Question

In developing a strategic direction for Kroger:

• Which strategies will be especially effective for Kroger?  

• Which strategies should Kroger avoid?

Also, consider the potential strategic and tactical areas for developing a competitive advantage:

• In which areas will Krogers unique capabilities likely provide a sustainable competitive advantage (or a basis for developing one)?

Answer 1

Company M/s K involved in grocery business is one of the most competitive and dynamic space wherein players keep constantly differentiating to sustain in the market. The competitors in the retail industry constantly try to put pressure on established players using distinguished offering. The sale keeps moving up and down due to various external factors like market effect, inflation or tough competition. Company M/s K learnt a lot from tough times and seen these instances as opportunity to grow.

• Following strategies will be effective for M/s K to increase their sales,

a) Differentiated offering in terms of products and service- Customer buying experience is the most important factor in retail segment which creates good brand image. If customers are able to identify and choose the right products with good quality then he/she will be made to got repeat buy. Visibility of price tags and location of goods in shop this will also create difference among competition and gain advantage.

b) Digitizing experience and enhance operational efficiency- Customers should be given many options like online shopping , door delivery facility and digital displays in shelf giving additional information about products. Digital display helps operation team to change the price of products easily without manual intervention and thus increasing the operation efficiency.

c) Focus on quality and create premium approach of selling- Quality is basic requirement which customer will expect out of retail chain. The operation should frequently inspect the line of goods and try to remove the items that have reached its expiry. Dealers are the ones who help in establishing the brand name in the retail market. Sourcing from right suppliers and developing good ambience in stores attract customers to make a visit to their shops.

Company M/s K should also focus in retaining their customer base by creating the record of people involved in making buys, frequency of purchases, type of goods purchased and total amount at which purchases are made. Marketing team of the company should inform the offers through email, hoardings and advertisements to attract customers.

• Following strategies should be avoided by M/s K,

a) M/s K should avoid price reduction- Sudden reduction in prices and selling the products at low margins will make the company run at loss. Low prices of premium products can create a sense of doubt among customers on whether they are purchasing the right quality product. On longer run company M/s K bottom line and operation profits will be low. This will prevent company M/s K to make new investments and cannot grow among competition

b) Should stop charging high price on premium products- Company M/s K should not charge more price on premium products. This will not attract customers and company will end up in loss if the goods are getting scrapped without selling.

c) Avoid over differentiation on product quality and service- Too much focus on quality and differentiated offering will increase the marketing spends thereby reducing the profits. Customer requirements should be studied through market survey and offer right service at optimum cost level.

• Potential and tactical areas where in M/s K can gain competitive advantage are as listed below

a) Sourcing from suppliers involved in making good quality products- Good suppliers are the basis for creating good benchmarks in market. Suppliers with right resources, robust quality standards and innovative process method help company M/s K to set high standards in market.

b) Area of research and development- Established player like M/s K spend significant portion of their sales turnover in research and innovation. Higher use of technology will increase the product capability and quality, improved specification that results in grand success among customers.

c) Robust supply chain and retail network- Wide spread among market will help company M/s K to increase their customer reach. If products are supplied to warehouses and retail shops on time then customers will be satisfied with service offered by the retail chain. The retail network plays an important role in establishing the brand name for M/s K.

d) Unique customer service and marketing activities- A good brand promotion in terms of television commercials, advertisements and email campaigns help company to reach more among customers. If the customers are given more awareness on technical front and information on products then it will create a kind of confidence among them to go for the product. Customers often keep looking for the right offers so it is the duty of marketing team to keep them informed about the latest pricing and discounts.

Sustainable competitive advantage can be achieved through differentiated offering made in the market. Competitors keep tracking the progress and future strategies of the established player in the market to gain advantage.

a) Offering latest features and keeps the purchasing cost of buyer at optimum level. Customers expect their product to have the latest features and technology at affordable price level. To meet this requirement company M/s K have to implement cost reduction techniques and increase the operational efficiency. The resources allocated for the projects should be also utilized to the fullest extent increase the profitability. Using the research and innovation the features need to be constantly upgraded as per the latest market trend to gain advantage over competition.

b) Implement features that enhance product life- Product life cycle is a key element which creates the buy decision among customers. People prefer that their product should run for the maximum life possible, safe to use, more convenient to handle and should be available at competitive price. Availability of the products in store also needs to take care by the retailer to keep the customer confidence at high standards.

c) Offering unmatched service and capability- Customer should be given confidence on functionality and after buy experience. If the product fails due to some reason within the warranty or guarantee period then he/she should be made to replace those products at free of cost. Company M/s K should be offering products with right capability. This is more related to ability to storage life and ability to bring in new products with lesser turn around time.