Food Lion and Marketing Strategy

For Store 2692

Jonathan Campagna

September 16, 2009

Marketing 100

Food Lion, LLC is a subsidiary of Brussels-based

Delhaize Group and is one of the largest supermarket

companies in the United States. Operating more than

1300 stores, either directly or through affiliated entities,

under the names of Food Lion, Harveys, Bottom Dollar,

Bloom, and Reid’s, Food Lion, LLC is headquartered in

Salisbury, North Carolina. The company started in 1957 as Food Town, in Salisbury, NC, and

changed its name to Food Lion in 1983 after being acquired by the Delhaize Group. It has stores

in eleven Southeast and Mid-Atlantic states and had estimated sales of 18.2 billion dollars in

2007, a 5.1% increase over 2006. In Hinesville, Food Lion has been in the area since the mid-80s

and recently opened a new store, located on highway 196 due west, in September of 2008 (the

older store is on General Screven Way and was refitted in early 2008). Originally based on the

concept of “extra low prices” and lacking amenities, such as bakeries and delis, Food Lion is

now focused on the needs of the customer and community involvement. New and refitted

stores have deli, bakery, meat and seafood departments, and expanded produce. With

expanded services and store departments, Food Lion has introduced several marketing

strategies to guide in its effort to base operations in the marketing concept and to follow its

motto: “Good Neighbors. Great Prices.” Segmentation and store clustering, building strong

employees, community involvement and customer connection, and competitive pricing on

private and manufacturer brands are the bases of Food Lion’s marketing strategy and can all be

seen in Food Lion 2692, Georgia Highway 196, Hinesville.

Food Lion’s marketing strategy begins with segmentation and store clustering. Their

goal is to be the shopper’s “neighborhood store”, therefore, the demographics and

psychographics of every market that Food Lion is either in or entering are carefully studied to

determine how best to satisfy the needs of the area’s customers. The philosophy used to be

“one size fits all” in terms of operating stores to serve customers, according to Rick Anicetti,

CEO of Food Lion, LLC. Basically, every store was the same in floor layout, size, pricing strategy,

and weekly circular. Through market research, Food Lion now segments the markets into eight

groups: Dinks (dual

income, no kids) with

Dollars, Comfortably

Carpooling, Country

Living, Getting By,

Babies and Bills,

Wealthy Elites, Golden

Years, and Savvy

Singles.

Using the patterns and percentages of the most apparent segment profiles, stores are

placed into one of seven clusters with names such as the “Affluent Bunch” and “Golden Country

and Family.” Then, each store is designed, stocked, and operated with the specific cluster in

mind. For example, the “Affluent Bunch” cluster offers an extended wine selection and an

expanded produce assortment than other clusters; whereas, the “Golden Country and Family”

cluster might have lower shelf heights

(so products are easier to reach) and a

different produce core to

accommodate older customers. “It’s

all about serving customers based on

their individual needs,” explains

Anicetti.

In Hinesville, Food Lion 2692 is

placed in the “Stretching Every Dollar”

cluster. This cluster represents all eight segments fairly equally, thus, the store offers

something for everyone. There is a well stocked wine selection for the “Wealthy Elites,” as well

as a considerable assortment of frozen vegetable packages for the “Comfortably Carpooling”

segment trying to feed the family.

According to Penny Newton, General

Sales Manager of Food Lion 2692, the

market area not only includes parts of

Hinesville and Liberty County, but Long

County, as well. This includes the town

of Ludowici and the Gum Branch

Community. The market area is also

comprised of numerous military

personnel with varying backgrounds and roots. The reach of the store covers a diverse market

and in an effort to satisfy the needs of the shoppers, Food Lion bases product-core, layout, and

promotional opportunities on this market. There is even emphasis placed on Hispanic goods in

the produce section and in a special “ethnic” section of the grocery aisles.

Building strong employees is another key to the marketing strategy of Food Lion. No

company can survive without the commitment of its employees to do their best to meet the

needs of the customer. According to their website (Foodlion.com), the Core Values of Food

Lion are:

Integrity – We consistently treat our associates, customers, and business

partners in a fair, honest, and straightforward manner.

