What strategies can a local supermarket such as

Shivraj Super Shoppee use to compete with a huge

hypermarket such as Star Bazaar?

Submitted by:
Name: Anam Ankolkar
S.A.P No.: 53002130004
Class: S.Y.B.M.S A
Date: February 23, 2014

RESEARCH METHOD IN BUSINESS

2014 2015

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

TABLE OF CONTENTS
Introduction.3

Methodology.4

Market Research- Main Findings........5

Porters Five Force Analysis....8

Pricing..10
Competition-based pricing.....10
Price elasticity of demand..10

Promotion...11
Below-the-line promotions......11

Conclusion and Recommendation....12

Evaluation.......12

Summary.........13

References........14

Appendices.......15
Appendix I Questionnaire for customers and Analysis of answers.......15
Appendix II Questionnaire given to Shivrajs manager......19

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

INTRODUCTION
Background of Shivraj
Shivraj is a local supermarket with increasing competition all around not just by hyper markets
like Star bazaar but also other supermarkets in the area. It was established in 2000, then being one
of the only supermarkets in the area. However, soon a number of similar businesses entered the
market. With the entry of hyper market, Star Bazaar started by Trent in 2004 which offers an
eclectic array for products to customers, competition has become tougher.
Rationale of the study
Shivraj requires promoting itself, focusing on its strengths and alter its pricing strategies in order
to reduce competition faced by Star Bazaar.
Methodology
In order to do so it is imperial to conduct a market research to find out the customers needs and
wants, by giving out questionnaires. In addition to this the manager and employees of Shivraj will
also be interviewed to understand the strategies they use currently. Furthermore secondary data
such as articles from the web and newspapers will be gathered. This information will then be
analyzed and evaluated using the Porters Five Force Analysis, evaluating correct pricing
strategies based on the competitors prices and the price elasticity of products. Further
concentrating on promotions of the store to build and maintain the customer base.
Aim of study
Hence the purpose of this study is to conduct competitive analysis for Shivraj to find out What
strategies can a local supermarket, Shivraj adopt to reduce its competition with the hypermarket,
Star Bazaar?

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

METHODOLOGY
Primary research:

Interview Shivrajs managers. This aimed to discover:

o The stores current problems
o The current strategies employed to reduce competition.

Shivrajs potential and existing customers were given questionnaires selected randomly to
note their preferences and expectations of the store in comparison to others.

Secondary research:

Strategies used by Star Bazaar were obtained through the internet.

This data will be analyzed using several tools. First being Porters Five Force Analysis to
provide an insight to the degree of competition present. Suitable pricing strategies will then be
applied, such as competition-based pricing, while the price-elasticity of products will help
determining suitable prices. Lastly, promotional strategies will be identified to market the store.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

MARKET RESEARCH - MAIN FINDINGS

Market research is marketing activity carried out to discover the opinions, beliefs and feelings of
potential and existing customers. This involves collecting primary and secondary data to
comprehend the nature of the market. To seek Shivrajs standing in the market to form suitable
strategies to reduce competition, a survey has been carried out.
Number of Customers per shop:
Chart 1

As seen Shivraj is the leading super market, however competed by Star Bazaars this indicates
that rigorous action must be taken by Shivraj to reduce the gap between Star Bazaar and itself.
When asked what factors influence customers to shop from Shivraj:
Chart 2

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

From the chart above, it is noted that Shivrajs key strengths are its home delivery service,
convenience and customer loyalty. Hence, Shivraj must play on these factors to reduce
competition.
When asked what factors influence customers to shop from Star Bazaar:
Chart 3

Compared to Chart 2, the chart above notifies that the vast product range, services and low prices
provided by Star Bazaar act against Shivraj. Therefore considering these factors Shivraj must use
suitable promotional strategies and alter their product and price range to attract customers.
6

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

When asked if Discount rates affect where the customer shops from (In percent)
Chart 4

As noticed in Chart 3, Star Bazaars main strength is its products prices. Therefore Shivraj must
employ suitable discount schemes to gain clientele.
When asked if Home Delivery makes a shop more attractive to the customer
(In percent)
Chart 5

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

From Chart 1, its deciphered that Home Delivery plays a large role in attracting customers to
Shivraj. The chart above serves as evidence; hence Shivraj must market this service exclusively
as it will also be very convenient for many customers.

Porters Five Force Analysis

Porters five force analysis considers the nature of competition within the industry. There are five
competitive forces that help determine the long-term attractiveness and profitability of a
company. This will help Shivraj undermine what strategies to apply.
Figure 1: A diagrammatic representation of Porters Five Forces

The threat of new entrants, this increases competition and can also reduce Shivrajs market
share. A new store called Laxmi recently opened in the locality selling similar products as
Shivraj. This has resulted in reduction of clients whose residents are closer to Laxmi. Hyper
markets like Star Bazaar and D-Mart pose a huge threat to Shivraj since they provide a large
product range under one roof, making it easier for customers to shop, saving time and money.
Another threat is the entrance of Foreign Direct Investments such as Walmart. Walmart is a
globally recognized brand and might result in a loss of customers as it wont only consist of a
large product range but additionally have lower costs and a brand name in its favour.
8

