In the face of vigorous competition, a company must find ways of maintaining its competitive advantage or risk being competed out of the market. One way of identifying the changing needs of customers is through surveillance studies to identify areas of weaknesses and strength. This was the attempt Marsh carried out in its study. The study focused on its own chain of stores in different demographic set-ups. The information gathered was highly inconclusive and leaves the reader wondering what the best strategy to improve competitiveness would be.
The areas of concern for the chain of supermarkets were on the product specialization, product display, the target consumers, and the promotional activities. The issue on product specialization revolved around the products with high direct production costs (DPC). Fragile goods such as charcoal had high handling costs amounting to a DPC value of $0.37. Disposable diapers also held high DPC values of $0.70. These presented a problem with bulkiness. The varieties of the diapers, For example, kept changing, and that caused inconveniences in constant resetting of the shelf fixtures.
The display of products formed another area of focus. In this element, the study focused on the product and category sales per foot of the shelf space. The approach provided evidence that alcoholic beverages and cosmetics took considerable shelf space but generated considerably low in the returns. Alcoholic beverages performed poorly at $7.45 per feet while cosmetics performed even worse at $0.69 per feet of shelf space. Though they presented low returns, these products occupied considerable shelf space. The alcoholic beverages took a total of 513.3 feet of shelf space with only weekly sales of $3,823.73. Carbonated beverages, on the other hand, recorded almost triple in weekly sales to that of the alcoholic beverages ($10,003.92) but occupied shelf space of 339.7 ft. Cereals and other breakfast foods also occupied considerably little linear space, 166.6ft, regardless of the higher sales compared to the alcoholic beverages. In the non-edible grocery section, soaps and detergents took the largest share in the shelf space allocated (345.1ft.). The weekly dollar sales were $9187.17 compared to paper products (shelf space of 338.3ft and weekly dollar sales of $8483), and cigarettes/tobacco products, which had weekly sales of $11024.62, with a linear shelf space of 156.6 ft.
On the effect of promotion, various products responded well with the combination of advertisement, increase in display, and price reduction. Commercial bread increased in unit sales by 1211% in contrast to 133% increase in unit sales as a result of price reduction. Other notable products were flour, whose unit sales increased by 1856%. Baby food showed no response to the advert-price reduction-display promotion strategy.
It can be concluded that the heart of the matter in the supermarket chain operation largely depended on the promotion. With most of the products responding positively to a combination of the three elements of promotion, it means that the company should probably focus on allocating more display, cutting prices and advertising, more so, in the edible grocery section. Feminine hygiene products responded better in unit sales (127%) increase as a result of the combination between price reduction and increased display. When the two were combined with advert, the unit sales rose by only 95%. Incontinence products also performed excellently due to a price reduction and display increment (1007%). The best approach would be demarcating the products in the lines of promotion strategy that best suits each product.