12. % OF TOTAL 2002 SALES OF $14,326,700
SUPERIORINFORMATION
GROCERY
50
%
52
%
PRODUCE
18%
19%
MEAT&
FISH
20
%
12%
GENERAL
MERCHANDISE
7%
8%
BAKERY
5%
9%
% OF TOTAL 2002 GROSS PROFIT MARGIN OF $4,127,522
14. Over 30% of
people feel that
Superior has
high prices
Customers place
importance on
1. Price
2. Quality
3. Convenience
Image
Disconnect:
“Superior
Supermarket =
Superior Value”
ConsumerResearch
15. 33.8%:
Customers
aged 35-49
35%
Visit 2x a
week
77.9%
Regular
customers
for 3 years
of more
83.7%
Purchase
50% of
food
from
Superior
36.9%
Shop
Grocery
Only
42.3%
Shop in
Dairy
CONSUMER SHOPPING PREFERENCES
16. Store Choice Determinants at
four major food stores (in descending order)
SUPERIOR GRAND
AMERICAN
MISSOURI
MART
HARRISON’S
1.PRICE High prices More reasonable
than Superior
Reasonable Best overall
reasonable prices.
2.MEAT
QUALITY
Poor Poor Lowest quality Best quality/variety
3.QUALITY,
VARIETY,
DISPLAY
Best Shopping
Convenience
Out of stock
items. Best store
layout
Offers greatest
variety
“the produce store”
(highest
quality/variety)
4.SHOPPING
CONVENIENCE
Best shopping
convenience
Less Convenient Poor Service best quality service
17. Situational Analysis
• EVERYDAY LOW PRICING:
• 1. Superior’s Prices high, higher consumer price awareness
• 2. Risk of loss in Superior’s Market Share
Randall
Johnson
• Everyday Low Pricing success mixed, Strategy works better as a
broader store positioning strategy, supported with Advertising.
• Not necessary to be lowest priced Supermarket in trade area
• ELP must be used in all trade area stores to prevent image/positioning
confusion.
VP of Retail
Operations/
James Ellis
• EVERYDAY LOW PRICING – POTENTIAL TO REDUCE
OPERATING COSTS:
• 1. Reduction in Inventory/Handling Costs
• 2. Reduction in Labor Costs
Controller for
Superior
19. SWOTANALYSIS
STRENGTHS
Over 30 years of experience
Higher quality of products
3 Convenient Locations
More stores in operation
2002 Gross Margin above Industry
average
26. SWOT Summary
Superior Supermarket, with over 30 yrs of experience, is the 2nd
largest market share holder (23%), among its competitors. It has 3
conveniently situated store locations in Centralia. It offers high quality
products and great shopping convenience.
On the downside, Superior has a smaller store size in comparison to
its competitors and offers a smaller variety at higher prices.
Many opportunities are available to Superior for purpose of
increasing profit margin. Superior can look to expand store size, offer
greater variety, increase the number of Centralia shoppers, improve
store displays, and change the Pricing Strategy.
Superior Supermarket faces the following threats : loss in market
share if pricing strategy is not changed, loss in current customers,
lower prices at competitor stores, and an increase in price awareness
among customer base.
27. Options to consider (if ELP is
implemented):
Few shoppers had specific product or brand price
awareness (Usually, Category dependent).
“Should this Strategy be implemented across-the-
board (for all products) or just certain categories of
products?”
“How much should the prices be lowered?”
28. Superior Current Pricing
% of Sales Sales GPM Gross Profit Cost of Goods Sold
Centalia Stores 100% 14,236,700.00$ 28.8% 4,101,593.27$ 10,135,106.73$
Grocery 50% 7,118,350.00$ 30.0% 2,135,505.00$ 4,982,845.00$
Fresh Meat 20% 2,847,340.00$ 18.0% 512,521.20$ 2,334,818.80$
Produce 18% 2,562,606.00$ 30.0% 768,781.80$ 1,793,824.20$
Gen MDSE 7% 996,569.00$ 33.0% 328,867.77$ 667,701.23$
Bakery 5% 711,835.00$ 50.0% 355,917.50$ 355,917.50$
4,101,593.27$ 10,135,106.73$
Current Pricing Structure
29. Lower Price On General MDSE
and Grocery
Sales COGS Profit
Current 7,118,350.00$ 4,982,845.00$ 2,135,505.00$
GPM 30.00%
Lower 7 % 6,620,065.50$ 4,982,845.00$ 1,637,220.50$
GPM 24.73%
Need to Match 8,634,868.04$ 6,499,363.04$ 2,135,505.00$
GPM 24.73%
Grocery
Sales COGS Profit
Current 996,569.00$ 667,701.23$ 328,867.77$
GPM 33.00%
Lower 7 % 926,809.17$ 667701.23 259,107.94$
GPM 27.96%
Need to Match 1,176,334.72$ 847,466.95$ 328,867.77$
GPM 27.96%
General MDSE
•Must increase sales of General
MDSE by 18% to achieve same
Gross Profit
•Must Increase sales of Grocery’s
by 21.3% to attain same gross
profit.
30. New Pricing Structure
Lowers cost of General MDSE and Grocery 7%
Lowers GPM to 25.85% from 28.8% for the store and
gross profit to $3,533,548 from $4,101,593.
To retain same gross profit, stores must achieve Sales
of 15,866,898, and increase of 11.5%
% of Sales Sales GPM Gross Profit Cost of Goods Sold
Grocery 48% 6,620,065.50$ 25% 1,637,220.50$ 4,982,845.00$
Fresh Meat 21% 2,847,340.00$ 18% 512,521.20$ 2,334,818.80$
Produce 19% 2,562,606.00$ 30% 768,781.80$ 1,793,824.20$
Gen MDSE 7% 926809.17 28% 259,107.94$ 667,701.23$
Bakery 5% 711,835.00$ 50% 355,917.50$ 355,917.50$
Centralia Stores 100% 13,668,655.67$ 25.85% 3,533,548.94$ 10,135,106.73$
Lower prices in grocery and general--7%
31. Lower all Prices
Lowers GPM to 23.45% from 28.8% and lowers Gross
Profit to $3,105,024 from $4,101,593.
To Retain Gross Profit, stores must achieve sales of
17,489,599 or a 22.8% increase
% of Sales Revenue Gross Profit Cost of Goods Sold
Grocery 50% 6,620,065.50$ 25% 1,637,220.50$ 4,982,845.00$
Fresh Meat 20% 2,648,026.20$ 12% 313,207.40$ 2,334,818.80$
Produce 18% 2,383,223.58$ 25% 589,399.38$ 1,793,824.20$
Gen MDSE 7% 926,809.17$ 28% 259,107.94$ 667,701.23$
Bakery 5% 662,006.55$ 46% 306,089.05$ 355,917.50$
Centralia Stores 100% 13,240,131.00$ 23.45% 3,105,024.27$ 10,135,106.73$
Lower All Prices--7%
33. Do Nothing
Superior is already positioned well in Centralia
market.
Superior Value
Consistent year over year growth over past three years.
Instead focus should be on quality control.
Customers have seen differences in departments as far as
quality in the three different stores.
Need to provide same product at all three locations.
Notas do Editor
1. Price – most important store choice determinant
2. Meat Quality – Quality/display of meat, department cleanliness, and reasonable bargains
3. Produce quality, variety, and display - determine a quality store image
4. Shopping Convenience – ease of getting into and out of store lots, quick checkout, carryout service, well-stocked and orderly shelves, closeness to home/work and helpful store personnel.