Diversity and Embracing Differences – We seek, value, and respect

diversity in our associates, customers, and business partners. We also embrace

differences in order to improve ourselves. Innovation takes place when different

ideas, perceptions, and ways of processing information collide.

Learning and Development – We foster an environment where

continuous learning is encouraged and expected at all levels, and a strong

commitment to self-improvement exists.

A strong Work Ethic – We are passionate about our work and doing what

is right to get the job done.

How Food Lion sees these four values all mention the associates of the company first.

By encouraging and supporting all their employees to embrace the core values, Food Lion

ensures that the shoppers feel respected and comfortable during their time in the store.

Furthermore, this helps Food Lion ensures the future of the company. Of the culture that exists

in the company, Anicetti says, “It is an organization whose people are beginning to see that they

really own the future of this company. That’s not to imply that the cashier is going to a pricing

decision or a bagger is going to make a real estate decision, but people clearly can begin to see

that they can own what they do in their role every day. We’ve come to call that their ‘fraction

of the action.’ And it is the sum total of those fractions that makes Food Lion more able to

respond to the marketplace today.” Examples of Food Lion furthering the values, says Newton,

are the CBTs (computer based training), which are constantly updated to educate and reinforce

associates on procedures and safety practices, and the spontaneous employee huddles, that

are held to recognize an associate’s outstanding effort, as a quick morale booster, or to discuss

short-term strategy for , perhaps, a big holiday weekend. Demeeka Haynes, Assistant Sales

Manager, stated, “The transfer of knowledge from the department heads to their associates”

and “working as a team” contribute to stronger employees and satisfied shoppers.

The backbone of Food Lions marketing strategy is community involvement and

customer connection. For Food Lion, interaction with the customer takes place on a personal

level inside the store and with a sense of benevolence outside the store. “Welcoming”

shoppers “to your neighborhood Food Lion” and to each department is emphasized daily in the

store, says Newton, and this is reinforced through customer surveys on the internet and via

telephone. Associates are also encouraged to remember customers by noticing the color of

their eyes or to engage in formal introductions, as to learn their names. In an effort to become

the market’s “neighborhood store,” Food Lion feels that every associate and manager should

provide a sense of comfort and give the store an inviting quality. Furthermore, “customer

connection” also

includes actions,

not just words.

Keeping the

store physically

comfortable and inviting is just as much a “customer connection” as “welcoming” a shopper.

This means keeping aisles cleared and the bathrooms neat and clean. Everything the shopper

sees, hears, and feels involves “connection.” “It is about the total shopping experience,”

explains Newton.

Outside the store, Food Lion works diligently on projects to benefit the community. The

Children’s Miracle Network, Easter Seals, American Red Cross, and Feeding America (formally

America’s Second Harvest Network) are all organization that Food Lion works with to better the

community. Education is also a primary focus, through such programs as “Family Math Night,”

“Roaring to Read,” and “Box Tops for Education at Food Lion.” The store will even conduct a

tour of the store for interested schools with an emphasis on food safety. Though thousands of

dollars are collected through customer donations for Easter Seals and The Children’s Miracle

Network at Food Lion 2692, “hunger and education are the main focus for our involvement,”

says Newton. “Hundreds of pounds of perishable goods are donated to Manna House (the local

food bank) each week and canned goods are collected during the holidays.” In addition, food

boxes are available for the public to purchase and donate to the needy at Christmas. Newton

also said the store has information packets ready for the local schools to encourage

participation in the educational programs. She also explained that she will be, specifically,

contacting Long County schools to promote the programs. “This is an opportunity to benefit

store and the community.”

The second half of Food Lion’s motto is “Great Prices.” To accomplish this, Food Lion

uses a loyal shopper’s card (MVP card) and has established several money saving private

brands. The MVP card gives the customer a discount on selected items of five to fifteen

percent plus a register coupon based on the shopping habits of the customer. Some of the

discounted products are listed in the weekly circular; many aren’t seen until the shopper

browses the aisles. All are highlighted with a special MVP tag or a “Bonus Buy” sign. The

circular is available in The Coastal Courier, the

local newspaper, and The Pennysaver, a mailed

sales paper. For customers that are in areas

that do not have access to either, Food Lion

mails the circular. The weekly sales are also

available on the Food Lion Web site and are e-

mailed to customers. MVP card records are

used for this purpose.

