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Reed supermarkets - Rohan Joseph design

Group C team
by

Rohan Joseph

on 18 May 2014

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Transcript of Reed supermarkets - Rohan Joseph design

A New Wave of Competitors
Walid Yaqoobi
Laura Andujar
Giovanna Llenas Porcella
Rohan Joseph

Background
Established in 1939 by William H Reed. in Kalamazoo, Michigan
Grew to over 192 retail stores and 2 regional distribution centers in the Midwestern United States by 2010
21000 employees
Well known for its quality of its produce and emphasis on organic produce
High end supermarket with products ranging from seafood, imported goods to prepared entrees
Decline in market position due to high competition, its diversified marketing strategies
Customers become more price sensitive and less loyal

U.S. Food Retailing Industry - 2010
Average American annual expenditure on grocery items - $5200
2 supermarkets trips weekly
Definition of customer loyalty changed - Loyal weekly shopper replaced by savvy consumer with several different stores for the best deals
Growth of private label merchandise
Growth of pet and health food stores due to rising trend of pet lovers and health conscious Americans.
Increase in warehouse clubs, supercenters and specialty stores
50 largest U.S companies with 70% of revenue generation

SWOT Analysis
Strengths

Highest market position
Strong brand value
Large assortment of products, prepared entrees and imported varieties
Elegant and attractive stores
Attentive customer service
Opportunities

Potential revival of economy
Expansion into new areas – pet and health product lines
Enter into private label merchandise
E-commerce
Social media
Weaknesses

Limited store presence
Small store size
Lack of private label merchandise
Limited focus on pet and health products
Threats

New firms and branches entering the market
Increased pressure on prices
Cherry picking customer
First generation competition
Supercenters
Large discount department stores with general merchandise and grocery stocks
Spread over 70000 square foot
Convenient one stop shopping for multiple needs
Example: Walmart and Target

Warehouse clubs
Airport hangers like centers with merchandise straight from the manufacturer packing crates
Retail prices – 20% below conventional supermarkets
Bulk packed (6 boxes of pasta or six cans of beer)
Caters to middle and large size families
Example: Costco and Sam’s club

Second generation competition
Dollar stores
Packaged food, housewares, clothing, seasonal items priced at $1 per unit or low dollar multiples.
33000 dollar stores in the U.S
Maintained net margins of 8%
Examples: Dollar General, Dollar tree and Family Dollar


Limited selection stores
Stores with specialization in private label food items
Limited inventory of 1500 products per store
Highest sales per square foot of grocery chain in America
Emphasis on imported and specialty food items
Example: Trader Joe’s

Market research
Understanding market, customer behavior, trends, segmentation and special dollar campaign
Agenda
Dollar special campaign
Recommendations
Mission
To combat its high priced image among customers and improve market share
Offers dramatic discounts on 250 products each week
Focus of print, broadcast and online advertising
Reinforce store loyalty among regular customers
Commitment to low prices, private label brands and double coupons
To increase profits and market share in the long run
Competitors
Reed Supermarkets
Columbus market share
Action plan
Market segmentation
Raise the bar on by reinventing the shopping experience — better quality goods, a spectacular abundance of choice, restaurant-quality prepared foods, beautiful stores and displays and a nearly telepathic level of customer service. Reed must increase its offerings by providing more customer convenience options.

Market Cafés
Bakery
Deli & Cheese Shop
Nature Marketplace
Food from around the world
Private label merchandise
Pet and health food aisles
E-commerce
Social Media – Facebook, Twitter, eNewsletter

Marketing strategy
Differentiated market strategy is the most effective strategy to achieve its target of 16% market share by placing its focus and research on the huge and diverse U.S population.

Pricing: Higher pricing in affluent areas will cultivate its brand image of high quality. In middle class areas pricing the products below that of the competition to lure customers
Products and Services: Conduct market research on the local populace and study their tastes and requirements.
Convenience: Emphasize the location convenience to set business apart from the competition by reducing the time it takes for customers to get in and out.
Customer expertise: Past experiences from shoppers of different backgrounds with give the business an advantage to make buying decisions for potential shoppers therefore improving customer loyalty

Thank you
Any questions?
Customer perception
Price Index
Email survey of 400 Columbus customers
Quality Index
Survey of 250 Columbus non customers
Growing Trends
Pet industry
Billion dollar pet industry
High increase in ownership of pets in the U.S
20% higher than average among Reed shoppers
Increase in regular and organic pet foods aisles and stores
Health food industry
Private label merchandise
Achieve market share of 16% by 2011
Understand customer feedback
Study popular customer trends
Make target segmentation
Impact of dollar special campaign
Devise action plan
Prepare necessary marketing strategy

Financial Impact
Discontinue the dollar special campaign
Steep decline in net profits margins
Unsustainable financial model
Detract from quality image
Confuse affluent Reed consumers

Focus on reinforcing the range and quality of the products
Emphasis on quality and services in operations and advertising
American consumers have become more health conscious
Expansion of health and organic departments
Billion dollar industry with high growth
Private label foods accounts for 17% of total food and beverages sales up from 14% in 2005
Effective marketing sheds the low quality image
Quality as good as name brands
Costs lower than name brands
Full transcript