A Supermarket Marketing Strategy for Expanding its Store - Essay Example

A supermarket strategy for expanding its store retail wine offer; Castlegate Wines Ltd Executive Summary The main target of any organisation is to maximize the level of sales. This study gives an analysis of how an organisation can use a supermarket strategy to expand its store retail wine offer. This is very important given the current situation of the wine market, which is characterized by a very high level of competition. This analysis is based on Castlegate Wines Ltd a small wine company that was formed on October 2010. Currently, the company has not developed a successful marketing plan. There is need for improvement. In most cases, supermarkets attract many customers due to a variety of commodities available under the same roof, from food to clothing and other things. Therefore, supermarket strategy can be very effective method in marketing wine for Castlegate Wines Ltd. The company will be able to trap potential customers from here. Recent statistics indicates that a significant number of females are now actively consuming wine (MPC Associates 2011). In many traditions, females are more associated with frequent shopping for food. By keeping wines in certain strategic positions, an organisation will manage to increase the level of sales through impulse buying. Finally, this analysis summarizes by giving some recommendations on how to achieve the goals. Although the market for wine has been expanding, it is also important to note that the level of competition has also been moving in same direction. Therefore, every organisation is fighting to its best in order to capture the emerging new markets. Thus, it is necessary for the organisation to apply the strategy of supermarket in order to expand on its sales. In most cases, customers will always visit a retail wine store with an aim of purchasing wine which most probably must have planned to. Therefore, there are very low chances of impulse buying through a wine retail outlet store. This is because only a single commodity is available under the proof. In the case of a supermarket, even those who visit purposely to buy food may end up buying a bottle of wine through impulse buying. This increases the level of sales significantly. It is therefore recommended that Castlegate Wines Ltd liaise with supermarkets to increase on its sales. In supermarkets, wine is placed in strategic positions where it can attract the attention of a large number of people. This includes places like near the tills, food staff and other conspicuous places. The organisation must also make an effort of ensuring all supermarkets are selling its product by approaching the newly developed supermarkets. Finally, it is recommended that the organisation maintain a steady supply to these supermarkets in order to retain good relationships between them. Shortages may lead to problems. Introduction In every organisation, there are some key marketing management decisions which play a pivotal role in determining the performance of an organisation. Managers have the ability to control these variables in their attempt to maximize the satisfaction level of their customers (Silk 2006). These include the product, price, distribution and management. In every day operations of an organisation, the total number of sales it makes plays a very important role in determining the overall performance. The main target in every organisation is to sell all what it produces in the shortest period possible. However, it requires an organisation to invest in and be able to come up with best marketing strategies which would help in maximizing sales. the current business world, the market has become extremely competitive due to entrant of many players in the market. In the wine industry, the level of competition has increased significantly over the past. In order for any organisation to be successful in the market, they need to have a good marketing strategy on top of their retail wine stores. This will help an organisation to reach as many customers as possible hence maximizing its sales. Background and arguments As already seen, the current market has become extremely competitive. In order to survive in such an environment, it is necessary for every organisation keep on revising on their marketing strategies in order to maintain a high level of performance. In the market for wine, there have been a number of new entrants over the recent past. This has increased the level of competition in the market. This has increased the need to come up with extra measure in an attempt top increase the level of sales. The main aim of this study is to come up with the best strategy through which the organisation can increase the level of wine sales bearing in the mind the high level of competition in the wine market. The best method in this case is the supermarket. The supermarket is one of the best method through which the company can increase its sales. In a supermarket, there are varieties of things. We encounter a large number of people each going to buy different things including foods. By placing wine near to the food shelves then it attracts the attention of the people who visit the supermarket purposely to buy other things like food. In the process, the display of wine in the supermarket leads to the impulse buying (Cellarette 2008). This can significantly increase the level of sales. Past studies has indicated that the rise of supermarkets have has transformed the domestic marketing channels (Bignebat, Koc & Lemeilleur 2009). Supermarkets have significantly contributed to the improvement in the distribution in many countries. This indicates that the company can significantly maximize its sales in the market. Another advantage of the supermarkets is that it is able to provide the wine in the market at slightly lower prices due to advantages associated with the economies of scale. A supermarket can be able to purchase a large volume of wines than other retail shops. This lowers the prices which consequently lead to increase in the level of sales. The supermarket marketing channel is also characterized by a very specific procurement system, which is very consistent with the produce they buy (Bignebat, Koc & Lemeilleur 2009). In other words, supermarket will guarantee a steady demand for its product. This improves on the stability of the average number of sales made. Consequently, the company manages to increase the level of sales significantly. Currently, many wine companies are using supermarkets to expand their sales. For instance, supermarkets are now in control of more than 80% of the retail take home wine in the U.K. (MPC Associates 2011). Most supermarkets at United Kingdom are filled with wine which is displayed conspicuously. It is important to note that it is necessary to bring to consumer’s information the availability of the product once in the supermarket. The stock should not just be placed on the shelf and then wait for the customers. It will be advisable for the organisation to take the necessary steps in order to promote the product. One way through which the company can invite a larger figure of