Reed supermarket case
Action Plan for Reed’s Growth
Background: Meredith Collins, VP of Marketing, Reed, needs a plan for 2011 to execute togrow its current market share from 14% to 16%. Margins for error are negligible as competition has intensified in every segment and current economic conditions aren’t looking good.
Recommendations for Growth:
1. Stop the dollar special for each week: 1st step is to stop the dollar special promotion immediately. This is not consistent with the brand equity and positioning built over the years.
It’s resulting in net operating loss of 76% on each discounted item and overall decreased the net operating profit for 2010 to 0.4% only (details in justification). Moreover, this promotional activity is polluting the message for regular consumers, considering that some of the dollar stores are located nearby.
2. Increase Sales Target: To increase the current market share to 16%, sales target is set to775Mn for 2011. It’s an increase of 95Mn. from 2010, on the assumption that total marketsize (4.74Bn) remains same.
3. Focus and Maintain current Target Segment and Increase the Wallet Share: Continue focusing on the current target segment of affluent and older customers with smaller household size. Their wallet share is 8.93% only as compared to average supermarket customer’s wallet share of 10.0% (details in justification). Wallet share of Reed customers will be increased by at least 1% which will result in additional revenue of 79Mn/year.
4. Maintain current Brand Positioning: Maintain current brand positioning by serving to highend of customers with good and specialised quality of products (like sea food and organic).Continue leveraging on better customer experience by providing attentive staff, shortercheck out times, and opening stores for long hours, with clean and better lit lay outs. This will able to defend the competition from Delfina, Whole Foods Market and Galaxy and Top Val.
5. Improve Product Mix: Improve the product mix by introducing
Background: Meredith Collins, VP of Marketing, Reed, needs a plan for 2011 to execute togrow its current market share from 14% to 16%. Margins for error are negligible as competition has intensified in every segment and current economic conditions aren’t looking good.
Recommendations for Growth:
1. Stop the dollar special for each week: 1st step is to stop the dollar special promotion immediately. This is not consistent with the brand equity and positioning built over the years.
It’s resulting in net operating loss of 76% on each discounted item and overall decreased the net operating profit for 2010 to 0.4% only (details in justification). Moreover, this promotional activity is polluting the message for regular consumers, considering that some of the dollar stores are located nearby.
2. Increase Sales Target: To increase the current market share to 16%, sales target is set to775Mn for 2011. It’s an increase of 95Mn. from 2010, on the assumption that total marketsize (4.74Bn) remains same.
3. Focus and Maintain current Target Segment and Increase the Wallet Share: Continue focusing on the current target segment of affluent and older customers with smaller household size. Their wallet share is 8.93% only as compared to average supermarket customer’s wallet share of 10.0% (details in justification). Wallet share of Reed customers will be increased by at least 1% which will result in additional revenue of 79Mn/year.
4. Maintain current Brand Positioning: Maintain current brand positioning by serving to highend of customers with good and specialised quality of products (like sea food and organic).Continue leveraging on better customer experience by providing attentive staff, shortercheck out times, and opening stores for long hours, with clean and better lit lay outs. This will able to defend the competition from Delfina, Whole Foods Market and Galaxy and Top Val.
5. Improve Product Mix: Improve the product mix by introducing