Marketing – Master of Management 78-614
Odette School of Business, University of Windsor
Title of case: Superior Supermarkets. “Everyday Low Pricing”
Key person and his / her position in the organization:
James Ellis Senior V.P at Hall Consolidated and President of Superior Markets
Key issue or decision that must be made: Should Superior Supermarkets implement the everyday low pricing strategy? If so, should this strategy be adopted across-the-board for all products or just certain categories?
Basic facts of the case:
Superior Markets is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall Consolidated was formed in 1959 and ...view middle of the document...
More than 30% of the interviewers considered Superior’s prices “above average.” In contrast some 20% of the respondents thought the prices at Missouri Mart and Grand America were below average. Harrison’s was thought to have the lowest everyday prices.
The four major aspects that determined store choice were Price, meat, Produce and Shopping convenience. Superior appears to be the winner on shopping convenience. Focus group participants from all parts of Centralia considered Superior to be a good neighborhood store. The “Superior Supermarkets = Superior Value” advertising was questioned given the perceived higher grocery, meat and produce prices.
In a second study involving personal interviews shoppers emphasized that lower prices and greater variety were needed. Appearance and cleanliness, friendliness, service and convenient to home or work were liked most by shoppers.
James Ellis has several options and several decisions he would have to make in regards to the implementation of the Everyday Low Pricing strategy. If the strategy is implemented James Ellis will have to make decisions regarding some key issues:
A. Should we aim to be the lowest priced supermarket in the trade area?
B. Should everyday low pricing be used by all stores in the trade area?
C. Should the everyday low pricing strategy be adopted across-the-board
for all our products or just certain categories?
Your chosen alternative:
After reviewing the available consumer research and determining that Superior could lose market share in Centralia due to the price differential, I would suggest that James Ellis implement the everyday low pricing strategy. The pricing strategy should be implemented as part of a broader store positioning strategy and supported with advertising. It would also be advisable for Superior to conduct further market research and determine exactly how price knowledgeable their customers are and what product categories they are most price-conscious of. I believe that it would be most profitable if Superior limited the implementation of the everyday low pricing strategy to only merchandise that shoppers are most price conscious of. It is also important to recognize that Superior cannot “outprice” Harrison’s and it is therefore important that Superior consider it’s advantage in the shopping convenience category and determine the best price changers accordingly.
Justification for your choice:
According to Randall Johnson who proposed the everyday low pricing strategy the two main reasons this strategy should be implemented are as follows:
(1) Superior’s prices were higher than the competition at a time of growing price consciousness among Centralia shoppers.
(2) Superior could lose market share in Centralia due to the price
Sales in Centralia were already down 3% in the first quarter of 2003 compared with budgeted sales goals. This decline, following a slower than...