Differentiation Generic Strategy of Spinneys Supermarket - Research Paper Example

?Differentiation Generic Strategy of Spinneys Supermarket Differentiation Generic Strategy of Spinneys Supermarket The dynamic manner in which the business environment is changing has prompted various businesses to align their operations in relation to these changes. The competitive nature of the business and the increasing operating costs of doing business have seen many firms draft various strategies to remain competitive in their industry. Differentiation generic strategy is a major strategy that retail chain organizations are adopting to win the competition. Spinney's supermarket has adopted the strategy by involving value chain and customer segmentation to ensure that it remains ahead of its competitors, while at the same time increasing its revenue. This paper will seek to address the differentiation generic strategy by Spinney’s Supermarket. The resources and capability of the firm in implementing this strategy will also be addressed. Differentiation generic strategy is the manner in which a company generically differentiates its products by classifying them in any possible aspect. The main aim of the strategy is to fight Porter’s five factors of competition, and to win the firm’s products brand loyalty from customers. Indirectly, points out Pradhan & Pradhan (2009), this helps in eliminating any potential competition by the rest of the firms operating in the same industry. The direction taken by the organizations is influenced by the strategic plans of the organization. Factors organizations could consider as its strengths include brand superiority, resources available, market share, and employee capabilities (Bhatia, 2008). Although the manner in which these strategies are implemented is what is important, the selection criterion is equally important. There are various sources of differentiation that a firm can exploit. Some organizations choose to differentiate their operations in terms of their products and services, but others opt to align theirs with the market they serve (Harrison, 2010). Spinney’s grocery retail store has chosen to undertake both value chain and customer differentiation as methods of differentiation generic strategy. Through this strategy, the retail chain hopes to achieve customer intimacy and operational excellence, so as to improve on its revenue. Value chain is the specific chain of activities followed by a particular firm operating in the specific industry in order to offer goods or services that are of high quality to the customers. Products follow a series of activities in the value chain, and in every stage they are added value to improve their qualities. At the end of the chain, a product ready for the market is achieved (Bhatia, 2008). Two types of value chains according to their activities include physical value chain and virtue value chain. While traditional value chain, also known as physical value chain involves physically performed activities to improve the quality of products through experience, virtue value chain is the use of computer aided systems to produce goods. Each has its own perks and limitations. The preference is thus upon the strategic management team of the organization. Little comparison however exists between the two, as virtual value chains are more superior, offering quality products and increased ease of operations than the traditional systems. The choice by Spinneys to adopt virtual systems has significantly increased the quality of its products, in relation to other firms in the retail business. Although not every operation in the store is computer operated, most of its operations are computer aided. Therefore, the speed of churning out quality products with increased ease has given the firm a competitive advantage over other firms in the industry. Fresh juices by the supermarket as well as its drinks are appealing to their customers due to quality. Along the various stages in a value chain, a number of differentiation sources can be exploited. Product differentiation is the diversification of a product to include qualities that other products do not offer. Quality is essential for Spinneys, which is echoed by freshness of its products. Unique characteristics of its products ensure that customers get extra satisfaction from the product, which other firms do not offer. Packaging in itself, although it does not add value to the product, it attracts customers to buy the product. Spinney’s has invested in packaging of its products to improve their beauty and aesthetic value, thus attracting more customers to buy its products. According to Jiang (2008), customer segmentation is the manner in which the market is subdivided into discrete customer groups in respect to their similarity in characteristics. Experts observe that through customer segmentation, firms are able to identify the unmet needs among the customers. Firms which successfully identify segments that are underserved improve on their ability to perform better than their rivals (Dibb & Lyndon, 2008). Tailoring products in reference to the needs and the desires of the customers is an attractive element of customer segmentation. Efficient methods of market segmentation divide the market into segments that are measurable in reference to their needs, past behaviours and demographic needs. Spinney’s is a high end market retail chain store that aims at supplying groceries to the high end customers with high income levels and show willingness to spend. Their customer segmentation strategy aims at capturing customers in big cities such as Lebanon, Dubai and Egypt (Spinneys, 2013). In Dubai, Spinneys is the highest end premium operator, targeting prestige and class among the shoppers. Selecting the rich and socially well up customers, the firm ensures that it taps into the market, creating a brand image that the rich and wealthy want to be associated with (Crain & Abraham, 2008). The main characteristic of this group of customers is their willingness to spend. Thus, the prices of its products are higher in relevance to other grocery food stores in the areas it operate. While many international supermarkets have failed in Egypt for example, Spinneys has remained a highly profitable firm despite the hard economic times (Spinneys, 2013). Many firms have ambitious differentiation strategies that they plan on implementing to achieve competitive advantage over other firms in the same industry. However, some of the strategies remain unimplemented due to constraining factors facing the organizations. While external factors cannot he avoided by a firm, internal factors are avoidable and thus require hedging strategies. The internal capability of the firm, adding to capital inadequacy constrains these plans. Any firm that wishes to be successful should thus weigh its ability to achieve the said strategies to know whether they are achievable or not. Spinney’s has the capability and potential to achieve its strategy. The firm has enough resources to implement its plans. Owing to the many years it has been in operation, the firm has had amassed enough resources as it has not failed to record profits in the recent past. Technologically, it is well equipped to implement these strategies. It has quality products and contract reliable suppliers who deliver fresh products to its shelves. Spinney’s has various key resources that are likely to contribute to its long-term competitive advantage. Not only is the retail chain technologically advanced to ensure that its supplies do not go bad, it also ensures quality service that aid in serving its customers swiftly. The firm has a strong brand image that has won it customer confidence and loyalty especially in Lebanon and in Dubai. Moreover, it treasures its customers, listening to their needs and desires and acting upon them, and this is likely to win them more customers as it strategizes to roll out its plans in relation to the needs of the customers. These plans include opening branches in the Sab-Saharan Africa on request by various customers. References Top of Form Bhatia, S. C. (2008). Retail management. New Delhi: Atlantic Publishers & Distributors. Crain, D. W., & Abraham, S. (2008). Using value-chain analysis to discover customers' strategic needs. Strategy & Leadership, 36(4), 29-39. doi:http://dx.doi.org/10.1108/10878570810888759 Dibb, S., & Lyndon S. (2008). Market Segmentation Success: Making It Happen!New York: Haworth Press. Harrison, J. S. (2010). Foundations in strategic management. Mason, Ohio: South-Western Cengage Learning. Jiang, T. (2008). Generalized approach to customer segmentation and building predictive models of customer behavior. Dissertation Abstracts International, 69-12. Pradhan, S., & Pradhan, S. (2009). Retailing management: Text and cases. New Delhi, India: Tata Mcgraw-Hill Education Pvt. Ltd. Spinneys - the price is right. (2013, Apr 12). Arabianbusiness.Com. Retrieved from http://search.proquest.com/docview/1326337748?accountid=45049 Read More