.

Factors influencing adoption

Compatibility- this refers to how well the innovation is able to meet the expectations of potential customers consistently. As more people join the service, the workload increases on all fronts given that each expects a delivery to be made on time. The issue of compatibility will only be fully addressed if each time a customer places a meal kit order it is delivered in the right quality and quantity (Furseth & Cuthebertson, 2016). HelloFresh prides itself in maintaining a consistent experience for their customers through rigorous application of safety standards in handling and packaging food for their customers. This helps to guarantee that the experience that a customer gets from using their product remains the same or improves in successive purchases. For instance, new recipes are tested a minimum of 45 times to ensure consistency in customer experiences (HelloFresh, 2019).

Relative advantage- this factor refers to how better the innovation is compared to what is already available in the market. During its entry into the market, HelloFresh was a direct competitor to local grocery stores which have been in operation for long and people are already accustomed to doing their grocery shopping in such environment. In other cases, the some grocery stores enjoyed better brand recognition in the market thus hurting the competitiveness of HelloFresh. Therefore, the company had to work towards convincing the market that it was more worthwhile for them to buy pre-packaged meal kits and have the same delivered at their doorstep (Helm, 2018). Consumers would have no need of travelling to a physical grocery store hence saving on time and expense. In addition, the meal kits come in portions enough for the number of people to be fed hence minimizing chances of food wastage.

Triability- innovations that are focused on attracting a huge number of adopters should allow for initial experimentation before people can commit their support. This helps to eliminate any doubts as to whether the potential benefits and usability of an innovation can be enjoyed in reality (Antonelli, 2006). The experimentation phase is critical especially when the idea behind the invention is radical and very new to the target market. This becomes a deal breaker hence the company has to be really confident in what they are offering as poor outcomes at this stage would result in poor adoption of the innovation. HelloFresh offers the meal kits through subscriptions which are both long and short-term. In addition, one can easily opt out of a subscription or change the particulars of the meal kit within the subscribed period. This flexibility helps to ensure that more people can experiment with what is on offer and possibly become regular subscribers.   

Complexity- this refers to how complex an idea is to the average user. New innovations that are intended for the mass market should be easy to understand as this helps in clearing misconceptions about the potential benefits to adopters (Johnson, et al., 2017). An innovation that is too complex may also take long to be adopted as people will tend to choose less stressful options regardless of how promising it seems. The idea behind meal kits is simple on the notion that it is all about food portions with the only different being that groceries are delivered to ones doorstep. The concept of making online purchases or being a subscriber to an online service is not new hence the company faced no challenge in that area. In addition, the company website has adequate information on how the entire process operates hence further making it easier for their customers.

Observability- this refers to the indicators as to what extent the innovation has been effective as stated. Proper marketing can help prop up a product increasing its sales volume in a market where better substitutes exist but are poorly marketed. However, this may not be effective in the long run as consumers are bound to see the deficiencies and switch to the better substitutes. Among the tangible results that HelloFresh has includes the high number of meal kit deliveries at 54.7 million making the company the largest player in the market (Helm, 2018). This is an indication that the company has been able to fulfil their promise to the customer leading to expansion as more people adopt the new lifestyle. Food is a sensitive issue hence being able to sustain such high numbers is an indication that the company is fully committed to providing quality food and exemplary experience to their customers consistently.

How HelloFresh has disrupted the market

The main focus of HelloFresh founders was to ensure that the new model worked by starting small and now the concept is becoming mainstream in major markets. Similar to the approach employed by many innovations, the model had to be employed in small-scale so that the various aspects of its performance in the market could be experimented (Chaffey, 2015). The major competitor at this point were the grocery stores which offer the same products but unpackaged. As the business continued to become mainstream, it eroded the customer base of the grocery stores as certain sections of the customer base turned to purchasing their groups in meal kits online. The expansion of HelloFresh over the years has led more companies to enter into the meal market since it has been proven that the concept can work if well executed. However, complete substitution of grocery store shopping with online meal kit shopping may take long to attain.