Food Lion has six private brands: Food

Lion brand, Healthy Accents, Home 360, On The

Go Bistro, Nature’s Place, and Smart Option. All

of these brands are designed to offer quality and value at affordable prices. There are

characteristics to each brand that offer certain value to the customer. For example, Home 360

is a line of house wares and other functional products, such as envelopes. Smart Options is a

line of economical everyday items from milk to plastic utensils. On The Go Bistro consists of

microwavable pre-made meal solutions, made in a factory built by Food Lion, LLC just for this

brand. On a more special side, Food Lion

established Nature’s Place, an organic brand of

products, and Taste Inspirations, a collection of

gourmet and specialty foods. These brands were

established to meet the varying needs of the

customer in pricing and use. Also, the availability

of each brand changes from store to store, depending on the cluster of the store.

For Food Lion 2692, the weekly circular is the only form of advertising used (television

and radio was used to promote the grand opening of store 2692). In other markets, television,

radio, and billboards are utilized to reach

customers. This is mostly in larger markets

which account for seventy-seven percent of

sales. On measured media, $19.3 million was

spent in 2008 for all of Food Lion’s stores. The amount spent in the greater Hinesville market

was unavailable, according to Newton. A new campaign initiative has been started by Food

Lion under the name “Great Price Hunters.” The tag line says, “You don’t have to hunt for great

prices.” Ken Mills, vice president of marketing, said, “Food Lion has a long history of delivering

competitive prices and great convenience to our customers. In the midst of a tough economy

and various retailers focusing on price messaging, we want to remind our customers that they

do not have to hunt from store to store for great prices.” The campaign is designed to reinforce

a “unique price position and neighborhood convenience,” explains Mills. Thus, Food Lion is

attempting to focus on pricing strategy in order to attract customers, but is still maintaining the

“neighborhood store” concept.

For the local market, “perceived value” is the most important thing to Newton. Many

times, shoppers assume that Wal-Mart and the commissary (Fort Stewart) have lower prices

than Food Lion. However, according to Newton, this is not always true. With MVP savings,

total food bills at Food Lion are very competitive. That is why “product placement of sale

items” in the store and merchandising are stressed. “The sale items are put on the ends of the

aisles and signs are placed throughout the store to give the customer a sense of value,” explains

Newton. Furthermore, “Don’t forget, ‘Customer Connection.” And not sure of what the future

holds for sales, with the ever-changing customer base at the fort and available space for lease

in adjacent stores, Food Lion 2692 must maintain a customer oriented attitude. Though when

asked if Food Lion was number one in its position in the market, Newton exclaimed, “No, nor do

we want to be”; this referring to Food Lions commitment to the community, as well as, sales.

On the other hand, this is what Food Lion 2692 should be using to increase sales. There

is no reason why everyone in the market shouldn’t know what Food Lion does for the

community. Being more aggressive in public relations and creating publicity are a must. Press

releases every time a food drive is started and calling The Coastal Courier for photo

opportunities when “Certificates of Appreciation” are presented should become standard

practice. Furthermore, open sponsorship of local events and area school sports also provide

excellent chances to gain positive favor in the eyes of current and potential customers. Have

Bradwell Institute’s cheerleading squad hold a car wash to raise money in the parking lot of

store 2692 or invite Long County schools to use the front walk to hold a bake sale. Finally, Use

Food Lion store 2692 as a community information center. Put a large bulletin board in the front

foyer for notices of neighborhood gatherings and meetings. Even let customers and employees

post pictures of their “Loved Ones” (pets, children, deployed spouses, ect.) and “New Arrivals”

(just born children). Hold hurricane awareness seminars and disaster readiness workshops.

Anicetti sums it up: “By positioning ourselves conveniently in neighborhoods, we found that the

combination of price, the kind of customer experience we’re trying to create,…and the smaller

nature of our footprint, well as density of our footprint in any particular market, is really going

to be something that carries the day”.