Reed SupermarketProblem  • Sale is decreasing  • Threats from competitors are risingReasons  • Wrong strategy             ...
Reed SupermarketGoal14% => 16% market shareSolution•   Convenience•   High quality product•   Reinforce the brand image•  ...
Reed’s CompetitorsUpper End => High Threat• Supermarket• Limited Selection• Whole FoodLower End => Low Threat• Warehouse C...
Strength         Weakness Experience in                                        Improve                  Limited product pr...
Quality Index                                         Price Satisfaction            1.8        1.8                        ...
Marketing Strategy   16% of Market ShareMarket SegmentationProduct Differentiation Product Positioning Brand Reinforcement...
Market SegmentationPrimary focus:  • High-end customers  • Healthy concern consumers                 SOM 498 - Spring 2012...
Product DifferentiationHigh-end          Convenience                Private labeling     Dollar SpecialProducts          •...
Product DifferentiationHigh-end           Convenience               Increase Private     Prepare FoodsProducts           •...
Introduction of Private Labeling                            Columbus Market    $1 Million Marketing Plan = Increase Sales ...
SOM 498 - Spring 2012   12
Product PositioningMaintain the current product position• High quality products• Organic & natural products• Imported prod...
Brand Reinforcement Convenience High-Quality Product Customer Satisfaction
RecommandationsProducts:• National brands• Private labels• Prepared foodService offering:• Seasonal gifts• Food samples• S...
RecommandationsAdvertising:    “Be Good to Yourself”• Health and sport magazines• Social media• Smartphone applicationsWeb...
RecommandationsMembership programs:• Points shopping rewards• Gas reward cards• Birthday card/special occasion gifts for l...
Conclusion• Revenue growth  • Differentiation strategy  • Marketing campaign• Branding as  • High quality  • Convenience  ...
Thank You!   SOM 498 - Spring 2012   19
Threats           Competitors - low-end productsWalmart/ Target Costco/BJ’s                             Dollar General(one...
Threats   Major Competitors – High-end productsTrader Joe’s         Delfina                     WholeFood                 ...
Disadvantage to the “Dollar Special”                          ($ Millions)                           Dollar Special       ...
Profits Increase                     ($, Millions)                                 Estimated SalesTotal Sales             ...
Adding Prepared Foods                                    ($, Millions)                         2010           Worst Case S...
SOM 498 - Spring 2012                                              25     Retrived From: http://www.ralcorp.com/pdf/Ralcor...
RalcorpSOM 498 - Spring 2012   26
Private Brand Foods Have Had Impressive                        Long-Term Growth Rates                                     ...
Private-Brand Food Opportunity          SOM 498 - Spring 2012   28
Ralcorp Categories    SOM 498 - Spring 2012   29
Financial Overview          Increase Market Sharehttp://www.reedsinc.com/ir/pdfs/12-711%20REEDS%20Dec%202011%20Investor%20...
Gas Price in Columbus, OH                                                                                Date             ...
Columbus market                                        ColumbusComparing to   Median               Population      Unemplo...
Total sales change 2005-2010      SOM 498 - Spring 2012   33
Quality Index          9.0          8.5                   8.4                     8.4                8.3          8.0     ...
Price Index        9.0                                         7.7                      7.9        8.0        7.0         ...
United States Organic Food Market Value & Value Forecast: $ billion, 2005-2014                       http://www.sbdcnet.or...
Customer Service               Satisfaction ProgramAnnual satisfaction surveys distributed online  and in-store, to measur...
List of brand name food products                              ExampleBaked goods      Cookies          Chips              ...
Reed Supermarket
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  • Brand awareness- measure how many consumers in a market are familiar with the brand and what it stands for.Perceived value: the relationship between a product’s benefits and its cost.A brand placed on products that a large manufacturer has created for a smaller retailer. The smaller retailer places their own private brand label on the final good which was created by a third party manufacturer.
