UK grocery market

2082 words (8 pages) Essay in Business

5/12/16 Business Reference this

Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Essay Writing Service. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

‘‘Co-Operative Food’s Market Segmentation and Brand Positioning”

Grocery Market Overview

Market Structure

The Co-Operative Group

The Co-operative Foods


Market Segmentation

Consumer Market Segmentation

Target Marketing

Co-Op’s Target Market

Brand Positioning

Marketing Mix (4P’s)

Co-Op’s Brand Positioning

Co-Op’s Brand Strategy

















Executive Summary

The Co-Operative group is in UK market for over 150 years and operates across the food, 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 adopted by Co-Op in order 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 segmentation framework is used to separate the target market into groups and by keeping the Co-Op’s ethical and fairtrade principles in mind. Brand positioning strategies adopted by the Co-Op food were identified by using the marketing mix framework (4P’s).

It is found that Co-Op is having intense pressure from its rival Tesco and Sainsbury’s who are growing rapidly into the convenience retailing. Although Co-Op’s profits are gone up as compared to recent years but there is still room for improvement.

1.0 Grocery Market Overview

1.1 Market Structure

The UK grocery market is mainly dominated by the big fours who have acquired almost 64% of the market share and of which Tesco is holding 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, Sainsbury’s, Asda and Morrisons) plus Waitrose who are sharing 80% of the market share.

The UK is through its worst ever recession which has also affected the grocery retailers and lead 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. Another 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 Group

This is UK base co-operative established in 1863 and it is quite diversified organization which mainly 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 outlets

1.3 The Co-Operative Foods

The 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 monitor 2008) The Co-Op food lies on the 5th place in grocery retail market with 8% shares, thanks to its merger with Somerfield in July 2008 (Mintel 2008). The Co-Op used to be the UK’s largest grocery retailer in 1960s and through Somerfield acquisition it will be able gain this position again in neighbourhood market.

According to the Telegraph (2009) Peter Marks, chief executive of the Co-op said that:

‘‘the move from the “big four” UK retailers – Tesco, Asda, Sainsbury’sand 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 fare trade approach which is the main emphasis of the Co-Op group as stated above. The key strategy adopted by Co-Op is ‘be local act local’ but in recent years they are having intense competition from Tesco and Sainsbury’s who are extended their business in convenience sector and grow rapidly.

2.0 Segmentation

According to Jobber (2004) the ways in which individuals and organisations with similar characteristics were put together that have significant implications for the determination of market strategy is called market segmentation.

2.1 Market Segmentation

Each 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) it 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 alone or in combinations. These segments can be divided into four groups:

* Behavioural Segmentation

* Psychographic Segmentation

* Geographic Segmentation

* Demographic Segmentation

The 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 people’s loyalty, their usage rate and attitude towards its product range.

3.0 Target Marketing

Choosing 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-Op’s Target Market

The segmentation strategy is been adopted by the Co-Op Food in order to remain competitive in the market.

The Co-Op’s target market is given below:

* Neighbourhood market

* Ethical market

* Fair trade market

* Top-up shoppers

These 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 Positioning

4.1 Marketing Mix (4P’s)

The marketing mix model which is also known as 4P’s is used as a tool by marketer in order to implement the market strategy. The 4P’s are:

* Product

* Price

* Place

* Promotion

Product: Co-Op’s 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 it’s 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 spending 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 consuming 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 promote its brands through local radio and TV and also by donating in local community projects

4.2 Co-Op’s brand positioning

According to Mintel (2009) the key rule followed by the Co-Op is getting into the market with bigger brand prospective which we’ve seen by the acquisition of Somerfield. Through this merger, Co-Op’s gone bigger but still they’ve opted to remain in the heart of local community by acting as local convenience store. And this message is conveyed by the Somerfield’s brand message ‘Britain’s favourite local grocer’.

4.3 Co-Op’s Brand Strategy

The 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 Mintel’s consumer research, with the Co-op’s customers the most likely to buy locally sourced and Fairtrade items.

In order to become a responsible 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). Simply value brand is also a replacement for every range and actually it is a Somerfield brand

5.0 Conclusion

Although Co-Op operates through its large number 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 treat 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 take ethical issues seriously while they shop. For them fairtrade and organic food are just another premium line on the shelf and the price factor restrict 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. More 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 Education.

* Hall, J. (2008), Co-op swoops on Somerfield in £1.56bn deal,, 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.

[] accessed 10/12/09

* Mintel (2009), Mintel market report- Food retailing, November 2009, London: Mintel.

[] accessed 05/12/2009

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please.

McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams Prices from

Undergraduate 2:2 • 250 words • 7 day delivery

Order now

Delivered on-time or your money back

Rated 4.6 out of 5 by Logo (119 Reviews)

We can help with your essay