Hi Value Case Essay
Superior Supermarkets (SS) must decide whether or not to pursue an everyday low pricing (ELP) strategy at its three Centralia MO locations.
Strategic Issues & Marketing Mix
Pricing: Current prices are reflective of a high-end branding strategy. SS everyday (non-promotional) prices are approximately 10% higher than Harrison (Hr) and about 7 percent higher than Grand American (GA) and Missouri Mart (MM). Subsequently, higher prices have become a competitive concern due to their declining market share in Centralia. The negative growth rate, based on 1995 to 2002 figures from Figure 2, is -0.53%.
Product line: SS are supermarket stores. The stores’ products may be divided into 5 categories: 1) grocery (including …show more content…
4) Constraint2: Implementing ELP strategy while maintaining current contribution margin.
History: SS is a division of Hall Consolidated (HC), a privately held wholesale and retail food distributor. HC distributed food and related products to some 150 company-owned supermarket units operating under three supermarket chain names through 12 wholesale distribution centers. These distribution centers also supplied about 1,100 independent grocery stores in the US. HC sales in 2002 were $2.3 billion.
Products: Products fall into 5 categories and have sales(%) and profit margin(%), respectively:
1) Grocery (including diary) -50%, 30%;
2) Fresh meat/poultry/seafood -20%, 18%;
3) Produce -18%, 30%;
4) Seasonal and general merchandise -7%, 33%; and
5) Bakery and deli -5%, 50%.
Size: SS stores capture 23% of Centralia’s supermarket market share. Only MM, with 27%, had more market share.
Strategic organization: Maintain high-end brand as indicated by their slogan “Superior
Supermarkets = Superior Value”.
Managerial organization: James Ellis –Sr. VP of HC + President of SS; Randall Johnson –District
3 Manager of SS (Centralia); Controller (unnamed).