Consumer Behavior : Consumer Behaviour

Because the retail grocery market is typically low margin, “typically in the mid-single digit range”.(VALUELINE, 2013) It is critical for companies to have some type of cost advantage over peers, the larger chains may be able to obtain better and cheaper access to products than the independent stores(economies of scale). Labor is also a significant cost to retail grocers, representing 50% to 53% of total operating costs (EHOW, 2013). Other operating costs (including rent, utilities, transportation, and technology) are controllable by the company. Lastly, technology costs are key in the retail grocery industry in order to increase efficiency in operations and aid marketing aids. Point-of-sale systems can help to increase inventory turnover and sales and lead to better targeted customer marketing (COUNTERPOINTPOS, 2013)

The grocery industry has a relatively high market commonality; a lot of grocery stores are somewhat related in terms of technologies used, labor force and the products or services offered in the stores. Differentiation with other competitors is key for survival in this highly competitive industry.

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive

Last of all, in Marion Nestle essay, “The Supermarket: Prime Real Estate” she states that supermarkets manipulate you on buying extra things you do not need. During her research, she realized there were a lot of different studies for designing the layout of the stores (Nestle 499-500). For instance; Stores do not use a lot of islands, they put certain things in the back of the store and put

Ever walk into a store with a defined list, but still get other items you never intended to get? Well, in Marion Nestle’s article “The Supermarket: Prime Real Estate,” Nestle goes into detail about how the supermarkets in your daily life uses many tricks to get you to buy items and spend money. Nestle claims that supermarkets and their managers study habits of shoppers to gain the control using certain tactics. According to Nestle, “This research tells food retailers how to lay out the stores, where to put specific products, how to position products on shelves, and lastly how to set prices and advertise products” (Nestle 498). Some tactics that Marion Nestle mention are product location, music, and even item size. During the course of my paper I will convince you that these tactics are in fact real and bring more to your attention. Us consumers have to stick together and this is the first step.

Consumers are more mindful of how their dollar is spent, and want to obtain the best bank for their buck. With general grocery stores located in La Jolla surrounding Kudler, Kudler must find innovative ways to compete and get customers into its stores. Marketing research for competitive intelligence is importance because the local grocery stores offer differentiated options to reach new customers. For example, generic stores are beginning to offer natural and organic foods, buyer programs, cooking demonstrations and slashed prices just as Kudler does and for a fraction of the cost. One can compare this to Dunkin’ Donuts and Starbucks; some folks want the experience and that is what Kudler must do; make it an experience for the consumer and potentially bring in products they do not current stock such as beauty products, vitamins and supplements, or other common grocery store items.

While examining the community of Valdosta, Georgia there were some common themes throughout the city. In this community there are multiple grocery stores spaced throughout the city, such as Publix, Winn-Dixie, and Walmart. Even though there are quite a few grocery stores for people to buy food to cook, on weekdays

Being a grocery store, there are no high involvement products, meaning there are no products which have high price tags like that of a house or vehicle, and comes with no risk or buyers’ remorse, unless they try a new product and they do not like it (citation). Throughout the store are various low-involvement products such as shampoo, pasta sauce, and eggs. All these products are displayed the same, with similar items grouped together, and items in the same category in the same isle. Products that are on promotion, and that are currently being offered at exceptionally low prices, are placed on the end cap of each of the nonperishable item aisles.

Marion Nestle, a teacher at New York University, examines how supermarkets are designed and how the design affects consumers in her essay “The Supermarket: The Prime Estate”. “Nestle teaches in the department of nutrition, food studies, and public health” (496). The essay was published in one of her numerous books, What to Eat: An Aisle-by-Aisle Guide to Savvy Food Choices and Good Eating in 2006. Nestle investigates the strategic method behind the store’s layout in this essay for the average consumer. Nestle portrays the manipulations of supermarkets to sell the most products possible to consumers through the store’s order and design through logos, pathos, and cause and consequence in the development of her essay.

Larger stores also offer people the convenience of additional services along with their shopping, for example post office, pharmacy and opticians. By addressing consumer’s expectations and using their buyer power they can offer a choice of products to reflect consumer’s diverse budgetary, dietary, ethical and environmental requirements. Furthermore their global buyer power enables consumers to benefit from choosing exotic produce all year round. With 30,000,000 customers (Bevan cited in Allen, 2009) choosing to use the big four supermarkets on a weekly basis it would suggest that they provide a format that consumers want.

Layout of Store- A great layout is vital for success. Grocery shopping can sometimes be tedious, so it is essential that the layout makes the process as easy as possible for a consumer. If a customer is having trouble finding things then they might start shopping elsewhere. Also, things that will spoil are usually in the back left of a store because that is where the customer will finish shopping thus reducing the time the product will spend not being refrigerated.

1. Location, specifically proximity to strategic markets. Being located close to or within key markets lets firms capitalize on their exposure, allowing them to maximize their control of a region and to enhance their margins. Grocery competition exists locally, since there is only so far that consumers are willing to travel to fulfill their needs, so if a firm can dominate a market with minimal competing operators it will enhance its profitability.

The grocery retail industry worldwide has grown in recent years to become one of the most intensely competitive industries due to the continuous amounts of new entrants. A grocery retailer is one that sells food and other general household items. Hypermarkets, supermarkets, discounters and small grocery retailers are all under the grocery retail umbrella. Between 2003 and 2008, the grocery retailing industry accounted for 45% of store-based retail values sales over the world. The figures

     In the early 1990’s, the retail grocery industry began leaving the growth stage and entered the maturity stage in the industry lifecycle. This was caused by increased market saturation and slowing growth rates. Between 1995 and 1996 the growth rates were the lowest they had been in the past twenty years. The main reason for

1. Consumers are often` confronted with incomplete information. How do consumers deal with incomplete information for (a) attribute values (b) brands? (give examples)