Marketing Sample Paper on Recommendations for Reeds Stores

Recommendations for Reeds Stores

Reed supermarket has maintained 14% market share in the Columbus food retail market for two years. The company has also maintained a steady growth in revenue by an average of 1% to 2% per year across its market. The company aims to achieve a market share of 16% by 2011. However, it is evident that Reed Supermarket is facing a great threat of competition in Columbus market mainly from dollar stores among others. From the analysis of the market and competitors positioning, it is evident that price is the main determinant of competition in the Columbus market. Most customers perceived the price at Reed Supermarket to be higher than those of the competitors and they have started shifting to the competitors. The management of the supermarket is in dilemma of whether to change the pricing model or to retain their pricing strategy and focus on quality as their competitive advantages. Earlier, the Reed had introduced a marketing campaign named dollar special to combat high pricing image. The program gives discounts on selected items on various products to attract customers and the program have been effective in increasing sales but due to low margin the sales revenue have remained stagnant.

To address the problem in the Columbus market, there are three options for the Reed Supermarket which include maintain the dollar special program, commit to low prices by introducing low priced specials and expanding private label brand and prepare low end goods to maintain high margin. Each recommendation has its pros and cons. The table below shows the pro and cons of the recommendations:

Maintain the Dollar Special Program
ProsCons
Increase sales by attracting customers Helps the supermarket in advertisement Increase brand awareness  Low profit margin Perception of low quality products from customers Customer take advantage of low priced products
Committing to Low Price
ProsCons
Increase traffic to the stores Increase sales Increase market share  Perception of low quality product Low profit margin Increased competition from market entrants 
Increase Low-Priced Specials
ProsCons
Increased competitive advantage  Increased market share in the short term Increased customer loyaltyLow profit margin Damage to quality image Limited growth in revenue