Reed Super Market

Marketing Management
Case Assignment # 1
Date: 01-Feb-2024
Rakesh Patel
 Table of Content
1. What is Reed’s position in the Columbus market? 1
Overview 1
Rivalry 1
Advantages 2
Drawbacks 2
2. What are the strategic options for Reed positioning in the Columbus marketplace, and
specifically whether to change the pricing model or stay on course? 3
Strategic Options for Reed's Positioning in Columbus: 3
Option 1: Maintain Current Model 3
Option 2: Change the Pricing Model 4
Option 3: Take a hybrid approach 4
Factors to Consider 5
3. How serious is the threat posed by dollar stores and limited selection stores? 5
4. Should Collins continue the dollar specials campaign? What is the financial impact of
this decision? 6
 Case Assignment #1
“Reed Super Markets: A New Wave of Competitors” by John A. Quelch; Carole Carlson

1. What is Reed’s position in the Columbus market?

Overview
In the Columbus market, Reed is one of the top food retailers. Over the previous five years,
Reed's market share in the Columbus market has decreased. Reed had a 15% market share in
2006, but by 2010 that had dropped to 14%. Reed is regarded as an upscale supermarket, with
expansive locations providing a good mix of conventional and gourmet/organic products. It is
renowned for its spotless, light-filled atmosphere and above-average service. At $31.48, Reed's
average sale value per transaction surpasses the national supermarket average by 18%. Reed is
the industry leader in the Columbus market, but its reputation for high prices presents
difficulties.

Rivalry
The following are Reed's primary rivals in the Columbus market:
● Delfina: Like Reed, Delfina is regarded as an upscale supermarket, with large stores
offering a balance of conventional and gourmet/organic items, above-average service,
and a bright, clean ambience.
● Galaxy: Supervalu owns the mid-range grocery retailer Galaxy. Generally speaking,
Galaxy stores are less maintained and older than Reed or Delfina stores.
● TopVal: A low-cost grocery chain with a constrained assortment of products, TopVal is
not like Reed.
Dollar stores and limited variety retailers like Aldi are becoming a bigger threat to Reed. Due to
their lean cost structure and restricted inventory, these stores are able to provide reduced costs.

Advantages
The following are Reed Super Market's advantages:
● Market Leader: Reed commands a 14% share of the market, despite the fact that it hasn't
increased over the last two years.
● High-End Reputation: They are known for their attention to detail, high caliber products,
and excellent service.
● Loyal Clientele: Current clients appreciate their services, which include prepared
Drawbacks
The following are Reed Super Market's weaknesses:
● Price Image: Compared to competitors, consumers think Reed is more expensive, which
makes it difficult to draw in new business.
● Stagnant Growth: They've managed to hold onto their market share but haven't been able
to grow in the Columbus area.
● Competition: They are under pressure from a range of retailers, from discounters like
Aldi to high-end establishments like Whole Foods.

In summary, Reed holds a complicated position overall. They have a strong brand and lead the
market, but in order to maintain growth in the future, they must change the way people perceive
their prices and adjust to the shifting competition environment.
By introducing specialty items, expanding the range of upscale prepared foods, boosting the
private label mix, and utilizing weekly advertising specials to boost sales, Reed is attempting to
counteract this competition.

2. What are the strategic options for Reed positioning in

the Columbus marketplace, and specifically whether to
change the pricing model or stay on course?

Strategic Options for Reed's Positioning in Columbus:

Reed has three strategic options for their Columbus market positioning, primarily revolving
around their pricing model:
● Option 1: Stay on course
○ Maintain current model with the current pricing model and focus on
differentiation
● Option 2: Change the Pricing Model
○ Lower prices to compete with dollar stores and limited selection stores
● Option 3: Take a hybrid approach
○ Combination of Option 1 and Option 2

Option 1: Maintain Current Model

In this option, the idea is to stay on course with the current pricing model and focus on differentiation.
Couple ways to stand out:
 ● This option would involve continuing to emphasize Reed's high quality, service, and selection of
gourmet and organic items.
● Additionally, Reed could also try to differentiate itself by offering unique or exclusive products
that are not available at other supermarkets in the Columbus market.

This option focuses on continuing emphasizing quality and service with occasional discount
programs, relying on their loyal customer base and premium image.
● Target High-End Customers: Double down on their organic and prepared food
offerings, attracting and retaining affluent customers who are willing to pay more for
quality.
● Rebrand Price Image: In order to do this, implement marketing campaigns to address
the high-price perception, highlighting value propositions and showcasing
competitive pricing on specific items.

