Superior Supermarkets Bilal Khan 101647863
Marketing - Master of Management 78-614
Odette School of Business, University of Windsor
TITLE OF CASE: Superior Supermarkets. _"Everyday Low Pricing"_
KEY PERSON AND HIS / HER POSITION IN THE ORGANIZATION:
James Ellis Senior V.P at Hall Consolidated and President of Superior Markets
KEY ISSUE OR DECISION THAT MUST BE MADE: Should Superior Supermarkets implement the everyday low pricing strategy? If so, should this strategy be adopted across-the-board for all products or just certain categories?
BASIC FACTS OF THE CASE:
Superior Markets is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall Consolidated was formed in 1959 and initially included a number of wholesale food operations and produce companies. The Superior Supermaket chain was acquired in 1975. Superior operates conventional supermarkets in trade areas that serve small cities and towns in the South Central United States.
Centralia is the primary trade area in Scott County, which is located in central Missouri. Four grocery chain stores accounted for 85% of all food sales in Centralia in 2002. Three of the chains - Harrison's, Grand American, and Missouri Mart - operated one store in Centralia, and Superior Supermakets operated three.
Sales in the three Superior stores were divided as follows: grocery (50%), fresh meat, poultry and seafood (20%), produce (18%), seasonal and general merchandise (7%), bakery and deli (5%). Company officials believed that Superior stores offered a more limited variety of merchandise than the major competitors but that Superior carried high-quality merchandise, particularly in grocery items and produce.
In mid-2002, Hall commissioned an independent marketing research firm to conduct a series of studies for the Superior stores in Centralia. The first study consisted of a telephone survey of 400 Centralia residents, who were asked to comment on the principal strengths of the Superior stores, Missouri Mart, Grand America, and Harrison's. More than 30% of the interviewers considered Superior's prices "above average." In contrast some 20% of the respondents thought the prices at Missouri Mart and Grand America were below average. Harrison's was thought to have the lowest everyday prices.
The four major aspects that determined store choice were Price, meat, Produce and Shopping convenience. Superior appears to be the winner on shopping convenience. Focus group participants from all parts of Centralia considered Superior to be a good neighborhood store. The "Superior Supermarkets = Superior Value" advertising was questioned given the perceived higher grocery, meat and produce prices.
In a second study involving personal interviews shoppers emphasized that lower prices and greater variety were needed. Appearance and cleanliness, friendliness, service and convenient to home or work were liked most by shoppers.
James Ellis has several options and several decisions he would have to make in regards to the implementation of the Everyday Low Pricing strategy. If the strategy is implemented James Ellis will have to make decisions regarding some key issues:
A. Should we aim to be the lowest priced supermarket in the trade area?
B. Should everyday low pricing be used by all stores in the trade area?
C. Should the everyday low pricing strategy be adopted across-the-board
for all our products or just certain categories?
YOUR CHOSEN ALTERNATIVE:
After reviewing the available consumer research and determining that Superior could lose market share in Centralia due to the price differential, I would suggest that James Ellis implement the everyday low pricing strategy. The pricing strategy should be implemented as part of a broader store positioning strategy and supported with advertising. It would also be advisable for Superior to conduct further market research and determine exactly how price...
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