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  • Product Differentiation
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  • Transcript of "Reed Supermarket"

    1. 1. Reed SupermarketProblem • Sale is decreasing • Threats from competitors are risingReasons • Wrong strategy SOM 498 - Spring 2012 2
    2. 2. Reed SupermarketGoal14% => 16% market shareSolution• Convenience• High quality product• Reinforce the brand image• Promotion/marketing strategy SOM 498 - Spring 2012 3
    3. 3. Reed’s CompetitorsUpper End => High Threat• Supermarket• Limited Selection• Whole FoodLower End => Low Threat• Warehouse Clubs• Supercenters• Dollars Stores SOM 498 - Spring 2012 4
    4. 4. Strength Weakness Experience in Improve Limited product private label product selection merchandise selection Promote High income High-endconsumer base products Brand Low Change awareness: Perceived customers’Quality product Value perceptions SOM 498 - Spring 2012 5
    5. 5. Quality Index Price Satisfaction 1.8 1.8 Index1.5 Industry average2008 2009 2010 2008 2009 2010 -2.0 -2.1 -2.5 SOM 498 - Spring 2012 6
    6. 6. Marketing Strategy 16% of Market ShareMarket SegmentationProduct Differentiation Product Positioning Brand Reinforcement SOM 498 - Spring 2012 7
    7. 7. Market SegmentationPrimary focus: • High-end customers • Healthy concern consumers SOM 498 - Spring 2012 8
    8. 8. Product DifferentiationHigh-end Convenience Private labeling Dollar SpecialProducts • 25 Locations • Natural • Decrease Net• Healthy • Long hours • Healthy Products Operating Profits• Organic • Full range of • Not consistent with• High Quality products brand equity• Imported • One-Stop Shopping SOM 498 - Spring 2012 9
    9. 9. Product DifferentiationHigh-end Convenience Increase Private Prepare FoodsProducts • 25 Locations labels • Increase variety of• Healthy • Long hours • Natural Products Healthy Foods• Organic • Full range of • Healthy Products• High Quality products • One-Stop Shopping • Lower Prices at = 2-4%• Private Label a Lower cost Increase Store Traffic Increase sales by 15% SOM 498 - Spring 2012 10
    10. 10. Introduction of Private Labeling Columbus Market $1 Million Marketing Plan = Increase Sales by 15%(Estimations in Millions) Current Sales Sales Increase by 15%Sales Decrease/Increase -31.43 99 Total Sales 660 759Sales Increase From Increase % Sales Increase by Private Labels 10% 66.0 Prepared Foods 3% 19.8 Other Items 2% 13.2Total Sales Increase 15% 99 16% SOM 498 - Spring 2012 Som 11
    11. 11. SOM 498 - Spring 2012 12
    12. 12. Product PositioningMaintain the current product position• High quality products• Organic & natural products• Imported productsValue-pricing strategies• Price the product based on customers’ perceived value SOM 498 - Spring 2012 13
    13. 13. Brand Reinforcement Convenience High-Quality Product Customer Satisfaction
    14. 14. RecommandationsProducts:• National brands• Private labels• Prepared foodService offering:• Seasonal gifts• Food samples• Store events Short term SOM 498 - Spring 2012 15
    15. 15. RecommandationsAdvertising: “Be Good to Yourself”• Health and sport magazines• Social media• Smartphone applicationsWebsite redesign:• Cooking receipts• Blogs/ forums• Customize healthy diet Medium term SOM 498 - Spring 2012 16
    16. 16. RecommandationsMembership programs:• Points shopping rewards• Gas reward cards• Birthday card/special occasion gifts for loyal membersPhilanthropy• Community service Long term SOM 498 - Spring 2012 17
    17. 17. Conclusion• Revenue growth • Differentiation strategy • Marketing campaign• Branding as • High quality • Convenience • Customer Satisfaction/Choice SOM 498 - Spring 2012 18
    18. 18. Thank You! SOM 498 - Spring 2012 19
    19. 19. Threats Competitors - low-end productsWalmart/ Target Costco/BJ’s Dollar General(one-stop shopping (wholesale warehouse) -biggest threatsupercenter) -most carry one brand -mix of packaged items-introduced groceries -bulk-packed for large, middle class -mostly no refrigerated-world’s largest retailer families product-leader of food retailing -20% discounted price SOM 498 - Spring 2012 20
