Discussion questions and educational frameworks

Superior Supermarkets- EDLP

Of the four Ps of the Marketing Mix, Price is the most flexible. Why is that? Please defend your opinion.

The case study, Superior Supermarkets: EDLP, pricing was considered the most flexible element of the marketing mix because it is the common and most distinct criterion variable considered mainly by consumers across all supermarkets surveyed (Harrison's, Missouri Mart, Grand American, and Superior). While each supermarket has their strengths in certain product offerings, pricing remains a marketing feature that gives consumers an impression that they are getting value from their money. In fact, both qualitative and quantitative research results showed that pricing is the key determinant among consumers in choosing which supermarket to shop from. Other determinants follow after the key determinant, pricing (i.e., reasonable prices), has been satisfied. Furthermore, competition among retail grocery stores make it imperative for operators to respond to consumers' need for competitive pricing, in addition to satisfying other consumer considerations such as location (of the grocery store), quality of products and services offered, store lay-out and shopping convenience.

DQ2: What do you think is more important to competitive marketing issues, namely, increased price competition or everyday low pricing.

Developing marketing strategies around increased priced competition or everyday low pricing (EDLP) has its own advantages and disadvantages. In increased price competition, the supermarket responds and changes its pricing specific to its major competitor's pricing or pricing strategy. Increased price competition can be responsive to consumers' shopping needs because the price competition ultimately benefits them: whichever supermarket provides the lower prices for core shopping/grocery items will be patronized by most customers/shoppers. However, price competition can be a disadvantage over time, as pricing tends to be too specific between competing supermarkets, and focus can be diverted from the shoppers to the competition. By responding to every price change in specific products/grocery items, the price competition eventually fails to be cost effective as pricing changes depend on the competition's pricing changes. As Hall Consolidated remarked, "[t]he need to remark merchandise and shelf tags, including labor expense, costs us 60 basis points (0.6% of sales)" (494).

EDLP as a marketing strategy, meanwhile, provides shoppers with the shopping advantage of getting discounts from all grocery items everyday. Compared to price competition, EDLP is more cost effective and focused on the shoppers, as prices are all discounted or lowered across all grocery items/product categories and are not heavily dependent on the competition. Further, EDLP is a promotional activity that creates more to the shopping value and experience of consumers. A disadvantage of the EDLP, however, is that the concept of low prices everyday would eventually level out and normalize, reaching a point wherein EDLP is considered the norm rather than a promotional strategy for the shoppers.

DQ3: What issues should be considered in deciding whether the price is wrong, or whether the problem lies in another element of the marketing mix?

Superior Supermarkets: EDLP presents a good analysis of how to develop the right approach to pricing as a marketing strategy in retail grocery stores/supermarkets. The case of Superior Supermarkets demonstrates the need for retailers to evaluate whether low pricing strategy is indeed the right solution and approach to increase competitiveness in the trade and for consumers. For Superior, the option to use EDLP as a pricing strategy must include an assessment of the retail grocery chain's pricing strategy prior to launching the EDLP approach. This way, Superior can best identify if the EDLP is the best approach after assessing pricing for all grocery items/product categories (i.e., do most or only few of the items need further reduction to increase pricing competitiveness). In addition, it would also be wise for Hall to determine, from consumer research results, the different "dimensions" that consumers give to the determinant "price." It is possible that "price" for consumers is simply looking at the price per se, and it is also possible that other consumers evaluate prices differently, attaching a specific value to it -- that is price plus quality of product/item, price plus shopping convenience, price plus consistency of pricing, among others. Dimensionalizing price will provide Hall with an indication if indeed, low prices or price reductions is the major determinant for supermarket preference and patronage, or maybe other factors or determinants come into play and are fused/integrated with consumers' perception of "price."

DQ4: Please compare Superior Supermarket to a supermarket that you shop at. Are they trying to compete on the platform of EDLP or something else? What is the message they communicate to consumers using IMC?