Superior Market Case Analysis

Case Recap In early April 2003, James Ellis, the President of Superior Supermarkets, met with company executives to discuss the ability to adopt an everyday low price (EDLP) strategy for Superior Supermarkets in Centralia and Missouri. Superior Supermarkets is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall distributes food and related products to some 150 company-owned supermarket units and about 1,100 independent grocery stores in the U.S. through 12 wholesale distribution centers. Hall’s sales in 2002 were $2.3 billion. Superior is the smallest of the three supermarket chains owned by Hall, with sales of $192.2 million in 2002. Superior serves small towns in the South Central U.S., and is number one or two by market share in each of its trade markets. Sales of the three Centralia stores were $14,326,700 in 2002. Their gross profit margin was 28.8%, while the median for the U.S. grocery industry was 26.4%. Randall Johnson, the District Manager for the Centralia stores, has recommended that they implement everyday low pricing (ELP). The reasoning behind his desire to implement the ELP strategy is that Superior’s prices are higher than the competition at a time of growing price consciousness, and that the price differential could cause them to lose market share. Superior President James Ellis suggests that their recent consumer research should be studied to assist in the pricing decision. If the research suggests that an ELP strategy should be used, it would then be applied to all three of the Centralia stores. One company official suggests that the pricing strategy should be part of a broader store positioning strategy, and it should be supported with advertising. It is known Superior is does have the highest prices in the area. To the extent that price knowledge exists, it is thought to be category dependent. This adds a dimension to the ELP implementation decision, specifically whether ELP should be applied

References: Kerin, R. A. & Peterson, R. A. (2007). Strategic Marketing Problems. New Jersey: Pearson Prentice Hall. http://www.cob.sjsu.edu