Superior Supermarkets Case

Chris Peterson

Superior Supermarkets

“Everyday Low Pricing”

December 5, 2012

Business Metric and Marketing Tool

In the Superior Supermarkets case the metric problem is market share in dollars because Superior wants to retain the number 2 market share position in this region. The marketing tool to solve this problem is price because current consumer trends in Centralia indicate a shift towards a greater focus on price.

Recommended Solution

Superior Supermarkets should reduce their prices by 7 percent for a few reasons. Reducing their prices by 7 percent will make Superior more price competitive in the food store market. Reducing the price will also reduce operating costs for inventory, handling costs, and labor expenses. Overall, these savings improved the gross profit percentage by roughly 1 percent, reducing labor costs related to less frequent temporary price reductions. These savings are calculated in Superior’s new overall gross profit margin percentage and will save Superior $157, 593 in operating costs. (APPENDIX EXHIBIT 3)

Using an “Everyday Low Price” strategy across all three stores and departments will eliminate the need for temporary or and varied price reductions. This will help with the confusion and dissatisfaction from customers and employees when shopping in all three Superior stores in Centralia. Superior wants to keep the same gross profit percentage because it will indicate if Superior is operating efficiently against competitors in this region.

Superior supermarkets are already known for loss leaders like bread, eggs, flour, and soft drinks. Superior should keep these loss leaders in place to get consumers to shop at their supermarkets. These products are perceived as undifferentiated among Centralia consumers and the price should not be changed.

With a decrease in price, sales will need to increase 17.31 percent to keep the same gross profit percentage. (APPENDIX EXHIBIT 5) An “Everyday Low Price” strategy will increase sales...