    20. 20. Threats Major Competitors – High-end productsTrader Joe’s Delfina WholeFood WholeFood -conventional &-Limited Inventory -only 2 stores -only 2 stores Organic(private labeling) -Slowly -above-average -Slowly-highest Sales/ service expandingsquare foot -Bright, clean (Back burner) -High stable Sales-imported & ambiencespecialty food -High stable Sales SOM 498 - Spring 2012 21
    21. 21. Disadvantage to the “Dollar Special” ($ Millions) Dollar Special Regular Price Price (6% Increase) 2% Sales 673.2 673.2 Increase 6% Sales 40.39 40.39 Net Profit Margin 13.46 13.46 Loss on Discounts -10.54 0 Net Sales 2.92 13.46Sales increase by 15% = $54.45 Millions lost on Net Sales SOM 498 - Spring 2012 Som 22
    22. 22. Profits Increase ($, Millions) Estimated SalesTotal Sales 759Operating Expenses -743.82Profit Margin (2%) 15.18Marketing Expense -1Net Profits Increase 14.18 SOM 498 - Spring 2012 Som 23
    23. 23. Adding Prepared Foods ($, Millions) 2010 Worst Case Scenario Best Case Scenario 2011 2011Estimated Sales: 660 673.2 686.4Store Traffic - 2% 4%Increase by:Sales from 112.2 125.2 138.6prepared foods:Profit Margin - 37.56 41.58(30%) SOM 498 - Spring 2012 Som 24
    24. 24. SOM 498 - Spring 2012 25 Retrived From: http://www.ralcorp.com/pdf/Ralcorp_CAGNY_Presentation.pdf
    25. 25. RalcorpSOM 498 - Spring 2012 26
    26. 26. Private Brand Foods Have Had Impressive Long-Term Growth Rates Date 2010 2011http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012 27
    27. 27. Private-Brand Food Opportunity SOM 498 - Spring 2012 28
    28. 28. Ralcorp Categories SOM 498 - Spring 2012 29
    29. 29. Financial Overview Increase Market Sharehttp://www.reedsinc.com/ir/pdfs/12-711%20REEDS%20Dec%202011%20Investor%20Presentation.pdf SOM 498 - Spring 2012 Som 30
    30. 30. Gas Price in Columbus, OH Date 2010 2011http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012 Som 31
    31. 31. Columbus market ColumbusComparing to Median Population Unemployment household growth from rate in Dec 2010: income: $52,000 2000 to 2009: 8.5% 11%Ohio 11.6% higher - -Nation Slightly higher 2% higher 1.3% lowerMedian income of a Reed shopper was 12% higherthan the area household average SOM 498 - Spring 2012 32
    32. 32. Total sales change 2005-2010 SOM 498 - Spring 2012 33
    33. 33. Quality Index 9.0 8.5 8.4 8.4 8.3 8.0 7.5Quality 7.0 6.8 Reed 6.6 6.6 Average 6.5 Discount Store 6.0 5.7 5.5 5.2 5.0 2008 2009 2010 Year(s) SOM 498 - Spring 2012 34
    34. 34. Price Index 9.0 7.7 7.9 8.0 7.0 6.8 6.6 6.2 6.0 5.0Price 4.3 4.5 4.2 4.0 Reed Average 3.0 Discount store 2.0 1.0 0.0 2008 2009 2010 Year SOM 498 - Spring 2012 35
    35. 35. United States Organic Food Market Value & Value Forecast: $ billion, 2005-2014 http://www.sbdcnet.org/small-business-research-reports/retail-organic-food-industry-in-the-u-s SOM 498 - Spring 2012 36
    36. 36. Customer Service Satisfaction ProgramAnnual satisfaction surveys distributed online and in-store, to measure: – Customer service – Customer expectations – Areas for improvement – What items they will like to see in stores SOM 498 - Spring 2012 37
    37. 37. List of brand name food products ExampleBaked goods Cookies Chips Hot food desserts brandsWarburtons Burtons Cheeselets Chicago Ben & JerrysHovis [1] Maryland Cheesy Tool Bag Town Calypso IciclesNabisco [2] Specials Discos Findus Crispy FreezepopsMcVities Cadbury Doritos Pancakes CremosaMothers Pride Snack Frazzles Pot Noodle Eskimo PiePepperidge Double Take (Walkers) [7] [8] and Juicy Drop PopFarm Domino Good n derived like Lyons MaidWestminster Disney Pixar Crunchy Pot Rice MagnumCracker Milk Golden Wonder Unilever PingviiniCompany [3] Chocolate (Tayto Group) Crispy PehmisSt. Amour Crispy Bars Horror Bags Chicken Bites RocketCookies Jaffa Cake [5] McCoys Crisps Basil BrushKits Kit Kat Snackfood ChickenDanish Oreo Company Boom Booms Biscuits Tayto Fusion Batchelors Walkers Shortbread SOM 498 - Spring 2012 38
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