A. Porter's Forces on Grocery Industry
In the Grocery industry today there are 4 major companies that dominate the United States market share; Kroger, Safeway, Super value and Publix. With the competitive advantage of being the largest stores in the industry these retail giants should have competition at a minimum and should be thriving (Farfan, US Largest Retail Supermarkets - Complete List). The application of Porter’s Five Forces that influence an industry shows that these retailers do have many advantages but being vulnerable in even one of the areas can make a significant difference in market share and profitability.
Rivalry
The rivalry aspect of Porter’s Five Forces that influence’s the grocery industry finds that there is a high degree of competition for consumer’s business among the dominate retailers as well as those companies trying to take any share of the market they can get. The large retailers engage in intense competition among each other as well as other stores that are competing for sales. Price wars drive down the profit margins for individual items and new and improved store design to bring in customers increases fixed cost. Improved distribution lines affect distribution and storage cost is competitive adjustments that the major retailers use to stave off the increasing competition. The last area of rivalry that the major companies use is the relationships they have with their suppliers to sign exclusive deals or lower cost than those prices paid by competing firms. As more retailers such as Wal-Mart and Target add groceries to their sales floor the competition increases as well as the stores that offer individual grocery items in their stores such as Dollar General, Walgreens and CVS. The grocery rival...
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...onsibility when marketing products to children. Today’s children have a higher rate of obesity and a higher rate of diabetes. The grocery industry has had an industry standard of placing items targeted to children on the lower shelves in the isles. In many cases these target items have been high sugar and high sodium foods that are not healthy for these inactive sedentary kids. The industry today is recognizing this issue and although this practice still continues the companies are addressing some complaints by offering more child friendly packaging on healthy foods. Some new packaging depicts healthy combinations of foods and encourages children of reading age to participate in outdoor activities and exercise. As customers realize the negative effects these foods have on their children they will demand a more responsible response from the businesses they frequent.
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
Earlier on this paper, the industry five forces analysis has been discussed generally. In this part, the paper analyzes Walgreens ' actions based on industry five forces model and suggests the next actions that Walgreens would rather do to maintain and improve its power in each five areas. This section will go into each force of five forces model in the order of priority, including bargaining power of buyers, the threat of substitutes, the degree of rivalry within the industry, the threat of new entrants, and bargaining power of suppliers.
The framework that will compare Publix Super Markets and its competitors is the Five Forces Model of Competition. The five aspects that will be discussed are the threat of new entrants into the market, the bargaining power of suppliers and buyers, threat of substitute products and rivalry among competing firms. Striving for the optimal position in each of these categories has given Publix Super Markets the reputation it has pride towards earning. It is important to every compa...
of Philip Morris, said “People could point to these things and say, ‘They’ve got too much sugar, they’ve got too much salt […] well, that’s what the consumer wants, and we’re not putting a gun to their head to eat it. That’s what they want.” (Moss 267) However, consumers are being unconsciously forced to fund food industries that produce junk food. Companies devote much of their time and effort into manipulating us to purchase their products. For instance, Kraft’s first Lunchables campaign aimed for an audience of mothers who had far too much to do to make time to put together their own lunch for their kids. Then, they steered their advertisements to target an even more vulnerable pool of people; kids. This reeled in even more consumers because it allowed kids to be in control of what they wanted to eat, as Bob Eckert, the C.E.O. of Kraft in 1999, said, “Lunchables aren’t about lunch. It’s about kids being able to put together what they want to eat, anytime, anywhere” (Moss 268). While parents are innocently purchasing Lunchables to save time or to satisfy the wishes of their children, companies are formulating more deceiving marketing plans, further studying the psychology of customers, and conducting an excessive quantity of charts and graphs to produce a new and addictive
The main rivals among the merchandising companies are Wal-Mart, Kohls, Family Dollar and Target among many more. Wal-Mart and Target are their main rivals, this is because Wal-Mart is known for their niche as having the lowest prices and Target is known for their fashions and home furnishings both of these items Kmart tries to compete against. Also buyers see Kmart as a discount store which doesn¡¦t stand when other competitors have lower prices. Kmart¡¦s customer service and available products are two other items that Kmart fails to be a strong competitor in against these rivals. Therefore, the rivalry among the merchandising stores is a strong competitive force in this market. Another external force that affects the market is substitutes.
