Reed Supermarkets Case Analysis

384 WordsApr 20, 20152 Pages
Marketing Problem/Objective: The marketing problem for Reed Supermarkets is there an increasing number of competing grocery stores entering its area and taking business away from Reed. The objective is to increase its market share by 2% by the year 2011. Solution: In order to attract more customers and increase its market share, Reed should offer more private-label products at lower prices Rationale: According to data from a survey conducted by Reed of consumers in the Columbus area who do not shop at Reed, 86% said that better prices at other outlets was either their most important reason or next most important reason for not shopping at Reed. Since private label brands can be sold at lower prices, Reed could attract new customers by offering them. Also, over the last decade, consumers in the grocery industry have become less loyal. They will shop around for the best deals rather than habitually shopping at one grocery store. This means that Reed could gain more customers that are currently in its area but who do not shop at Reed by offering private label brands at lower prices. It also means that Reed’s current customers will be less likely to shop at other stores if Reed is offering similar low prices. The increase of private label brands has been a trend in the grocery industry over the last five years. Private label foods account for 17% of total food and beverage sales, which is up 3% from 2005. Grocery stores can make higher margins selling these products, and have been able remove the perception that they are lower quality. Reed, being known for its quality goods, could still offer private label brands without damaging its image. The lower prices of these brands will attract customers and ultimately increases Reed Supermarket’s market share in the area. During the 2008-2010 recession, Reed lost customers to its lower cost competitors. These

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