PROMOTIONAL STRATEGIES USED BY SUPERMARKETS

Promotional Strategies used by Supermarkets

Abstract

The aim of this paper is to develop an understanding of the retail marketing, merchandising, and logistical practices in the grocery supermarket sector. Most of the literature in English has focused on the structure of the sector with little detailed research on the consumer and the corporate response to retail change. This paper highlights the case of Budgens, which has established a niche position in the grocery market through its operational excellence.

Table of Contents

Abstract2

Chapter 15

Introduction5

Chapter 2: Literature Review10

Background: Retail Market Segmentation10

Consumers and the Grocery Sector16

The Grocery Supermarket Sector20

Segmentation Analysis23

Chapter 3: Methodology28

Research Method28

Quantitative Research28

Qualitative Research29

Mixed Method Research30

Questionnaire Definition (only for Primary Research)35

Sections for Qualitative Secondary Research36

Literature Selection Criteria37

Search Technique37

Keywords Used37

Theoretical Framework37

Assumptions & Limitation37

Case Study38

Chapter 4 Discussion40

Refinement of market segmentation scheme40

Selection of target markets40

Development of positioning strategy41

Budgens - History and general background of the company42

Retail store operations44

Store formats and in-store layout44

Display policy and in-store atmospherics45

Replenishment lead-times at Budgens46

Retail marketing/service strategies at Budgens.46

Chirashi advertisement46

Point card scheme46

Own brands and branding strategies47

Store delivery and in-store handling/ processing operations49

Store delivery49

Backdoor/in-store processing of fresh vegetables/fruit51

Processing operations of fresh fish and fresh meat52

Home meal solution (HMS - sozai)53

Logistical operations at Budgen55

Segmentation Analysis59

Competitive Analysis62

Strategic Implications64

Refinement of market segmentation scheme66

Chapter 4 Conclusion69

Competitive Analysis69

Strategic Implications70

Current issues and future perspectives72

References77

Appendix87

Questionnaire87

Chapter 1

Introduction

Although the retailing sector has $424 billion annual sales, the second biggest market after the USA (Aggarwal et al., 2000), little has been written on the specific marketing and logistical practices of this particular industry. While much of the past research (Larke, 1992, 1994; Martin et al., 1998; Sternquist, 1998; Fernie, 1994) outline the general trends in the grocery sector based on the census of commerce provided by Ministry of Economy, Trade, and Industry (METI) and other governmental information sources, the understanding of corporate best practice has yet to be explored. Therefore, it has been always a problem for international researchers to compare their domestic practices with those in UK.

In light of this, this paper outlines the role of the consumer in grocery retailing, prior to giving an overview of the grocery sector. The awareness of the importance of logistics and marketing strategies in grocery retailing is explained through the case study of Budgens. supermarket chain, which has established an unique positioning in the grocery market through their operational excellence.

Retail market segmentation is necessary and often critical to the development of effective marketing strategies in today's competitive marketplace. The impetus for a market segmentation strategy is basic: customers exhibit heterogeneous needs and purchase patterns, and thus respond differently to different marketing stimuli. The benefits to be gained from a segmentation strategy are closely linked to the marketing concept. The process of identifying segments necessitates a thorough analysis of the entire market, not only focusing on the customer's needs and shopping habits but also providing knowledge of changing market conditions and competitive actions. This knowledge enables the retail organization to identify those segments that offer the most promising opportunities in relation to the organization's strengths and situational ...