Reed supermarket case

2089 Words Oct 3rd, 2014 9 Pages
Action Plan for Reed’s Growth
Background: Meredith Collins, VP of Marketing, Reed, needs a plan for 2011 to execute togrow its current market share from 14% to 16%. Margins for error are negligible as competition has intensified in every segment and current economic conditions aren’t looking good.

Recommendations for Growth:
1. Stop the dollar special for each week: 1st step is to stop the dollar special promotion immediately. This is not consistent with the brand equity and positioning built over the years.
It’s resulting in net operating loss of 76% on each discounted item and overall decreased the net operating profit for 2010 to 0.4% only (details in justification). Moreover, this promotional activity is polluting the message
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Porters - Industry Analysis

Industry Players & Competition Players in this industry make money by applying high volume and low margin strategy. Theonus here is to leverage the economies of scale driven by operational efficiency to reducethe cost. They buy large number of products across various categories in bulk from different suppliers and sell them at lower prices as compared to a smaller store which have limited shell space, product range and category. Net Operating Margins are quite thin, 1.5% - 2.5%,room for error or slag is nearly negligible in operations. There are 5 types of player in theindustry competing in 3 segments, from high end to low end of market. They are differentiating with each other on the following parameters:
Pricing as a strategy (shown below in perceptual map) is used by retailers to differentiate. Some are positioning their price low (Dollar stores) and some at premium like Reed, someuse discounted pricing or everyday low prices (TopVal).
Product specialisation and variety is another way of differentiation being employed. Someretailers are offering specialised products, like Reed specialises in organic and fresh seafoods and some differentiate on packaging. Some retailers are selling various products in a category by different

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