Advantages Disadvantages

Reed could continue to attract customers Reed could continue to lose market share to
who are willing to pay a premium for high lower-priced competitors.
quality products and services.

Reed could maintain its reputation as a Reed could become more vulnerable to
high-end supermarket. economic downturns.

Option 2: Change the Pricing Model

This option would involve reducing prices on a wider range of items, including some of
Reed's premium products. Reed could also try to reduce costs by streamlining its operations
and reducing its staffing levels. Also, introducing AI kiosks and robo greeters.

● Everyday Low Pricing (EDLP): Implement a consistent low-price strategy like

TopVal, potentially boosting price competitiveness and attracting cost-conscious
customers.
● Increase Low-Priced Specials and Private Label Brands: Expand offerings like "dollar
specials" and private label products, offering targeted bargains while maintaining
margins.
● Match Aldi on Staples: Directly compete with Aldi on essential items, attracting
price-sensitive shoppers and potentially triggering price wars.
● Automation, AI/ML, and robotics could help with cost reduction in the long run.
 Advantages Disadvantages

Reed could attract more price-conscious Reed could damage its reputation for quality
customers. and service.

Reed could improve its margins by selling Reed could cannibalize its own sales of
more volume. higher-margin items

Option 3: Take a hybrid approach

This option, hybrid approach, would involve keeping prices high on some items, such as its
premium products and prepared foods, and lowering prices on other items. Reed could also
try to differentiate itself by offering a wider selection of organic and gluten-free products.
The challenge with this approach is to find the right balance and execution.

Advantages Disadvantages

Reed could attract a wider range of This option could be difficult to execute
customers. effectively.

Reed could maintain its reputation for Reed could alienate some customers by
quality and service while also offering raising prices on certain items.
competitive prices.

Factors to Consider
In order to choose the right option, below are different factors to consider.
● Impact on Revenue and Margins: Each option has varying effects on profitability,
with EDLP and increased specials potentially sacrificing some margins for volume.
● Customer Response: Analyzing consumer segments and their price sensitivity is
crucial to predict which approach would resonate best.
● Competitive Landscape: Assessing competitor strategies and identifying potential
price wars and market saturation is essential.
● Brand Identity: Aligning the chosen strategy with Reed's established image of quality
and service is important to avoid brand dilution.
Additionally, the exhibits provided offer valuable insights:

● Exhibit 2: Compares operating statements of different chains, highlighting the lower

expense burden of dollar stores and Aldi.
 ● Exhibit 3 & 4: Show Reed's price perception compared to competitors, indicating a
need for potential price adjustments.
● Exhibit 5 & 6: Reveal customer concerns about cost and preferences for promotions,
emphasizing the importance of addressing price sensitivity.
By comprehensively evaluating their options and utilizing available data, Reed can make an
informed decision on their Columbus market positioning, ensuring future growth and
competitiveness. In totality, the best way for Reed to position itself in the Columbus market
is to strike a balance between quality, service, and price. Reed should not try to be all things
to all people, but rather should focus on attracting a specific customer segment that is willing
to pay for the quality and service that Reed offers.

3. How serious is the threat posed by dollar stores and

limited selection stores?
Dollar stores and stores with a narrow assortment pose a serious challenge to Reed
Supermarkets. That is corroborated by the quantitative data below:
● Market share: In the Columbus market in 2010, Reed Supermarkets had a 14% market
share. This amounted to 15% in 2006. This 1% reduction is probably the result of
fewer selection stores and more competition from dollar retailers.
● Customer traffic: Twenty percent of 1,000 Columbus residents surveyed in a recent
week said they had made a purchase at a dollar store. It's interesting to see that 15%
had visited a store with a small variety. This implies that a sizable portion of Reed
Supermarkets' clientele is moving to these kinds of establishments.
● Sales growth: The aggregate sales growth of dollar stores and limited selection stores
in 2010 was 10%. On the other hand, Reed Supermarkets had a sales growth of only
2%. Dollar stores and limited selection stores are growing much faster than Reed
Supermarkets.
The following further quantitative information demonstrates the danger that dollar stores and
stores with a narrow assortment represent to Reed Supermarkets:
● Market Part: In the Columbus market in 2010, Reed Supermarkets held a 14% market
share, while the total market share of dollar stores and limited selection stores was
20%.
● Average Transaction Value: The average sale value at Reed Supermarkets is $31.48
for each transaction. While restricted selection businesses and dollar stores have an
average sale value per transaction of $15. The perception that Reed is an expensive
retailer.
 ● Sales: Dollar stores and stores with a narrow assortment cost Reed Supermarkets $10
million in sales in 2010. Dollar stores and businesses with a small assortment are two
major contributing factors to this.
Based on these facts, it appears that Reed Supermarkets faces a significant challenge from
dollar stores and limited variety retailers. Reed faces a loss of market share and profitability
if it does not take steps to counter this threat.
In summary, the quantitative evidence indicates that Reed Supermarkets faces a considerable
threat from dollar stores and restricted variety retailers. Reed Supermarkets is losing market
share to these stores, which are expanding far more quickly. To keep its market share and
profitability, Reed Supermarkets needs to figure out how to set itself apart from these rivals.

