CUSTOMER ANALYSIS AND MARKET STRATEGY -SUPERMARKETS Vs, CONVENIENCE STORES

byEd Watkins

Ohio State UniversityColumbus, Ohio

Food store customers are motivatedby numerous factors in the selection ofthe store or stores in which they dotheir food shopping. Of interest is therelatively different set of criteriainvolved in the selection of a conven-ience store as compared with thosefactors considered important by cus-tomers in the selection of a supermarket.

Recent surveys of supermarket cus-tomers have identified some twentyfactors as having a bearing on the choiceof the supermarket(s) shopped. Nine ofthe factors to be enumerated and ratedare considered major determinants inthe selecting of a supermarket, elevenare viewed by customers as of somewhatless importance. However, when thecustomer views the competing stores assimilar in performance for major factors,the decision where to shop may be basedon those factors associated with theless important.

The factors determined to be ofmajor consequence in the selection of asupermarket by customers are listed asfollows in descending importance, Table1. The first column identifies thefactor, the second the number of res-ponses about that factor per 100 cus-tomers, and the third column the rangein number of responses about that factorwhen related to each of nine competingstores.

The relative importance of allstore selection factors identified bysupermarket customers appears to shift

over time and between trading areas duein part to economic competitive changesand shifts in consumer’s priorities.

No store in the survey rankedeither uniformly high or low for allfactors. Even though a store was ratedgenerally high, there were factors thatcustomers rated rather low. Even forthe most highly rated store, one majorfactor and seven on the less importantlist received a bottom of the list rat-ing. It is of interest that each super-market was rated by its customers asexcelling for one or more selectionfactors. Average weekly food storeexpenditures were $11.34 per capita and$43.52 per household.

When convenience store customerswere asked what considerationswereimportant in choosing one of thesestores, six factors were identified,Table 3.

The relative importance of thesefactors associated with conveniencestores does not appear to shift signi-ficantly over time or between tradingareas. The first three factors include81% of the total responses of conven-ience store customers while supermarketshoppers required the first ten factorsin their list to include 81% of theirresponses.

Very few customers identify con-venience stores as their primary sourceof food. Convenience stores are identi-fied as a source for fill-in items.

February 76/page 110 Journal of Food Distribution Resea”

While price was not given as a factorin the selection of one conveniencestore over another it was definitely afactor in limiting purchases at con-venience stores or in not shopping con-venience stores. With customers viewingconvenience stores primarily as asource for fill-in items to supplementtotal food store purchases, conveniencestores choice of a “right” mix of a verylimited product selection would seemcritical, Table 4. These six productcategories included 80% of all itemscustomers associated with conveniencestores. Average weekly conveniencestore sales in the trading area were$2.62 per household or $.96 per capita.

The competitive strategy of con-venience stores first might well con-centrate on location strategy, a loca-tion possibly removed from locations ofother food stores both convenient andsupermarkets. In addition, building animage of quick service, of long hoursopen, and an excellent choice of itemsassociated with the relatively few prod-uct categories customers identify withconvenience stores seems essential. Asstated earlier price differentiationbycustomers of competitive conveniencestores did not appear to be a factor inconvenience store selection. Marketsegmentation appears to have limitedpossibilities for convenience stores.

Customers of supermarkets readilyidentified these stores as a primarysource of nearly all food items.Supermarket customers viewed some storesas excelling in specific departments,such as meat, produce and bakery. Theyalso differentiated stores on location,prices, selection and variety of items,store atmosphere, layout, servicesoffered, in-store displays, out ofstocks, and employee attitudes. Al-though location was a primary factorand checkout and hours open were per-formance factors identified as recogniz-ably different between stores, thesefactors did not have the overridingimportance as with convenience stores.

Supermarket competitive strategymay concentrate on price programs,on quality perishable programs, oncleanliness, or a broad appeal strivingfor superior performance in most areas.Supermarket strategy may develop someversion of market segmentation byidentifying that store to customersinterested in superior department opera-tions or recognizably different pricingprograms. In addition, market strategyof supermarkets may shift over time tomeet changing competition or in responseto altered economic conditions.

wrnal of Food Distribution Research February 76/page 111

Table 1. Factors Considered by Customers in the Selection of a Supermarket

Supermarket Average Number Ranges in Number of ResponsesSelection Responses per 100 per 100 Customers BetweenFactor Customers Competing Stores

1. Prices 62 55 - 822. Cleanliness 36 25 - 483. Food Quality 34 25 - 484. Selection-Variety 33 8 - 485. Store Location 34 8 - 426. Employee Attitude 30 16 - 547. Meat Quality-Freshness 28 15 - 398. Produce Quality-Freshness 23 8 - 449. Store Atmosphere 13 6-28

Table 2. Factors of less Importance in the Customer’s Choice of a Supermarket

Supermarket Average Number Ranges in Number of ResponsesSelection Responses per 100 per 100 Customers BetweenFactor Customers Competing Stores

10. Store Layout 8 4-1511. Services 8 4-1612. Checkout 6 3-1613. Specials 6 3-1714. Displays 5 3-1415. Well Stocked 5 0-1116. Brands Available 4 0-617. Parking 4 2 - 1018. Advertising 3 0-1419. Product Availability 3 0-620. Hours Open 2 0-14

Table 3. Factors Considered by Customers in the Selection of Convenience Store

Average Number Ranges in Number of ResponsesConvenience Store Responses per 100 per 100 Customers BetweenSelection Factor Customers Competing Stores

Quick Service 64 53 - 80Hours Open 58 28 - 64Location 59 55 - 72Products Available 24 22 - 44Employee Attitude 8 8-9Parking 4 3-11

February 76/page 112 Journal of Food Distribution Resear

Table 4. Product Items Customers Commonly Associated with Convenience Stores

% of Customers Range in % of CustomersIdentifying this Identifying this Category

Product With Convenience Between CompetingCategory Stores Convenience Stores

Bread 63 59 - 84Milk 61 58 - 73Beverages 36 36 - 43Cigarettes & Tobacco 17 16 - 18Snack Foods 16 16 - 18Newspaper & Magazines 10 8-10

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ANOTHER LOOK AT CUSTOMER IMAGE STUDIES

byTheodore W. Leed

Professor of Food MarketingUniversity of Massachusetts

Amherst, Massachusetts

It has been about 15 years sinceRicker first used the mail survey ratingsystem to develop customer images ofcompeting supermarkets in market areas.Since that time the technique has beenused by Leed, Marion, Watkins, Skinnerand others as a means of developingcompetitive strategy recommendations forfood retailing firms. Although someadaptations have been made, the basicformat of the questionnaireremainsessentially the same with respect tothe attribute ratings. (Exhibit 1)

It would seem appropriate at thistime to review the “state of the art”in relation to what we have learnedabout customer perception or image, howthe knowledge has been used and how wecan improve the technique and its

application to the management decision-making process. I will use the techniqueand results of our latest consumer imagesurvey in Massachusetts as illustrations.

What We Have Learned

Based upon our rating studies inMassachusetts as well as those con-ducted elsewhere, we can formulate somegeneral conclusions.

1. Relatively high rates ofresponse, usually greater than 30%.

2, Consumer selectivity in evalua-tion of quality and prices among majorproduct categories.

)urnalof Food Distribution Research February 76/page 113