Supermarket industry.

Essay by bobgeldof November 2003

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The overall emphasis on non-price characteristics and the relative

importance of the different characteristics in all countries provides

opportunities for retail managers to differentiate their firms away

from pure price competition. These consumer responses have been

important in shaping the marketing strategies of the food retail

companies and have allowed a range of strategies which range from an

emphasis on discount prices, to pure quality and service

considerations. These strategic directions are strongly supported by

promotional programmes which emphasise the characteristics of the

stores rather than the products which are stocked.

In Hughes (1994) information is presented which shows that food

retailing firms are ranked number one, nine and eleven in terms of

their advertising expenditure amongst all firms, which demonstrates

the overall importance of promotional activities to these firms.

These activities allow retailers to develop their own 'brands' or

images which are independent of the brands that are sold, and are

likely to be the source of control which food retailers are reputed to

exert over manufacturers.

Table 5Most important factor when buying food

(Percentage of respondents ranking first)


EUROPE461716 8 8

Belgium68105 6 7

France59186 7 7

Germany39162311 8

Holland46131611 7

UK511713 7 9

Italy481219 7 5

Spain402617 7 6

Greece183918 612

Source: Food Marketing Institute (1992)

Positioning of retail firms

In recent years food retail firms have pursued strategies which have

provided consumers with increasingly diversified opportunities for

purchasing food. The discussion above has shown that these

developments have been made possible by the wide range and changing

nature of consumer requirements. Firms have identified the

possibilities and have developed appropriate strategies to compete in

the market place.

The concept of competitive strategies is clearly developed by Porter

(1980) and has become an accepted approach for analysing the manner in

which firms within an industry compete...