-Act in the role as consultant for Reed Supermarket
-Demonstrate the ability to offer creative solutions based on the case scenario and to justify these solutions with rigorous analysis.
-
9. Product Differentiation
High-end Convenience Private labeling Dollar Special
Products • 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
10. Product Differentiation
High-end Convenience Increase Private Prepare Foods
Products • 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
11. Introduction of Private Labeling
Columbus Market
$1 Million Marketing Plan = Increase Sales by 15%
(Estimations in Millions) Current Sales Sales Increase by 15%
Sales Decrease/Increase -31.43 99
Total Sales 660 759
Sales Increase From Increase % Sales Increase by
Private Labels 10% 66.0
Prepared Foods 3% 19.8
Other Items 2% 13.2
Total Sales Increase 15% 99 16%
SOM 498 - Spring 2012
Som 11
13. Product Positioning
Maintain the current product position
• High quality products
• Organic & natural products
• Imported products
Value-pricing strategies
• Price the product based on customers’ perceived
value
SOM 498 - Spring 2012 13
16. Recommandations
Advertising: “Be Good to Yourself”
• Health and sport magazines
• Social media
• Smartphone applications
Website redesign:
• Cooking receipts
• Blogs/ forums
• Customize healthy diet Medium term
SOM 498 - Spring 2012 16
17. Recommandations
Membership programs:
• Points shopping rewards
• Gas reward cards
• Birthday card/special occasion gifts for loyal members
Philanthropy
• Community service
Long term
SOM 498 - Spring 2012 17
18. Conclusion
• Revenue growth
• Differentiation strategy
• Marketing campaign
• Branding as
• High quality
• Convenience
• Customer Satisfaction/Choice
SOM 498 - Spring 2012 18
20. Threats
Competitors - low-end products
Walmart/ Target Costco/BJ’s Dollar General
(one-stop shopping (wholesale warehouse)
-biggest threat
supercenter) -most carry one brand
-mix of packaged items
-introduced groceries -bulk-packed for
large, middle class -mostly no refrigerated
-world’s largest retailer families product
-leader of food retailing -20% discounted price
SOM 498 - Spring 2012 20
22. Disadvantage to the “Dollar Special”
($ 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 13.46
Sales increase by 15% = $54.45 Millions lost on Net Sales
SOM 498 - Spring 2012
Som 22
23. Profits Increase
($, Millions)
Estimated Sales
Total Sales 759
Operating Expenses -743.82
Profit Margin (2%) 15.18
Marketing Expense -1
Net Profits Increase 14.18
SOM 498 - Spring 2012
Som 23
24. Adding Prepared Foods
($, Millions)
2010 Worst Case Scenario Best Case Scenario
2011 2011
Estimated Sales: 660 673.2 686.4
Store Traffic - 2% 4%
Increase by:
Sales from 112.2 125.2 138.6
prepared foods:
Profit Margin - 37.56 41.58
(30%)
SOM 498 - Spring 2012
Som 24
26. Private Brand Foods Have Had Impressive
Long-Term Growth Rates
Date
2010 2011
http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012 26
29. Financial Overview
Increase Market Share
http://www.reedsinc.com/ir/pdfs/12-711%20REEDS%20Dec%202011%20Investor%20Presentation.pdf
SOM 498 - Spring 2012
Som 29
30. Gas Price in Columbus, OH
Date
2010 2011
http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012
Som 30
31. Columbus market
Columbus
Comparing 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% lower
Median income of a Reed shopper was 12% higher
than the area household average
SOM 498 - Spring 2012 31
33. Quality Index
9.0
8.5 8.4 8.4
8.3
8.0
7.5
Quality
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 33
34. Price Index
9.0
7.7 7.9
8.0
7.0 6.8 6.6
6.2
6.0
5.0
Price
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 34
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 35
36. Customer Service
Satisfaction Program
Annual 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 36
37. List of brand name food products
Example
Baked goods Cookies Chips Hot food desserts
brands
Warburtons Burton's Cheeselets Chicago Ben & Jerry's
Hovis [1] Maryland Cheesy Tool Bag Town Calypso Icicles
Nabisco [2] Specials Discos Findus Crispy Freezepops
McVitie's Cadbury Doritos Pancakes Cremosa
Mother's Pride Snack Frazzles Pot Noodle Eskimo Pie
Pepperidge Double Take (Walkers) [7] [8] and Juicy Drop Pop
Farm Domino Good 'n' derived like Lyons Maid
Westminster Disney Pixar Crunchy Pot Rice Magnum
Cracker Milk Golden Wonder Unilever Pingviini
Company [3] Chocolate (Tayto Group) Crispy Pehmis
St. Amour Crispy Bars Horror Bags Chicken Bites Rocket
Cookies Jaffa Cake [5] McCoys Crisps Basil Brush
Kits Kit Kat Snackfood Chicken
Danish Oreo Company Boom Booms
Biscuits Tayto Fusion Batchelors
Walkers
Shortbread SOM 498 - Spring 2012 37
Editor's Notes
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.
