Superior Supermarkets

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Case Brief: Superior Supermarkets

Short Brief: Superior Supermarkets
MKT 5023
The University of Texas San Antonio
 
          I.     Major Issue
The major issue presented in the Superior Supermarkets case study is: Should Superior Supermarkets adopt an “Everyday Low Price” pricing strategy?  
        II.     Alternative Courses
Maintain Current Pricing Strategy
                                               i.     Advantages 1. No New Training or Advertising Adjustments Needed
2. Maintains Current Profit Margins (High Margin)
3. Avoids a Possible Pricing War with Competitors
                                             ii.     Disadvantages 1. Potential Loss in Market Share to Lower Priced Competitors 2. Does Not Address Issue of Stagnating Sales
3. Shoppers are Becoming More Price Conscious
iii.     Quantitative Notes:
1. Current Sales and Market Share trends indicate stagnation and decline. Adopt an “Everyday Low Price” Strategy For All Products/Stores                                                i.     Advantages 1. Makes Superior More Price Competitive in the Market

2. Could Potentially Reduce Operating Costs
3. Demand Could Become More Predictable
4. Eliminates Need for Temporary/Varied Price Reductions
                                             ii.     Disadvantages 1. Reduces Gross Margin Percentage/Profit Margins
2. May Start a Price War with Competitors
3. Could Be Confused as a Reduction in Quality of Products 4. Requires Additional Advertising to Get The Word Out
iii.     Quantitative Notes
1. Reducing Prices by 10% will require an increase in sales of around 47% and a 12% gain of market share to maintain the current level of contribution margin. 2. Reducing Prices by 7% will require an increase in sales of around 27% and a 7% gain of market share to maintain the current level of contribution margin. Adopt an “Everyday Low Price” Strategy for Specific Products/Stores...
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