A New Wave of Competitors Case Study Example | Topics and Well Written Essays - 1750 words

A New Wave of Competitors - Case Study Example The company mainly targets the wealthy and high income customers that have an average income that is at least 12 percent higher than the rest of the population and currently Reed owns 14 percent of the market share. Reed Supermarkets has a reputation of around 80 years for its service as a supermarket chain. Reed is now known nationwide and is serving a huge population. This creates a competitive advantage for the company and places them at an upper position relative to its competitors. The layout of the stores of Reed Supermarkets is attractively planned. Attractive stores and good service allowed Reed to differentiate itself from other competitors in the industry. Among the factors the most distinguishing are long store hours and short time for checkout, adequate number of staff, elegant and creative serving-case displays, extensive customer service and runners carrying bags of the customers to their cars. Customers are not required to provide tips to the staff while leaving. The p laces in which the stores are located show high population growth and even in many of these places, the growth rate of population is above the average rate of growth in the rest of the country. This shows that there is high prospect for the company to increase store traffic. The store visibility is also enhanced since large number of customer would visit the store and they would act as word of mouth promoter. Weaknesses Reed offers high quality products to its customers, but, according to the perception of a considerably large segment of the target customer, prices charged by Reeds is high. Therefore only a selected slice of the market can buy products from its stores. There is no harmony among the management of the company about the appropriate strategy that must be implemented for increasing market share. Contradiction exists among managers about discounts, high-margin items, introduction of low price specials and double couponing. On this issue, they have not been able to choose the most apt solution from the different opinions provided by each of them. The company has drawn a line on its capital expenditure for at least the coming two years starting from 2011. Such freezing on capital expenditure would affect the operations and growth path of the company. In order to meet higher revenue objectives more stores have to be opened. However, stringent capital expenditure policy might hamper such ambitions and impair the growth of the business. Opportunities Political/Legal The supermarket industry in the USA faces the support of strong lobbying form farm groups, transporters, and food processors. This facilitates the supermarket by removing barriers to trade, maintaining symmetry in information sharing across the market and allowing smooth expansion. Economic The economy of the USA has the GDP of 15.94 trillion (according to 2012 estimate). It is a developed country and therefore has the ready ground for development of flourishing supermarkets. Columbus, being situated in the largest state in the United States of America therefore offers a good opportunity for growth to Reed. The average citizen in the state has a high purchasing power. Socio-cultural There is an increasing trend among the American consumers that they are gradually becoming more health conscious besides being price sensitive. The emerging trend