According to an article entitled, The Child in the Garden: An Evaluative Review of the Benefits of School Gardens, by Dorothy Blair, “Anonymous prepackaged food arrives at supermarkets from energy-intensive, polluting, and often obesity-promoting industrial food-manufacturing systems.” This is the main reason that I am interested in food based education programs because I am a mother of three school aged children and as a mom it is difficult for me to encourage healthy eating habits when everything is against me. Television commercials are constantly advertising sugary foods, radios promote candy, and grocery stores encourage more candy sales at checkout lines. On top of that they are packaged in a way that is appealing to young children. For example, I was at the grocery store and saw a box of cereal with the characters of Frozen as did my daughter. Since Frozen is my daughter’s favorite movie she wanted me to buy it for her. I looked at the nutrition content and it was just another sugary cereal. As a mother this is a hard decision because I know the only reason she wants it is because of the packaging. If I say no than she becomes upset and if I say yes than I am not providing healthy food choices. This is the
In reference to the Five Forces Model, being the largest retailer in the world, Wal-Mart’s position is strong overall. Rivalry among competitors is fairly weak.
• Considering the two forces of competition and predict what McDonald’s Corporation might do to improve its ability to address these forces in the near future.
Any agency that uses children for marketing schemes spend hundreds of billions dollars each year world wide persuading and manipulating consumer’s lifestyles that lead to overindulgence and squandering. Three articles uncover a social problem that advertising companies need to report about. In his research piece “Kid Kustomers” Eric Schlosser considers the reasons for the number of parents that allow their children to consume such harmful foods such as ‘McDonalds’. McDonalds is food that is meant to be fast and not meant to be a regular diet. Advertising exploits children’s needs for the wealth of their enterprise, creating false solutions, covering facts about their food and deceiving children’s insecurities. It contains dissatisfaction that leads to over consumption. Children are particularly vulnerable to this sort of manipulation, American Psychological Association article, “Youth Oriented Advertising” reveals the facts upon the statics on consumers in the food industries. The relationship that encourages young children to adapt towards food marketing schemes, make them more vulnerable to other schemes, such as, advertising towards clothing, toys and cars. Article writer of “The relationship between cartoon trade character recognition and attitude toward product category in young children”, Richard Mizerski, discusses a sample that was given to children ages three to six years old, about how advertising incurs young children that are attracted too certain objects or products on the market.
Focusing on the well being of the customers should be the main focus of any major company, especially fast food companies. By reducing the amount of unhealthy choices for children and replacing them with nutritional foods, the nation’s youth will benefit.
For Oliver’s Market among the five Competitive forces, pressures associated with the threat of new entrants into the market are the strongest one. Because Wal-Mart and Target had announced plans to develop regional supercenters in the Sonoma county region. They are strong candidates for entering the market, because they possess the res...
7-Eleven has emerged as a clear market leader in terms of competition with similar convenience stores because of its highly customer focused orientation and implementation of various information systems adding to its differentiation strategy. Rivalry is further reduced because of the switching costs buyers' face with the presence of customized goods. The organization does not possess high fixed costs and this discourages competitors from manufacturing with price cuts. However, there are still a few competitor that gives an impact to the market. Such as the strong convenience store in US, Wall Mart. In Malaysia, the regular competitor is KkMart Store. In fact, nowadays there are many independent retailer who are trying to compete in the market of convenience store.
Worcester Polytechnic Institution. "Fast Food Marketing to Children." Public Health Communication. (2007). http://www.wpi.edu/Pubs/E-project/Available/E-project-082107-231740/unrestricted/Appendix_1.pdf (accessed February 17, 2014).
Challenges in Today's U.S. Supermarket Industry. 2014. Challenges in Today's U.S. Supermarket Industry. [ONLINE] Available at:http://msdn.microsoft.com/en-us/library/aa479076.aspx. [Accessed 31 March 2014].
McGinnis, J. Michael., Jennifer Appleton. Gootman, and Vivica I. Kraak. Food Marketing to Children and Youth: Threat or Opportunity? Washington, D.C.: National Academies, 2006. Print.