Another way that HelloFresh disrupted the grocery industry is through the application of a model that the existing businesses had not tried. One of the features of the model include using a subscription based model for products and packaging the same into meal packs. Instead of customers picking one item at a time, the meal kits are a collection of all the items that one requires in preparing a particular meal (Helm, 2018). In addition, the meal kits are portioned in exact quantities enough to feed a definite number of people and depending on one’s lifestyle. Grocery stores on the other hand provide an array of products and it is up to the customer to determine based on their judgment the amount they need of each produce. This can easily lead to food loses which is avoided if one choses the meal kit option offered by companies such as HelloFresh.

The disruptive capacity of a firm can be seen with how successful it turns out in curving out a new market out of existing market scenario (Christensen, et al., 2015). However, even if the company would have faltered in terms of its financial performance its impact on the market would still be disruptive as the concept it introduced in the grocery industry was new. The fact that the company has been successful leading to the emergence of competitors employing similar models in the market such as Blue Apron is an indication of the applicability of the innovation (Helm, 2018). The company was able to survive through its initial stages of expansion while competing against established brands in the market. One of the ways that existing grocery store could respond to this disruption would be to start operating their own divisions of online meal kit products (Chaffey, 2015). This will help them tap into the potential of the industry without going through the pains of the originator of the ideas.

HelloFresh is currently expanding its operations as indicated by its recent acquisition of Green Chef which is commonly known for its organic and gluten free meal kits. This acquisition helps position the company well especially in the US against competitors such as Blue Apron (Helm, 2018). Moreover, this indicates that the company is cautiously looking into the overall call for changes in lifestyle given the types of food that people choose to consume. Price remains a huge factor as to various products will be priced hence it is expected that meal kits associated with organic food choices would continue to cost more until another change occurs in the industry mainly in regards to the actual food production. This deal helps HelloFresh to attract a more diverse client base as the two companies become more integrated. Given that Green Chef is certified as an organic food company, then HelloFresh stands to continue exerting its leadership in the market. 

Conclusion

The diffusion of an innovation in the society to the point where it is adopted and becomes mainstream determines the strength and applicability of an idea. Disruption on its own cannot provide the full picture as to the reasons behind the successful operations of a particular company. There exists numerous factors both in the society and personal level such as founder’s leadership style that helps towards steering the company towards a particular goal (Gloor, 2017). Companies have to always be on the lookout for new innovations without necessarily having to abandon their existing successful operations. This helps to guard such companies against the undetermined nature of the adoption rate of new technology while ensuring that of the innovations are successful, they too get a share of the new market. HelloFresh is on the right path of conquering the mainstream grocery market without necessarily seeking for its replacement. The complete replacement of the old model can only occur in the event where there is an intersection between the disruptive innovation and the mainstream market needs.         

Bibliography

Antonelli, C., 2006. The economics of innovation : new technologies and structural change. London: Routledge.

Chaffey, D., 2015. Digital business and e-commerce management : strategy, implementation and practice. 6th ed. England: Harlow.

Christensen, C. M., Raynor, M. E. & McDonald, R., 2015. What Is Disruptive Innovation?. [Online]
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Furseth, P. I. & Cuthebertson, R., 2016. Innovation in an advanced consumer society : value-driven service innovation. 1st ed. Oxford: Oxford University Press.

Gloor, P. A., 2017. Swarm Leadership and the Collective Mind: Using Collaborative Innovation Networks to Build a Better Business. United Kingdom: Emerald Publishing.

HelloFresh, 2019. HelloFresh: Our Story. [Online]
Available at: https://www.hellofreshgroup.com/websites/hellofresh/English/140/our-story.html
[Accessed 20 June 2019].

Helm, B., 2018. The World’s Most Ruthless Food Startup: The Inside Story of How HelloFresh Clawed Its Way to the Top. [Online]
Available at: https://www.inc.com/magazine/201808/burt-helm/hellofresh.html
[Accessed 20 June 2019].

Johnson, G. et al., 2017. Exploring strategy: text and cases. 11th ed. London: Pearson.

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