UK grocery market

UK grocery commercialise hencooperative Foods Market Segmentation and sucker military position groceryplace Market OverviewMarket StructureThe hencooperative GroupThe Co-operative FoodsSegmentationMarket SegmentationConsumer Market SegmentationTarget sellingCo-Ops Target Market pock PositioningMarketing Mix (4Ps)Co-Ops Brand PositioningCo-Ops Brand Strategy44445556666778910Executive SummaryThe Co-Operative assemblage is in UK grocery for over cl years and operates across the regimen, travel, funeral, pharmacy and banking and insurance sectors. It has 4.5 million members and around 5,300 retail outlets.This report provides an analysis and evaluation of the strategy choose by Co-Op in frame to target the consumers and market. It also explores the brand positioning of Co-Op in the grocery retail market in accordance with the consumer demands.In order to do this analysis market cleavage frame plump is use to separate the target market into groups and by keeping the Co-Ops est imable and fairtrade principles in mind. Brand positioning strategies adopted by the Co-Op food were identified by using the marketing mix framework (4Ps).It is found that Co-Op is having terrible pressure from its rival Tesco and Sainsburys who ar growing rapidly into the convenience retailing. Although Co-Ops profits are gone up as compared to recent years but there is still room for improvement.1.0 Grocery Market Overview1.1 Market StructureThe UK grocery market is principally henpecked by the big fours who have acquired almost 64% of the market share and of which Tesco is prop the 30% of the market share (Mintel 2009) and it also shows the oligopolistic nature of the market. The grocery market players have divided their customers into two groups primary shoppers and top-up shoppers , and according to Mintel (2009) the primary shopping is dominated by big fours (Tesco, Sainsburys, Asda and Morrisons) plus Waitrose who are sharing 80% of the market share.The UK is finished i ts worst ever recession which has also affected the grocery retailers and charter to change their strategies. According to Keynote (2009) the hard discount strategy was adopted by most retailers in last two years which was quite successful. other strategy adopted by the supermarket retailers is to diversify their chains in rural areas in form of convenience stores in order to targets people who have a little access to supermarkets (Mintel 2009).1.2 The Co-Operative GroupThis is UK base co-operative established in 1863 and it is quite diversified organization which in general operates through its two divisions trading and financial services. The Co-Operative group is well known for its ethical nature and fair trade principles which reflects within its organisation and differentiates it from its competitors.The Co-operative Group operates across the food, travel, funeral, pharmacy and banking and insurance sectors. It has 4.5 million members and around 5,300 retail outlets1.3 The C o-Operative FoodsThe Co-OP food operated in UK through its 2223 food stores which can be found in two formats convenience stores and small/ medium sized supermarkets (Data superintend 2008) The Co-Op food lies on the 5th place in grocery retail market with 8% shares, thanks to its uniting with Somerfield in July 2008 (Mintel 2008). The Co-Op used to be the UKs largest grocery retailer in 1960s and through Somerfield acquisition it lead be able gain this position again in neck of the woods market.According to the Telegraph (2009) Peter Marks, chief executive of the Co-op said thatthe move from the big four UK retailers Tesco, Asda, Sainsburysand Morrisons- to a big five including the Co-op will further boost competition for UK consumers.The Co-Op targets its consumers through its ethical and off the beaten track(predicate)e trade approach which is the main emphasis of the Co-Op group as tell above. The key strategy adopted by Co-Op is be local act local but in recent years the y are having graphic competition from Tesco and Sainsburys who are extended their business in convenience sector and grow rapidly.2.0 SegmentationAccording to Jobber (2004) the ways in which individuals and organisations with similar characteristics were baffle together that have significant implications for the determination of market strategy is called market pieceation.2.1 Market SegmentationEach buyer can act as a potential separate market due to its unique demands and needs (Kotler 2005). It depends on companies to either follow this approach or not, companies can practise no segmentation (mass marketing), complete segmentation (micromarketing) or something in between (niche marketing) according to Kotler (2005)The Co-Op food is following the micromarketing approach rather mass marketing which has its own drawbacks. Kotler (2005) says that the micromarketing is a way of tailoring products to suit individuals according to their taste and needs.Through these criteria (Co-Op) i t is targeting the local market by keeping them in convenient locations and addressing the key ethical issues. Although with the merger with Somerfield in July 2008 (Mintel 2008) they got some medium sized super market in their camp but the main focus is still the c-store format.2.2 Consumer Market Segmentation As Kotler (2005) stated that there is no single way to segment a consumer market. A marketer has to try different segmentation variable either solely or in combinations. These segments can be divided into four groups* Behavioural Segmentation* Psychographic Segmentation* Geographic Segmentation* Demographic SegmentationThe Co-Op is mainly targeting the behavioural and psychographic consumer segments. Through psychographic approach it is targeting the consumer on the basis of their social class, lifestyle as well as their personality through its ethical and organic food products. On the other hand through behavioural segmentation it is targeting peoples loyalty, their usage ra te and attitude towards its product crop.3.0 Target MarketingChoosing a specific segment to serve in a market is called