MKT 501 – KROGER’S MARKETING STRATEGY
The purpose of this report is to offer my suggestions on Kroger’s marketing strategy. In this report I will include comments on how the company should target cost-conscious consumers with products such as: discount/generic drugs, private label brands, and organic food line. I will conclude this report with a brief summary of the entire analysis, highlighting some of the more significant parts that the report contains.
“Kroger’s competitive strategy is that of a low cost operator that is able to sell at relatively low prices and still generate good financial return based on their cost structure. Supporting this marketing strategy of focusing on the customer.” They call this as their “Customer 1st” strategy. This marketing strategy has driven sales upward and has helped the company to offer lower prices without negatively affecting financial returns. The main key ingredient of low cost and low selling prices is the fact that Kroger offers the most extensive variety of private brand products offered by any of the traditional grocers. “In the most recent quarter private label represented almost 27% of the company’s grocery sales.” (Duff) This strategy has worked extremely well for Kroger. According, to Terry Schumacher, for the last several years identical stores tend to be in the mid-single digit range which are notably better than rival Safeway and SUPERVALU.
A good marketing strategy for any company to adopt, in an effort to be successful, is to understand who your customers are and what needs they would be looking to gratify. In other words you must determine who your target audiences are. Then you must create your strategy to match the strengths of your company to compliment the needs of your customer clientele. Identify the consequences, is this something that the company can accomplish without a big negative change. Take the time to research and develop a marketing plan that would boost profits for its company, as well as ensure you have the most competitive products and services in the market. The whole purpose for change in a company is to improve profitability. Some other good keys to remember when creating your marketing strategy to improve profit could be to remember your goal is to acquire more customers and persuade those customers to buy more products.
These are all suggestions that I believe Kroger really took into consideration. They took a step back and looked at what their consumer wanted. Customers wanted a quality product at a reasonable price and were willing to switch brands and Kroger took advantage of that fact. Furthermore, Kroger offers a “Kroger plus Savings Card that allows members to receive special discounts on most products without having to clip coupons. In addition, Kroger is the fifth-largest pharmacy operator in the United States in number of locations, operating retail pharmacies in over 1,900 of our food stores. “During fiscal 2008, Kroger pharmacists filled over 121 million prescriptions at a retail value of approximately $6.5 billion, an increase of approximately 9% from the previous year.” (Kroger.com) Kroger also is offering a 30-day supply on hundreds of prescriptions for only $4, or get a 90-day supply for only $10. That means you can save on generic drugs used to treat a tremendous range of medical conditions.
“Health & wellness and sustainability concerns are leading many of today’s customers to look for more organic choices on their grocers’ shelves, and Kroger is responding in a very big way to deliver “organics for everyone”. In August 2007, we expanded the organic product offering sold under our exclusive Private Selection® brand. Our stores offer more than 60 Private Selection (PS) Organic™ items ranging from everyday staples like milk, ketchup, butter and eggs to new items like cereal, salads, and snacks. Every PS Organic™ product contains at least 95% organic ingredients and is USDA certified, assuring our customers that these products are grown and processed without preservatives, artificial colors or flavors. We continue to add new items to this proprietary line-up.” (Kroger.com)
The ideal to come up with a marketing strategy that targets specific customer needs is an outstanding idea. You want to sell products and services that customers can identify with. This ideal has become a benchmark for others to follow. Competitors are now finding themselves adapting to Kroger’s change. The key to maintaining profits into the future will be to optimize cost awareness and attract new customers and existing customers to their isles and improve the whole shopping experience. They’ve got to continue to focus on the customer.
1. http://Kroger.com retrieved 16 Oct 2009
2. “Marketing Basics for the Small Business” by Laura Lake, Retrieved 12 April 2007 from http://marketing.about.com/cs/sbmarketing/l/aa060103a.htm
4. “The Capabilities of Market-Driven Organizations.” By George S. Day, Retrieved from Market Driven Strategy, New York: The Free Press.1994. Journal of Marketing, 58 (4): 37-52 on 10 Oct 2009
5. Dillon Says Kroger Strategy Delivers in Recession, Will Keep Paying
By Mike Duff | Jun 7, 2009
6. Terry Schumacher Major Grocery Chains: Competitive strategy Matters
Retrieved 8 Oct 2009 from