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Marketing: Supermarket Problems Case Study

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Updated: Aug 28th, 2020

Stating the Problems

First of all, consumer loyalty changed. The supermarkets which profited from the weekly shoppers were losing their rates.

Secondly, the merchandise of private label increased.

Thirdly, the supermarket customers in the United States became more aware of their health.

Problems Analysis

As for the first problem, the supermarkets started losing profits from weekly shopping. A lot of people used to visit supermarkets once a week and buy food for the next week. As a rule, they visited the same supermarket in the neighborhood for years. With the rise of warehouses and superstores, some people changed their preferences. Besides, a share of customers was distracted by discount merchandisers and so-called dollar stores.

Speaking of private labels, the sales of this food and drinks increased. The retail enterprises noticed the high potential of these goods and were actively promoting them.

The increase of health-consciousness also influenced the situation with the supermarkets. In fact, it has conditioned the development of stores with organic and healthy departments.

On the whole, the profit of food retailers depends mainly on the sales size and their effectiveness.

Potential Solutions

The contemporary supermarkets have two major types of competitors. Supercenters and Warehouse Clubs are those of the first generation. They are competitive due to the lower prices. The prices are low thanks to the bigger sales volume and direct supplies from the manufacturers. Dollar and limited selection stores make the second generation of competitors. They sell a few brands, but the prices are not high.

The following things may be done by the supermarkets to be competitive on the market and solve the defined problems. Weekend discounts may be introduced to stimulate the weekly shopping as the people mainly shop for food on their days-off. These should be discounts for major goods categories like meat or grocery. Its advantage is that it will attract consumers with low prices and they are likely to do all the shopping in one place. Still, the disadvantage is that there is no guarantee that the people will come back on the day with no discounts.

Private-label goods should be varied and combine high quality and a moderate price. If consumers like these products, they will return again and again to the supermarket to buy them. On the one hand, it is obviously an advantage. On the other hand, the disadvantage is that other goods of the same type will weaken their positions.

The need for healthy and organic food increased with the growth of customers’ health consciousness. As a rule, they are more expensive than common products. An excellent solution here maybe the supermarket’s production. This approach has a big disadvantage at the initial stage. The start of organic goods production is time and money-consuming. Not all owners may afford a farm or a field to grow vegetables. Still, in the future, the manufacturer and retailer, which are the same unit, are likely to profit. Organic food of local production will be cheaper than the exported and preferred by the customers.

Further Recommendations

I can suggest some recommendations that can be useful for some supermarket owners. They may attract consumers and consequently increase profit. It may be a good idea to make an agreement with a manufacturer and become an exclusive official representative of a certain product in the region. If the product gets popularity, it will be a sound investment. Speaking of the labeled goods, they should cover a broad range of daily products. Lower prices and high quality will attract the customers with a limited budget. Still, they should not be too cheap, for the low price is often associated with low quality.

The issue of various discounts should also be considered. These may be seasonal discounts connected with different holidays. Daily discounts on a limited range of goods may attract people who prefer regular shopping. For example, the supermarket may suggest a lower price for fish on Monday, cheaper apples on Wednesday, and a pleasant discount on meat on Friday. Newsletters can be distributed in the neighborhood to inform the people about the prices and special offers in addition to general advertising. Still, such campaigns should not be too intrusive.

A special discount can be introduced for a bill of more than 100 dollars for example. It will stimulate consumers to buy more at the same place. Moreover, it may be a sound idea to organize a lottery for loyal customers. Let it be, for example, every last Saturday of the month. People usually like free gifts. Besides, they will probably do more shopping afterward.

It may be useful to open a fresh bar in the supermarket. Shopping is a tiring process, and the consumers will be happy to refresh with a glass of juice while choosing goods.

On the whole, the emphasis should be made on quality and service. Even cheap goods should be of normal quality. Otherwise, the reputation may be lost. As for the workers, any exciting initiative will be ruined with poor service, so the choice of the stuff is not less important than the goods variety.

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