Choosing markets, Option 1, Grenoble Graduate School of Business
November 16th, 2009
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INTERNATIONAL MARKETING, KROGER & CARREFOUR
For the purpose of this essay, we will analyze the marketing strategies of two companies evolving in the retailing industry.One of them, which operates in both, developed and developing countries, and the other one just in a developed country. The companies would be, respectively, Carrefour and Kroger co. Kroger co, general information Kroger co. is an American company, headquartered in Cincinnati, Ohio. It is the 26th fortune of the country. It celebrated its 125th anniversary in 2008. They employ more than 310,000people, working in 2490 supermarkets in 31 states under different banners like Kroger, Ralphs, Fred Meyer, Food 4 less, Fry’s, King Soopers, Smith Dillons, QFC and City Market. In 2008 it reported US$59,577 million in Net sales. From 2007 to 2008 the Net sales has grown about 2.7%. It is one of the largest grocery chains in the US (Ranked second in terms of value share) and the fifth biggestretailer in the world. However, Kroger operates only in the US, and despite the fact that the company also operates in 782 convenience stores, 394 jewellery stores and 686 supermarket fuel centers, grocery retailing account for the vast majority of the company’s value sales. Besides pure distribution activity, Kroger operates 42 plants in 17 states (wholly own or used with operating agreements) in orderto produce its private label products. We will see that private labels are a key point of their marketing strategy. Product As I said, Kroger is mainly a grocery retailer, so we will focus only on that activity. Kroger offer a full range of private label grocery products from budget to premium. Private labels is central to its merchandising strategy, it accounts for 25% of its grocery sales.Kroger’s private labels are divided into three categories: Premium, banner and value, so that it covers almost every segment of customers. Private labels are not restricted to food goods only; they also offer floral goods, health and beauty care and general merchandise goods. They have been designed to compete with famous national and regional brands. Not only a retailer, Kroger co has the largestfood manufacturing business in the US. Its 42 facilities are used to produce the major part of its private label products, the rest being produced by leading national brand producers. This vertical integration affords them to get a better profit margin on the private label products. Which are, by the way, comparable in quality to similar national brands.
INTERNATIONAL MARKETING, KROGER &CARREFOUR
They also surf on the organic trend by launching in 2003 the “Naturally Preferred” line that consists of around 150 natural and organic food products. It seems like Kroger successfully appeal to a broad and very diverse consumer base because private labels sales increased in both value and volume terms over 2008. Price Kroger co is only present on its domestic market, and it cannotrealize the economy of scale that others like Wall-Mart do. Because of that, it cannot compete with them over price. But thanks to its private label strategy, and its expertise in food processing manufacturing, Kroger can sell its private label products, comparable in quality to similar national brands, at a lower price. Moreover, Kroger gets from its sales an attractive profit margin. Place Kroger isthe supermarket specialist. It has not really diversified into a variety of formats like the majority of retailers, although it does have interests in a small number of hypermarkets in the US. Kroger is ranked number one on the supermarket retail segment (16.9% value share). It also dominates in terms of numbers of outlets: 2,364 supermarkets in 2008 versus Safeway’s 1,510 stores (Safeway is...