Reed Supermarket is facing decreasing sales and rising threats from competitors. The document analyzes reasons for declining performance and provides solutions to increase market share to 16% including focusing on high-end customers, differentiating products through quality, convenience and private labels, and reinforcing the brand through promotion. Competitors are segmented into high and low threats with strategies outlined to combat each.

2. Reed Supermarket
Problem
• Sale is decreasing
• Threats from competitors are rising
Reasons
• Wrong strategy
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3. Reed Supermarket
Goal
14% => 16% market share
Solution
• Convenience
• High quality product
• Reinforce the brand image
• Promotion/marketing strategy
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4. Reed’s Competitors
Upper End => High Threat
• Supermarket
• Limited Selection
• Whole Food
Lower End => Low Threat
• Warehouse Clubs
• Supercenters
• Dollars Stores
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5. Strength Weakness
Experience in Improve
Limited product
private label product
selection
merchandise selection
Promote
High income
High-end
consumer base
products
Brand Low Change
awareness: Perceived customers’
Quality product Value perceptions
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6. Quality Index Price Satisfaction
1.8 1.8 Index
1.5
Industry
average
2008 2009 2010
2008 2009 2010
-2.0 -2.1
-2.5
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7. Marketing Strategy
16% of Market Share
Market Segmentation
Product Differentiation
Product Positioning
Brand Reinforcement
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8. Market Segmentation
Primary focus:
• High-end customers
• Healthy concern consumers
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9. Product Differentiation
High-end Convenience Private labeling Dollar Special
Products • 25 Locations • Natural • Decrease Net
• Healthy • Long hours • Healthy Products Operating Profits
• Organic • Full range of • Not consistent with
• High Quality products brand equity
• Imported • One-Stop Shopping
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10. Product Differentiation
High-end Convenience Increase Private Prepare Foods
Products • 25 Locations labels • Increase variety of
• Healthy • Long hours • Natural Products Healthy Foods
• Organic • Full range of • Healthy Products
• High Quality products
• One-Stop Shopping • Lower Prices at = 2-4%
• Private Label
a Lower cost Increase
Store Traffic
Increase sales by 15%
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11. Introduction of Private Labeling
Columbus Market
$1 Million Marketing Plan = Increase Sales by 15%
(Estimations in Millions) Current Sales Sales Increase by 15%
Sales Decrease/Increase -31.43 99
Total Sales 660 759
Sales Increase From Increase % Sales Increase by
Private Labels 10% 66.0
Prepared Foods 3% 19.8
Other Items 2% 13.2
Total Sales Increase 15% 99 16%
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12. SOM 498 - Spring 2012 12

13. Product Positioning
Maintain the current product position
• High quality products
• Organic & natural products
• Imported products
Value-pricing strategies
• Price the product based on customers’ perceived
value
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14. Brand Reinforcement
 Convenience
 High-Quality Product
 Customer Satisfaction

15. Recommandations
Products:
• National brands
• Private labels
• Prepared food
Service offering:
• Seasonal gifts
• Food samples
• Store events
Short term
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16. Recommandations
Advertising: “Be Good to Yourself”
• Health and sport magazines
• Social media
• Smartphone applications
Website redesign:
• Cooking receipts
• Blogs/ forums
• Customize healthy diet Medium term
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17. Recommandations
Membership programs:
• Points shopping rewards
• Gas reward cards
• Birthday card/special occasion gifts for loyal members
Philanthropy
• Community service
Long term
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18. Conclusion
• Revenue growth
• Differentiation strategy
• Marketing campaign
• Branding as
• High quality
• Convenience
• Customer Satisfaction/Choice
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19. Thank You!
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20. Threats
Competitors - low-end products
Walmart/ Target Costco/BJ’s Dollar General
(one-stop shopping (wholesale warehouse)
-biggest threat
supercenter) -most carry one brand
-mix of packaged items
-introduced groceries -bulk-packed for
large, middle class -mostly no refrigerated
-world’s largest retailer families product
-leader of food retailing -20% discounted price
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21. Threats
Major Competitors – High-end products
Trader Joe’s Delfina WholeFood
WholeFood
-conventional &
-Limited Inventory -only 2 stores
-only 2 stores
Organic
(private labeling) -Slowly
-above-average -Slowly
-highest Sales/ service expanding
square foot
-Bright, clean (Back burner)
-High stable Sales
-imported & ambience
specialty food -High stable Sales
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22. Disadvantage to the “Dollar Special”
($ Millions)
Dollar Special Regular Price
Price
(6% Increase)
2% Sales 673.2 673.2
Increase
6% Sales 40.39 40.39
Net Profit Margin 13.46 13.46
Loss on Discounts -10.54 0
Net Sales 2.92 13.46
Sales increase by 15% = $54.45 Millions lost on Net Sales
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23. Profits Increase
($, Millions)
Estimated Sales
Total Sales 759
Operating Expenses -743.82
Profit Margin (2%) 15.18
Marketing Expense -1
Net Profits Increase 14.18
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24. Adding Prepared Foods
($, Millions)
2010 Worst Case Scenario Best Case Scenario
2011 2011
Estimated Sales: 660 673.2 686.4
Store Traffic - 2% 4%
Increase by:
Sales from 112.2 125.2 138.6
prepared foods:
Profit Margin - 37.56 41.58
(30%)
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25. SOM 498 - Spring 2012 25
Retrived From: http://www.ralcorp.com/pdf/Ralcorp_CAGNY_Presentation.pdf