target marketing (Jobber 2004), also firms need to segment the market and target that segment in order to work effectively.3.1 Co-Ops Target MarketThe segmentation strategy is been adopted by the Co-Op Food in order to remain competitive in the market.The Co-Ops target market is given below* Neighbourhood market* Ethical market* Fair trade market* Top-up shoppersThese above mentioned areas are the key segments targeted by the Co-Op, as it mainly operates in c-store format and it emphasis on providing fresh food products by targeting the local market and by keeping its ethical dilemma and fairtrade principles in mind. there is another important segment it targets is top-up shopping market, through this area Co-Op gets the opportunity to gain customer and introduce them to their ethical principles.4.0 Brand Positioning4.1 Marketing Mix (4Ps)The marketing mix model which is also known as 4Ps is used as a tool by marketer in order to implement the market strategy. The 4Ps are* Product* Price* Place* PromotionProduct Co-Ops product offering is pretty simple, it has fairtrade products, organic products and also simply range which targets almost all segments of the market on the basis of quality and ethics.According to Mintel (2009) the most of the supermarkets have the good-better-best product range but Co-Op is so far concentrating on the better and best product range. Few of the key brand product offered by Co-Op are mentioned in table2.Price At Co-Op the price is a big issue at Co-Op which can be expected at a convenience store but its their ethical stance which keeps the prices high too. But in order to remain competitive Co-Op offers range of discounted products and through its loyalty cards it gives an opportunity to get points against consumption which can be used for further shopping at store.Place This is the most important part of the strategy adopted by Co-Op through locating its stores at convenient and accessible places. As reported by Mintel (2009) the first criteria by C-store shopper is the location rather than price. Due to its convenient placement of stores Co-Op provides child friendly and time friendly environment right in the heart of community for its customers who find out of town shopping time overpowering and stressful.Promotion The current slogan by Co-Op is Good with food. Other initiatives include the Green dot scheme, highlighting healthy products. Mainly Co-Op bring forward its brands through local radio and TV and also by donating in local community projects4.2 Co-Ops brand positioningAccording to Mintel (2009) the key rule followed by the Co-Op is getting into the market with bigger brand prospective which weve seen by the acquisition of Somerfield. Through this merger, Co-Ops gone bigger but still theyve opted to remain in the heart of local community by acting as local convenience store. And this message is conveyed by the Somerfields brand message Britains favourite local grocer.4.3 Co-Ops Brand StrategyThe Co-operative Group has adopted strong brand strategy in order to sustain the market shares. As stated by Mintel (2009) its brands lie on the basis of* ethical credentials* environmental issues* local sourcing* Fairtrade.This is underlined by Mintels consumer research, with the Co-ops customers the most likely to buy locally sourced and Fairtrade items.In order to become a amenable retailer Co-Op launched it Ethical Food Policy which resulted because of good response from its 250,000 members. As result Co-op switched all of its premium meat products with RSPCA Freedom-food label (Mintel 2008). only when value brand is also a replacement for every range and actually it is a Somerfield brand5.0 ConclusionAlthough Co-Op operates through its large topic of small stores by targeting different location and consumer groups but the average foot fall in some of stores is relatively less (Mintel 2008). As it is facing intense pressure from supermarkets in order keep the prices at a competitive level which is quite difficult as it is operating on such a large scale and operating cost are high.The main problem is that Co-Op is not seen as a shopping destination for majority of consumers and they treasure it is as top-up store which nearby and available most of the time. A recent study by Mintel shows that only a significant percentage of people effect ethical issues seriously while they shop. For them fairtrade and organic food are just another premium line on the shelf and the price factor leap them from buying.Mintel (2009) shows an improvement in fairtrade sale but it seems organic products are struggling to keep up sales target during recession.It is clear that Co-Op is facing intense pressure from its rivals but it has improved a lot through merger and rebranding strategy. Its profits are record high as compared to last 10 years. much and more people are getting awareness of ethical approach adopted by Co-Op and it shows the significance of Co-operative food in the intense market environment.6.0 References* Data Monitor (2008), Company Profile Co-operative Group Limited, June 2008, London Data Monitor.* Jobber, D. (2004), Principles and practice of marketing, 4th Edition, Berkshire McGraw-Hill upbringing.* Hall, J. (2008), Co-op swoops on Somerfield in 1.56bn deal, Telegraph.co.uk, 16th July.* Kotler, C. (2005), Principles of marketing, 5th Edition, Essex Pearson Education Ltd.* Keynote (2009), Market review Food Catering, Jan 2009, 19th Edition, Keynote Publishing Ltd* Mintel (2008), Mintel market report- Food retailing, November 2008, London Mintel.* Mintel (2009), Mintel market report- Convenience retailing, September 2009, London Mintel.* Mintel (2009), Mintel market report- Food retailing, November 2009, London Mintel.http//academic.mintel.com/sinatra/oxygen_academic/search_results/show/display/id=395621/disp lay/id=496165/display/id=496171atom2 accessed 10/12/09* Mintel (2009), Mintel market report- Food retailing, November 2009, London Mintel.http//academic.mintel.com/sinatra/oxygen_academic//display/id=395621/display/id=496166 accessed 05/12/2009