Superior Supermarkets
PROBLEM STATEMENT
Superior Supermarkets (SS) must decide whether or not to pursue an everyday low pricing (ELP) strategy at its three Centralia MO locations.
Strategic Issues & Marketing Mix
Pricing: Current prices are reflective of a high-end branding strategy. SS everyday (non-promotional) prices are approximately 10% higher than Harrison (Hr) and about 7 percent higher than Grand American (GA) and Missouri Mart (MM). Subsequently, higher prices have become a competitive concern due to their declining market share in Centralia. The negative growth rate, based on 1995 to 2002 figures from Figure 2, is -0.53%.
Product line: SS are supermarket stores. The stores’ products may be divided into 5 categories: 1) grocery (including diary); 2) fresh meat/poultry/seafood; 3) produce; 4) seasonal and general merchandise; and 5) bakery and deli.
Promotion: The 2002 advertising budget was 0.89% of sales revenue, or $127,500. Competitors spent an estimated 1.0% of their sales revenue. If ELP is adopted, SS would increase the advertising budget (discussed later).
Location: SS’s three locations (North Fairview, West Main and South Prospect) provide a competitive advantage. As cited by the VP of Operations: “we offer greater convenience of shopping with our three stores and that is worth something (implying higher prices)”. Further evidence is indicated in Exhibit 6 customer survey ranking “most convenient”: SS -35%, MM -25%, Hr -21%, and GA -18%.
Goals & Objectives
1. Increase market share in Centralia.
2. Maintain contribution margin while offering an expanded selection of loss leaders.
3. Understand customer needs to improve consumer image of and experience with SS.
4. Develop an advertising campaign commensurate to objectives 1-3.
Concerns & Constraints
1) Concern1: SS relatively higher prices and the growing price consciousness among Centralia shoppers.
2) Concern2: Loss in market share in Centralia “since store sales were below budgeted levels in the
Superior Supermarkets (SS) must decide whether or not to pursue an everyday low pricing (ELP) strategy at its three Centralia MO locations.
Strategic Issues & Marketing Mix
Pricing: Current prices are reflective of a high-end branding strategy. SS everyday (non-promotional) prices are approximately 10% higher than Harrison (Hr) and about 7 percent higher than Grand American (GA) and Missouri Mart (MM). Subsequently, higher prices have become a competitive concern due to their declining market share in Centralia. The negative growth rate, based on 1995 to 2002 figures from Figure 2, is -0.53%.
Product line: SS are supermarket stores. The stores’ products may be divided into 5 categories: 1) grocery (including diary); 2) fresh meat/poultry/seafood; 3) produce; 4) seasonal and general merchandise; and 5) bakery and deli.
Promotion: The 2002 advertising budget was 0.89% of sales revenue, or $127,500. Competitors spent an estimated 1.0% of their sales revenue. If ELP is adopted, SS would increase the advertising budget (discussed later).
Location: SS’s three locations (North Fairview, West Main and South Prospect) provide a competitive advantage. As cited by the VP of Operations: “we offer greater convenience of shopping with our three stores and that is worth something (implying higher prices)”. Further evidence is indicated in Exhibit 6 customer survey ranking “most convenient”: SS -35%, MM -25%, Hr -21%, and GA -18%.
Goals & Objectives
1. Increase market share in Centralia.
2. Maintain contribution margin while offering an expanded selection of loss leaders.
3. Understand customer needs to improve consumer image of and experience with SS.
4. Develop an advertising campaign commensurate to objectives 1-3.
Concerns & Constraints
1) Concern1: SS relatively higher prices and the growing price consciousness among Centralia shoppers.
2) Concern2: Loss in market share in Centralia “since store sales were below budgeted levels in the