Hi value Market Case
Kelsey Carpenter
MKT 520
Hi Value Supermarket Case
March 20, 2014
Hi-Value Supermarkets
Competitive Environment
- Market shares change a lot
- 3 Hi-Value stores compared to only one each of competitor stores in area
- 30% of shopper say that Hi Value is overpriced
- Centralia trade area had total retail sales of $725 million in 2002
- There are 20 establishments in Centralia that sell food and beverages
- Competitors drew their customers from larger areas outside of Centralia
Positioning
- Rank high in cleanliness and convenience
- Shoppers go there 3-5 times a week
- Less than 1/3 of shoppers purchase majority of food there
- Shoppers go more frequently, but not buying more
- Shoppers go to Harrison’s for meat/produce
- Shoppers are buying less per visit
The Problem
- Hi Value’s prices are higher tan the competition at a time of growing price consciousness, and the price differential could cause them to lose market share.
- Prices are 10% higher than Harrison
- Prices are 7% higher than Grand American and Missouri Mart
- Company growth rate = .53%
- Advertising budget is .89% of sales compared to competitors 1.0% of sales
- Should they adopt an everyday low pricing strategy?
SWOT Analysis
APPENDIX I
Pros & Cons of Everyday Low Pricing
APPENDIX II
Pros & Cons of Price Reductions
APPENDIX III
Advertising
APPENDIX IV
Calculations
APPENDIX V
Options
1. Do nothing (Don’t implement Every Day Low Pricing)
2. Lower the prices across the board
3. Lower prices in certain categories
Recommendations
I believe that Hi Value needs to increase their market share. Their original advertising was .89% of sales. Missouri Mart and Harrison’s are 1% of sales. By saving on operating costs due to everyday low pricing, Hi Value can increase their advertising to 1.1% of sales. I would recommend a 7% pricing reduction for groceries and general merchandise. With that price reduction, you
MKT 520
Hi Value Supermarket Case
March 20, 2014
Hi-Value Supermarkets
Competitive Environment
- Market shares change a lot
- 3 Hi-Value stores compared to only one each of competitor stores in area
- 30% of shopper say that Hi Value is overpriced
- Centralia trade area had total retail sales of $725 million in 2002
- There are 20 establishments in Centralia that sell food and beverages
- Competitors drew their customers from larger areas outside of Centralia
Positioning
- Rank high in cleanliness and convenience
- Shoppers go there 3-5 times a week
- Less than 1/3 of shoppers purchase majority of food there
- Shoppers go more frequently, but not buying more
- Shoppers go to Harrison’s for meat/produce
- Shoppers are buying less per visit
The Problem
- Hi Value’s prices are higher tan the competition at a time of growing price consciousness, and the price differential could cause them to lose market share.
- Prices are 10% higher than Harrison
- Prices are 7% higher than Grand American and Missouri Mart
- Company growth rate = .53%
- Advertising budget is .89% of sales compared to competitors 1.0% of sales
- Should they adopt an everyday low pricing strategy?
SWOT Analysis
APPENDIX I
Pros & Cons of Everyday Low Pricing
APPENDIX II
Pros & Cons of Price Reductions
APPENDIX III
Advertising
APPENDIX IV
Calculations
APPENDIX V
Options
1. Do nothing (Don’t implement Every Day Low Pricing)
2. Lower the prices across the board
3. Lower prices in certain categories
Recommendations
I believe that Hi Value needs to increase their market share. Their original advertising was .89% of sales. Missouri Mart and Harrison’s are 1% of sales. By saving on operating costs due to everyday low pricing, Hi Value can increase their advertising to 1.1% of sales. I would recommend a 7% pricing reduction for groceries and general merchandise. With that price reduction, you