customers is through sales promotion. Sales promotion is another method which the company has employed in promotion. Sales promotion can significantly help an organisation in boosting the level of sales. In addition, sales promotion has been of great importance in creating consumer awareness. Through promotion, the company will manage to bring its potential customers to awareness of the product in the market. This method has been of great importance especially to these companies venturing into a new market. In some regions, most of the people may not be aware of the company’s product. In this case, it becomes very difficult to sell the product in such market. However, the company can overcome this barrier through sales promotion. This attracts customers hence increasing the level of sales. One advantage of using sales promotion is that it can stimulate quick increases in sales by targeting promotional incentives on particular products. These can significantly help in improving the performance of the organisation in the short run. This method has helped several companies in increasing the sales in their market networks (Trehan and Trehan 2009). However, this method of promotion suffers from the fact that excessive promotion can be dangerous. For instance, the customers may get used to the effect in the long-run. Again, promotion can also be harmful on the fact that it may damage the image of the brand (Trehan, and Trehan 2009). Public relations Furthermore, it is advisable for the company to use public relations in order to maximize the sales through the supermarket. According to Pezzullo (1998), public relations play an important role in helping an organisation and its public in adapting mutually to each other. Several companies have applied public relations technique in increasing its sales. A good example of such a company is Jean’s Coffees Company (Gloria Jean’s Coffees 2011). The company uses this method by creating a good picture on the eyes of the media hence encouraging positive commentary from them. This significantly contributes in promoting the company products in its market networks. One advantage of this method is that it is possible to reach a large number of customers (Tutor2 2011). This reduces the average costs of marketing the product. The message sent through public relations seems more credible as they are viewed as coming from different parties (Tutor2 2011). This improves on the effectiveness in enticing consumers to buy the product. Some of the tools, which the company can use through public relations, are tools like magazines and newspapers, which are of great importance to many companies. However, this method suffers from the fact that the company may lose control. For instance, the Company cannot be able to convince all the people what to say or write about them. Advantages of selling through supermarkets As already noted, it is expected that the company is more likely to increase the total level of sales on implementing the proposed strategy. There are several advantages associated with this method. To start with, many people trust supermarkets to have genuine or original commodities (Lucas 2010). Therefore, an organisation will automatically enjoy the credibility of the supermarkets by selling its product through them. According to Lucas (2010), many consumers in China, for instance, trust the supermarkets chain because of their clear awareness of these. Supermarkets are also associated with a symbol of quality which implies that it will be difficult to meet fake products in supermarkets. It is difficult for one to find a fake bottle of wine in supermarkets like it is the case with other small outlets (Anonymous 2010). The company will therefore significantly benefit from this hence increasing the level of sales significantly. Supermarkets also attract a large number of customers because of wide variety of selection. Therefore, by using other marketing tools like sales promotion, the company will be able to win a large number of customers from its competitors. In other words, many people prefer shopping in supermarkets because of wide range of a commodities rather than store selling homogeneous products. Supermarkets can significantly contribute in creating or reinforcing the brand of an organisation (Lucas 2010). A good brand name is of great significance in selling the company’s product. Companies with famous brands have recorded a significant increase in the level of sales over the past. Impact and effectiveness of a supermarket strategy for expanding Castlegate Wines Ltd’s store retail wine offer Over the past, the proposed strategies have proved positive to a number of companies. Statistics indicates that the larger fraction of the wine sales in the United Kingdom can be attributed to the supermarket sales. In fact, supermarkets represent 80 percent of the total sales in wines (MPC Associates 2011). This is a clear demonstration of the significance of supermarkets as the wine outlets. Therefore, this analysis is critical in this specific time when the market is characterized by a very high level of competition. After its establishment late last year, Castlegate Wines Ltd has been seeing its wines mainly through its outlets. Over reliance on one way of marketing has retained a very low level of sales. This strategy has however been faced by a few reactions towards this method. For instance, some campaigners are against the situation where the wine is placed together with the foods. It is argued that such an act will encourage alcohol consumption. This is just one of the obstacles which face this method of making sales. Effects of the strategy to Castlegate Wines Ltd The application of this strategy is going to affect the organisation significantly. First, the supply chain will change. This is because the company will be forced to supply addition quantities to supermarkets. Previously, the Castlegate Wines Ltd had been selling its wines mostly through its stores. Therefore, there will be an additional agent in the supply chain. This will also involve some adjustments in terms of prices in order to cater for the necessary costs. Another significant change will take place in the production. It is expected that the level of sales are more likely to increase after the implementation of this strategy. This implies that the production managers have to revise their strategies accordingly; otherwise, there will be shortages. It is therefore necessary for the production managers to access the likely increase in demand and then make the necessary changes. This may involve increasing the number of convey belts, extension of the machine operation hours and also increase in the quantity of the raw materials used every day. These changes will help in meeting any increase in the level of demand. These changes will also affect the logistics managers as they will adjust the supply chain. Other necessary marketing measures From the study conducted, the organisation has a variety of options through which it can increase the level of sales through the proposed strategy. It will call for other marketing tools in order to increase the level of sales. To start