Please read the whole case to discuss in the class and answer the following questions in 1000 words. 1) Define the core issue or issues involved in the case. What is Reed’s position in the Columb

Case Study on Reed Supermarket

Case Study Reed Supermarket

Reed Supermarket is the one of the most leading supermarket in U.S which is facing sensitive competition and declined its share in its region Columbus, Ohio. Apart from other competing firm, it is facing huge fight to acquire a good market value among grocery retail stores is strong.

1. The Core issue or Issues and Reed’s Position in the Columbus Market

The core issue involved in the case is high prices offered by Reeds Supermarkets for its products, in comparison to its competitors. When Meredith Collins, the VP of Marketing for Reed Supermarkets, walked down the strip mall housing the Westgate Plaza branch of Reeds, she noticed more customers entering the doors of Dollar General (DG) than the Reed store. From her judgment, DG was performing well but not better than the Aldi stores. Although the store carried little food items as compared Reeds, still had remarkably low prices which put Reeds at a significant threat.

The high prices made Reed Supermarkets experience a modest decline in the Columbus market share in the past. It is for this reason that Collins had taken a leave from her home office in order to benchmark the shopping centers around there. The Columbus market was stable but had various grocery retailers who fought intensely for the share market. Three substantial supermarket chains and smaller regional chains dominated the metropolitan area of Columbus. However, the high prices on products adversely affected the market positioning of the Reeds supermarkets (Armstrong, Adam, Denize & Kotler, 2014). The position of Reeds in the Columbus market was challenging. Although the company grew and expanded its chain by establishing some new units every year, it had not established new ones in Columbus. The major problem of the company was high prices as perceived by most of its customers.

The US food retailing industry faced several customer trends which shaped the industry over the past decade. For instance, customer loyalty had dwindled significantly as traditional supermarkets could no longer depend on their loyal weekly shoppers. The customers had become savvy, and they shopped various stores and formats, as they searched for the best deals concerning product quality and prices. Additionally, the significant growth of superstore supermarkets and warehouses attracted bulk-buying budget customers, as low-priced product promotions and campaigns drew buyers to specific dollar stores, discount merchandisers and supermarkets.

Another critical issue is that consumers had become more conscious of health, and they preferred shopping in health-conscious stores such as Whole Foods. It also led to the development and expansion of organic and health departments or selections of products at conventional supermarkets such as the Reed.

1. Alternatives (Strategy or Significant Marketing Action) Decision-Makers May Select

Decision makers of Reeds may choose various alternatives (strategies or significant marketing actions) to handle positioning in the Columbus market. The alternatives include adding new stores, adopting an everyday low pricing model and commitment to increasing customer loyalty (Ryan & Jones, 2011).

Brad Johnson suggests that moving to an everyday low pricing model would help handle the market positioning threat in Columbus. He suggests that the adoption of more high-margin items such as prepared foods and fewer low-end products would help the company grow in every market.

Jane Wu, the operations director, suggests that the company should meet the Columbus market share threat head-on. She proposes on adopting a decision and action which improves the loyalty of the company’s customers (Gbadamosi, 2013). Jane acknowledges that most buyers do not shop with them due to high prices, and those who visit their stores complain of high prices and do not come back. She further suggests that the management should exhibit the company’s brands through the introduction of double couponing, expansion of private label brands and increasing low-priced specials. The management needs to focus much on its pricing model in order to attract customers and increase their brand loyalty (Ryan & Jones, 2011).

Finally, Reed CEO suggests to Collins that adding new stores is ideal for building up the company’s premium private labels and selections of organic produce which would position it for growth. The most prosperous customers in Columbus would get tired of huge boxes and picking their cans off pallets. He proposes that adding new stores in Columbus would help maintain the company’s share position and keep up the sales growth while generating sufficient profits to keep shareholders happy (Kotler & Armstrong, 2010).

1. Should Collins Continue The Dollar Specials Campaign?

Reed supermarkets should continue the dollar specials campaign. The campaign would help the company reinforce store loyalty among its regular customers, thus preventing them from shifting to their competitors. The dollar specials campaign would serve as a benchmark with which customers would make a comparison between the prices of Reed Supermarkets and that of its competing stores. As a result, Reed would attract more customers, both existing and new (Ryan & Jones, 2011).

As Ellen Ross suggests, the company should give the dollar specials program sufficient time. The program would help change the perception of customers that the company has higher prices, in comparison to other stores. As such, the campaign would keep the quality image of the company in the long-run. In addition to this, as Jane suggests, lowering prices would help improve and maintain customer loyalty. Continuing the dollar specials campaign can help reduce prices significantly and attract more customers to the company (Gbadamosi, 2013).

Reed competitors had established competitive branded products which created more pressure as they focused on promoting their products. Companies such as PepsiCo, General Mills and Nestle pressed supermarkets such as Reed to lower their prices to improve retention of customers. The unique dollar campaign is a vital program that would help Reed achieve reduced prices, enhance customer loyalty and generally improve organizational performance. The campaign would help the company increase its market share and maintain sustainable profit margins through the promotion of its branded products (Doyle, 2009).

1. Thorough Rationale for the Recommended Approach (The Best Alternative)

The best alternative for Reed Supermarkets to handle the Columbus market share threat is to adopt an everyday low pricing model as it would help the company grow in every market. Reed can achieve a low price model through the use of double coupons and trade discounts that allow customers to purchase products at much lower prices (Gbadamosi, 2013). The initiated dollar specials campaign is part of the company’s low pricing strategy. Lowering prices for its products would enable Reed to attract new customers and retain existing ones through improvement of brand loyalty. However, the company should accompany its reduced prices of product with improved quality, in order to enhance customer satisfaction. Satisfied customers would always recommend the company’s products to their friends, thus increasing the sales volume and generating more profits. Therefore, the low pricing model is the best alternative as it has long-term impacts on the company’s market share and financial performance (Doyle, 2009).

Appendix

High Quality

Low Price High Price

Low Quality

Perceptional Map for Reed Super Market

References

Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of Marketing. Melbourne, Australia: Pearson Australia.

Doyle, P. (2009). Value-based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value. Hoboken, NJ: John Wiley & Sons.

Gbadamosi, A. (2013). Principles of Marketing: A Value-Based Approach. London, United Kingdom: Macmillan International Higher Education.

Kotler, P., & Armstrong, G. (2010). Principles of Marketing. London, England: Pearson Education.

Ryan, D., & Jones, C. (2011). The Best Digital Marketing Campaigns in the World: Mastering the Art of Customer Engagement. London, England: Kogan Page Publishers.