Kelsey Carpenter MKT 520 Hi Value Supermarket Case March 20, 2014 Hi-Value Supermarkets Competitive Environment -Market shares change a lot -3 Hi-Value stores compared to only one each of competitor stores in area -30% of shopper say that Hi Value is overpriced -Centralia trade area had total retail sales of $725 million in 2002 -There are 20 establishments in Centralia that sell food and beverages -Competitors drew their customers from larger areas outside of Centralia Positioning -Rank high in cleanliness and convenience -Shoppers go there 3-5 times a week
-Less than 1/3 of shoppers purchase majority of food there -Shoppers go more frequently, but not buying more -Shoppers go to Harrison’s for meat/produce -Shoppers are buying less per visit The Problem -Hi Value’s prices are higher tan the competition at a time of growing price consciousness, and the price differential could cause them to lose market share. -Prices are 10% higher than Harrison -Prices are 7% higher than Grand American and Missouri Mart -Company growth rate = . 53% -Advertising budget is . 89% of sales compared to competitors 1. 0% of sales -Should they adopt an everyday low pricing strategy? SWOT Analysis APPENDIX I
Pros & Cons of Everyday Low Pricing APPENDIX II Pros & Cons of Price Reductions APPENDIX III Advertising APPENDIX IV Calculations APPENDIX V Options 1. Do nothing (Don’t implement Every Day Low Pricing) 2. Lower the prices across the board 3. Lower prices in certain categories Recommendations I believe that Hi Value needs to increase their market share. Their original advertising was . 89% of sales. Missouri Mart and Harrison’s are 1% of sales. By saving on operating costs due to everyday low pricing, Hi Value can increase their advertising to 1. 1% of sales. I would recommend a 7% pricing reduction for groceries and general merchandise.
The Research paper on Hi-Value Supermarkets- Everyday Low Pricing
Case Analysis I. Factual Summary Hi-Value Supermarkets became a division of Hall Consolidated, a privately owned wholesaler and retail food distributor in 1975. Hi-Value Supermarkets is considered to be the smallest of the three supermarkets chains owned by Hall Consolidated, with a small store distribution for its category. Hi-Value was the number one or two ranked supermarket chain in each of ...
With that price reduction, you are able to increase sales, increase the contribution margin, and increase market share. All of the financial objectives are met. The brand image of “Hi-Value Supermarket = Superior Value” would not be in question any longer. Price sensitive customers would benefit as well as Hi-Value Supermarkets. Avoid a price war with Missouri and Grand American. 4% increase in market share is already optimistic SWOT Analysis Strengths: -Oldest supermarkets in Centralia -3 stores -Convenient locations -Some high quality products -Stores are renovated, clean, & convenient Weaknesses: -Pricing strategy
-Limited variety of merchandising -Reduced brand advertising, no outstanding ads -Too high prices for meat & product Opportunities: -Increased consumer awareness about image and price (through advertising) -Increase market share by lowing prices Threats: -Loss of current market share -Decreasing sales -Price War Inconsistent brand image (from HI value to LOW price) Pros & Cons of Everyday Low Pricing Pros: -Shopper perception -Potential to reduce operating costs -Boost advertising with money saved -Reduce labor cost -Opportunity to expand market -Predictable demand Cons: -Have to sell more if prices are cut
-Potentially lose money -Could cause pricing war -Could hurt customer perception -Loss of jobs due to labor cost cuts Pros & Cons of Price Reductions Lower prices across the board Pros – meat is considered, greater impact on customer perception, least amount of inventory Cons – Lowering prices of perishables could be bad for store’s image Lower prices in selected categories Pros – Still convey change in image, less inventory, no need for lowering prices of bakery, bigger market share, react to trend of price-consciousness Cons – Does not take meat into account which is the most important to customers
The Essay on Ordinaries Index Market Share Shares
... share has increased in value by the time you sell it, you have gained value. The difference between the original price and the selling price ... 15 pm each day. b) Move is the amount by which the last sale price is ... ratio a) Close is the price the share was sold for in the last sale for the day. The market officially closes at 4: ...
Calculations 7 % Price Reduction Price Reduction Original Sales Contribution Margin% change to break even New Sales Grocery(Dairy Included)-7% $7,163,350 30%30% $ 9,343,500. 00 Seasonal/General Merchandise -7% $1,002,869 33%27% $ 1,272,872. 19 Total Original Sales $ 14,326,700. 00 Total New Sales $ 16,776,853. 19 Original Market Share 23% New Market Share 27% Market Share Increase 4% 8% Price Reduction Price Reduction Original Sales Contribution Margin% change to break even New Sales Grocery(Dairy Included)-8% $7,163,350 30%36% $ 9,768,204.
55 Seasonal/General Merchandise -8% $1,002,869 33%33% $ 1,323,787. 08 Total Original Sales $ 14,326,700. 00 Total New Sales $ 17,252,472. 63 Original Market Share 23% New Market Share 28% Market Share Increase 5% 9% Price Reduction Price Reduction Original Sales Contribution Margin% change to break even New Sales Grocery(Dairy Included)-9% $7,163,350 30%43% $ 10,233,357. 10 Seasonal/General Merchandise -9% $1,002,869 33%38% $ 1,378,944. 88 Total Original Sales $ 14,326,700. 00 Total New Sales $ 17,772,783. 02 Original Market Share 23% New Market Share 29% Market Share Increase 6%
