Reed Supermarkets - Garrett Carlson Marketing 510 Professor...

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Garrett Carlson Marketing 510 Professor Faircloth Reed Supermarkets Harvard Business School Case February 10, 2015 Define the Problem: With more competitors, such as dollar and limited selection stores and warehouse clubs, entering the market, Reed’s senior management needs to find a way to attract more customers to gain more market share (target of 16%) and increase revenue. Decision Alternatives: 1. Status quo – Continue to be a higher end supermarket a. Continue to add specialty items and higher-end prepared foods b. Maintain reputation of having above-average service and being clean c. Continue with weekly promotional specials to drive traffic 2. Compete on price – Move to everyday low pricing model a. Change image and compete on cost b. Stock more lower priced items c. Lose the great customer service such as runners and cookies on weekends 3. Embrace Image – Market that Reeds is a high quality, great service supermarket a. Market that Reed’s is a higher end supermarket b. Limit/End the weekly deals, promotions, and “dollar specials” c. Advertise the specialty items, higher-end prepared foods Relevant Information: Median household income is $52,000 (11.6% higher than state average) Population growth was 11% (2% higher than the national rate) Unemployment rate of 8.5% (1.3% below national rate) Median income of Reed shopper was 12% higher than area’s ($58.240) Trends o Shoppers buy less more frequently, 60% make fill-in trips, 40% make stock-up o Private labels foods sales were 17% of total food and beverage sales (up 3% since 2005) o Consumers have become more health conscious o Decreasing customer loyalty Reed has continued to grow profits from 1 to 2% per year Reed led food retailers in the Columbus area with a 14% market share
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Pet ownership was 20% higher among Reed shoppers Strengths o Highest market share among Columbus Market Competitors o Good reputation of having high quality and great service o Conveniently located Weaknesses o Reputation of having high prices o Lost 1% of their market share over the last 2 years (15 to 14%) Opportunities o Consumer preferences are changing such as being more health conscious o Columbus has a growing population Threats o Fierce competition o Customers are not loyal Identify Best Alternative: In order to increase revenue and obtain 16% market share, Reed should stick with the status
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