with, it is necessary to inform the potential customers about the availability of the commodity in the certain supermarkets. This can be done through various ways. One of the most effective ways is through advertising. Advertising is the message which is designed in a certain way for the purpose of promoting or selling a product. Through such messages, an organisation will be able to promote wine in the locality and hence encouraging more people to purchase more wine from the supermarket (Fruzsina 2007). It will provide information as well as calling for attention from the potential customers. Over the past, this method has worked very well to certain organizations. Several companies have significantly increased their performance through the use of advertising in the process of marketing (Moore and Pareek 2009). One of such organizations is Gloria Jean’s Coffees Company. The company uses several types of media to pass information to the potential customers. In most cases, the company benefits from this method when it opens a new shop in a certain region. The company applies a variety of media including printed, broadcasting and display media. Television is one of the frequently used media by the company. One of the main advantages for using television is because it helps the company to reach a greater number of its target audience (Pride 2006). Therefore, this media lowers the promotion cost per head. Through this method of advertisement, the company has managed to build its brand in the new market. Over the past, this method has yielded good returns through increased level of sales. Another method of advertisement which has been applied by the Gloria Jean’s Coffees Company is the display media. This method has also significantly contributed in increasing the level of sales in the organisation. Through the display media, the company uses eye attracting pictures which easily attracts the attention of the targeted audience in the market. Consequently, the company manages to pass information more easily to the group. One major advantage of this medium of advertisement is that it is more cost effective. It does not require large sums of money like in the case of television. Since this method has worked very well over the past, it is expected that it will result in good results to Castlegate Wines Ltd. Advertisement as a method of promotion is associated with a number of advantages. To start with, advertisement is effective in reaching a wide range of audience (Trehan and Trehan, 2009). This is more so when advertising is conducted through a media which reaches a large number of people. The method will reach greater number of people compared to other methods like the sales promotion. Therefore, this method will not only reach the people who shop in that particular supermarket, but also to other people who shop from other stores. Another advantage of this method is that it is most effective in creating awareness. When the audience views a certain advert on television regularly, this increases their awareness of the presence of the product in the market. This builds their curiosity to try the new product. This significantly helps in increasing the level of sales. Again, advertising helps in building customer trust through repetition of the main brand and product. In the process, the company will be able to maximize on the level of sales made. Despite of these achievements of advertising as a method of promotion, it suffers some limitations. To start with, this method is impersonal and therefore it becomes impossible to answer the customer’s questions (Lamb 2009). By using this method in promotion, the company will be limited in interacting with the customers effectively. For instance, the company sometimes needs to learn more about the customers’ tastes and preferences. In this method of promotion, it becomes difficult to pick views from the potential customers. This may limit the success of promotion to some extent. When used on its own, this method is not effective in making the customer to make their final decisions in purchasing the product. In other words, this method is not hundred per cent reliable in convincing the customers to purchase the product. Difficulties, opposition & barriers Despite of these advantages associated with supermarket strategy for expanding the company’s wine offer. Some of the alcohol campaigners have been calling for supermarkets to restrict all alcohol dedicated aisles in order to prevent the cases of impulse buying (Lechmere 2011). The main target for these campaigners is to reduce the level of alcohol consumptions. This is exactly the opposite of the organization’s intention to come with such a strategy. This poses a great danger to the company as it attempts to maximize the level of sales. One of the ways through which this method can be successful is through good a display which attracts the eyes of potential buyers (Westling 2001). Good display can entice shoppers to buy the wine even without having planned to do so. By restricting the extent to which the wine should be displayed, the organisation receives a very thorough blow. In order to maximize the sales of wines in supermarket, the strategic position in which the wine is placed is significant in increasing the level of sales. For instance, the wine bottles can be kept near foods aisles or near to the door tills so that they can easily be seen by the shoppers. However, campaigners opposing taking of alcohol are against this as they consider it as normalization of alcohol. That is, making alcohol appear like any other common good hence inciting people to consume. For instance, at UK, charity Alcohol Concern carried out a survey and found out that placing alcohol together with other goods increased the level of alcohol taking (Lechmere 2011). These threats have posed a major threat to the supermarket strategy in marketing wines. Another main threat which is likely to face the supermarket is the shelf dullness (MPC Associates, 2011). This problem arises from the over-produced new world wines which have been influenced by the dumped prices which allow huge retail profit margins at the expense of adding more choice to the consumers (MPC Associates 2011). Recommendations Given this analysis, it is recommended that the company take the necessary steps described above in order to maximize the level of its sales. As already seen, the company can significantly increase the level of its sales through supermarkets. In order to achieve maximum level of sales through this strategy, it is recommended that the company liaise with all supermarkets in the region with an effort to facilitating the process. These include ensuring that the wine is placed in strategic places where it will likely attract more customers. This will lead to a successful marketing strategy. References Anonymous, 2001. Think Wine Marketing. [Online] Available at: [Accessed 21 April, 2011] Becatti, F. 2007. Marketing Mix: Strategic Marketing Insight. Vol 25 Issue No. 7/8 I 2007 I R25. Bignebat, C., Koc, A, and Lemeilleur, S., 2009. Linking small producers to supermarkets. 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