26. Ralcorp
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27. Private Brand Foods Have Had Impressive
Long-Term Growth Rates
Date
2010 2011
http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012 27

28. Private-Brand Food Opportunity
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29. Ralcorp Categories
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30. Financial Overview
Increase Market Share
http://www.reedsinc.com/ir/pdfs/12-711%20REEDS%20Dec%202011%20Investor%20Presentation.pdf
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31. Gas Price in Columbus, OH
Date
2010 2011
http://gasbuddy.com/gb_retail_price_chart.aspx SOM 498 - Spring 2012
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32. Columbus market
Columbus
Comparing to Median Population Unemployment
household growth from rate in Dec 2010:
income: $52,000 2000 to 2009: 8.5%
11%
Ohio 11.6% higher - -
Nation Slightly higher 2% higher 1.3% lower
Median income of a Reed shopper was 12% higher
than the area household average
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33. Total sales change 2005-2010
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34. Quality Index
9.0
8.5 8.4 8.4
8.3
8.0
7.5
Quality
7.0 6.8 Reed
6.6 6.6
Average
6.5
Discount Store
6.0
5.7
5.5
5.2
5.0
2008 2009 2010
Year(s)
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35. Price Index
9.0
7.7 7.9
8.0
7.0 6.8 6.6
6.2
6.0
5.0
Price
4.3 4.5
4.2
4.0 Reed
Average
3.0
Discount store
2.0
1.0
0.0
2008 2009 2010
Year
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36. United States Organic Food Market Value
& Value Forecast: $ billion, 2005-2014
http://www.sbdcnet.org/small-business-research-reports/retail-organic-food-industry-in-the-u-s
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37. Customer Service
Satisfaction Program
Annual satisfaction surveys distributed online
and in-store, to measure:
– Customer service
– Customer expectations
– Areas for improvement
– What items they will like to see in stores
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38. List of brand name food products
Example
Baked goods Cookies Chips Hot food desserts
brands
Warburtons Burton's Cheeselets Chicago Ben & Jerry's
Hovis [1] Maryland Cheesy Tool Bag Town Calypso Icicles
Nabisco [2] Specials Discos Findus Crispy Freezepops
McVitie's Cadbury Doritos Pancakes Cremosa
Mother's Pride Snack Frazzles Pot Noodle Eskimo Pie
Pepperidge Double Take (Walkers) [7] [8] and Juicy Drop Pop
Farm Domino Good 'n' derived like Lyons Maid
Westminster Disney Pixar Crunchy Pot Rice Magnum
Cracker Milk Golden Wonder Unilever Pingviini
Company [3] Chocolate (Tayto Group) Crispy Pehmis
St. Amour Crispy Bars Horror Bags Chicken Bites Rocket
Cookies Jaffa Cake [5] McCoys Crisps Basil Brush
Kits Kit Kat Snackfood Chicken
Danish Oreo Company Boom Booms
Biscuits Tayto Fusion Batchelors
Walkers
Shortbread SOM 498 - Spring 2012 38