Hi-Value Supermarkets- Everyday Low Pricing
MKT 601 Section 51
Professor Ivan Vernon
April 11, 2014
I. Factual Summary
Hi-Value Supermarkets became a division of Hall Consolidated, a privately owned wholesaler and retail food distributor in 1975. Hi-Value Supermarkets is considered to be the smallest of the three supermarkets chains owned by Hall Consolidated, with a small store distribution for its category. Hi-Value was the number one or two ranked supermarket chain in each of its trade markets (as measured by market share).
Hi-Value is known as “most convenient”, having three stores in Centralia compared to its top competitors only having one each. Hi- Values three are major competitors are: Harrison’s, Grand American, and Missouri Mart. The three major competitors in Centralia contain stores all subsequently larger in size than those of Hi-Value. The four major supermarkets in Centralia make up 85% of all food sales, with the remaining 15% stemming from smaller, independent grocery stores and convenience stores. All 3 major competitors contain a feature attributes and a unique position in the market. With Hi-Value having three locations in Centralia, it puts them at an advantage for convenience that the competition cannot duplicate without having the funds or other resources to do so.
Although Hi-Value Supermarkets offer the highest level of convenience, there prices are overall are the highest as well. Residents of Centralia prefer lower prices because according to the U.S. Census held in 2000, the median income was 36,000. It is understood that price is the most important store determinant for the residents, which poses a problem for Hi-Value. The major question described in the case is whether or not Hi-Value should implement a low-pricing strategy. With the examination of Hi-Value’s current situation, it is evident that their future falls in between several courses of action that executives must examine and choose whether or not to integrate them. This process must be done in order to maintain a strong position in their served market and prosperous future.
II. Case Problem/Opportunity
Hi Values main problems are that they lack strong customer image and are highly priced. Each of the local supermarkets in the Centralia area has an image. Harrisons has an extremely favorable image. They are well managed, clean, orderly, and attractive, and the store is conveniently located along with excellent parking. Grand American is the most modern store in Centralia and has a highly regarded dairy department. Contrarily, they have a modest variety in meats, and produce and offer double coupons. Missouri Marts primary merchandising strength is in groceries and special purchase displays, but its store lacks quality and freshness. Hi-Value has multiple locations but has highly priced merchandise. A supermarket interview was conducted to give customers an opportunity to share their overall thoughts and experience they had when shopping at local supermarkets in Centralia. The questions were asked based upon the characteristics each store had to offer. The number one concern customers had with Hi Value was “price”. At the time Hi-Values prices ran 10 percent above Harrison’s, and 7 percent above Missouri Mart and Grand American. Although Hi-Value is recognized for its store convenience it lacks a top ranking sales item that sets it aside from other supermarkets in the area. Since Hi- Values reputation is not where management expected, Hi-Value Supermarket is reviewing whether or not it would be a good business decision to incorporate an everyday low pricing strategy to stay competitive with the other supermarkets in the area marketing tactic. The most important opportunity for Hi-Value Supermarkets is the growing price consciousness Centralia shoppers are becoming. The increase on price elastic customers should be carefully taken into consideration...
Please join StudyMode to read the full document