4. Should Collins continue the dollar specials campaign?

What is the financial impact of this decision?
Collins should weigh the benefits and drawbacks of carrying on the dollar specials program
at Reed Supermarkets in Columbus. Here is a breakdown of the possible financial effects and
important considerations:
● Higher Sales Volume: Dollar specials have the ability to draw in budget-conscious
clients, which could increase sales volume in the near run. Revenue could increase as
a result, particularly for things that are bought regularly.
● Margin erosion: Offering products at a discount can erode profit margins and have an
effect on total profitability. The product mix, operational effectiveness, and depth of
the discount all influence how much of this occurs.
● Supply Chain Complexity: Keeping track of several price points and promotions can
complicate the supply chain, which can affect purchasing costs and inventory control.
● Dilution of Brand Image: Over-reliance on discounting can lead to a perception of
Reed as a "discounter," potentially alienating their existing customer base who value
quality and service.
Things to Take Into Account:
● Efficacy of the Present Campaign: To determine the true impact of the current dollar
specials campaign, analyze sales data and consumer feedback.
● Target Market Segment: Determine which client segment is most responsive to the
promotions, then assess the size and profitability of their prospective market.
● Competitive Landscape: To determine whether Reed's specials are indeed
competitive, compare them to those of rivals like Aldi and dollar stores.
● Long-Term Strategy: If dollar deals are only going to be used temporarily, think about
how Reed's overarching vision would be served by them and how it would affect the
brand's identity.
In general, a thorough evaluation of the possible financial impact, taking into account Reed's
unique situation and long-term objectives, will determine whether to proceed with the dollar
specials campaign.
Here are a few more suggestions:
● Evaluate and Enhance: If you want to keep running the campaign, try varying the
amount of the discount, the product categories, and the length of the promotion.
● Track Results: Keep a close eye on profitability, customer response, and sales
statistics to evaluate the campaign's continuing effects and make any necessary
adjustments.
● Examine Options: Examine other pricing techniques that may provide a better balance
between price competition and margin protection, such as EDLP or focused
promotions on particular products.
Collins can decide whether to continue the dollar specials promotion and make sure it fits
with Reed's strategic goals and financial viability in the Columbus area by carefully
analyzing the data that is provided and the possible consequences.

Benefits Drawbacks

Increased sales: The dollar specials
campaign could attract new customers and
increase sales. This could help Reed to
offset the losses it is currently experiencing
due to competition from dollar stores and
limited selection stores.
Erosion of brand image: The dollar specials
campaign could damage Reed's brand image
as a high-end supermarket. This could
alienate existing customers and make it
more difficult for Reed to attract new
customers.

Improved customer satisfaction: The dollar
specials campaign could make Reed more
appealing to price-conscious customers.
This could improve customer satisfaction
and loyalty.
Cannibalization of sales: The dollar specials
campaign could cannibalize sales of Reed's
higher-margin items. This could reduce
Reed's profitability.

Increased brand awareness: The dollar
specials campaign could increase brand
awareness for Reed. This could help Reed to
attract new customers and grow its market
share.
Increased costs: The dollar specials
campaign could increase Reed's costs, as it
would require the company to purchase
more low-margin items. This could reduce
Reed's profitability.

All in all, the decision of whether or not to continue the dollar specials campaign is a
complex one. Reed needs to make it carefully. The company needs to weigh the potential
benefits and drawbacks of the campaign carefully and make a decision that is in the best
interests of the company in the long run.