Threat of substitutes can also reduce the attractiveness of the shop. Due to the presence of a
large choice for cusomers, it may result in reduced clientele. Although Shivraj is the largest

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

supermarket in the area it isnt the oldest. Save money supermarket is their main competitor
being a pioneer. Star Bazaar once again poses as a threat, although relatively new, it provides the
same products as Shivraj with a larger choice, at a cheaper rate.
Bargaining power of suppliers directly affects the price a store sets for their products. Star
Bazaar sells their products at low, reasonable prices; a major reason for this could be their
products supplier. Star Bazaar is involved in the elimination of middle intermediaries; they
source their products directly from producers, cutting down prices to a great extent. Hence to
reduce competition, if Shivraj would source at least some of its products directly from the
produces, it would bring down products costs and attract customers.
Bargaining power of buyers. Buyers are who form the level of demand in an industry. If the
bargaining power of buyers is high; they have a large influence on the decisions made by a
business. Shivraj although one of the leading businesses is not a monopoly, Star Bazaar and other
smaller supermarkets too offer similar products and services, hence pricing plays a large role in
luring customers. Since Star Bazaar offers lower prices, customers can cause a ripple for Shivraj
stating they get the same product at a cheaper rate elsewhere. Therefore re-evaluating the prices
and product line of Shivrajs, could help reduce competition.
Intensity of rivalry. This refers to the degree and type of competition present. Most customers
who once shopped from Shivraj have now moved onto the hypermarket. The main reasons being;
value for money and product range. Shivraj could reduce competition by introducing a larger
product range. Purchasing these products in bulk would be a likely option as this will help reduce
costs, attracting customers. Non-pricing strategies could also be used like the use of loyalty
schemes; free home delivery as promotions.
This tool helped to identify the existing and possible threats that Shivraj faces, hence aiding to
generate strategies that would help reduce competition. However, it lacks in focus on competitor
analysis which is essential for Shivraj to be a market leader.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

PRICING
Price decision is a crucial part of any marketing campaign. Deciding the correct price is not
easy.
Competition-Based Pricing
Competition-based pricing refers to the pricing strategies of a firm in respect to its competitors
prices. Shivraj faces a high degree of competition by Star Bazaar. Looking at Chart 2 and 3, the
main reasons why customers prefer shopping from Star Bazaar is due to its prices. 42% of
customers prefer Star Bazaar for its prices as compared to 11% from Shivraj.
The company can employ the Predatory pricing strategy which involves temporarily reducing
prices to remove rivals, however since Star Bazaar is a large establishment this might not be
feasible. It would be reasonable for Shivraj to adopt the Going rate pricing which refers to
charging a similar price as to Star Bazaars goods and services, as this would not incur in losses,
however is uncertain of how much the competition might reduce, hence along with this suitable
promotional strategies must be employed.
Furthermore, seen in Chart 4, 82% of customers prefer to shop at a store with good discount
offers. Hence, Shivraj must consider offering good discounts on their products in order to lure
customers; this can also be used as a promotional technique. This can be achieved by striking
good deals with suppliers.
Price-Elasticity of demand
Price-elasticity of demand is the measure of degree of responsiveness of quantity demanded due
to a slight change in the price of products. Although Shivraj provides a large product range they
do not differ from the products10Star Bazaar and other local supermarkets sell. Hence it is
important the store adds value to these items, by setting right prices, good packaging and extra

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

services to be a market leader, attracting customers, although this may have an impact on the
profit made.

PROMOTION
Promotion refers to methods of communicating messages to the market with the intention of
selling a firms products. Promotional campaigns concentrate on three objectives; to inform the
market about a firms product, to persuade customers to buy their products and to remind
customers of the store.
Promotion is vital for spreading awareness of a business and to gain clientele. Shivraj has not
conducted any promotional activities yet, therefore must concentrate on promoting its strengths.
Seen in Chart 2, Shivrajs main attraction is its convenience as it is based centrally, sequentially
its customer loyalty. Hence focusing on this; above-the-line promotions such as billboards could
be set-up across the area, to remind customers of Shivraj. Another major advantage that the store
holds is its Home Delivery service. Noted in Chart 5, 81% of customers favour shops that offer
delivery services; therefore Shivraj must highlight this feature to make customers conscious of it.
Below-the-line promotions
Belowthe-line promotions include the use of non mass-media promotional activities. Since
Shivraj does not have a large budget for marketing, this method would be ideal. Flyers can be
given-out in the area; regarding the products they sell, focusing on its home delivery service.
Slogans can be formed based on this to attract attention. Additionally, they can adopt sales
promotions to boost sales and attract new buyers temporarily. Small tokens could be given at the
sales counter. Considering its large customer-base; loyalty schemes can be given for example,
11 attract customers to the store, lowering the degree of
special discounts. These will help

competition.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

CONCLUSION AND RECOMMENDATION

While answering the question What strategies can a local supermarket, Shivraj adopt to reduce
its competition with the hypermarket, Star Bazaar? it has been noticed that Shivraj has not
adopted any promotional activities, this being one of its reasons for facing increased competition.
Another being the pricing strategies employed, which are not as effective compared to its main
competitor, Star Bazaar. Neither has the store focused on its strengths such as its home delivery
services, customer loyalty and convenience to maintain and gain clientele. The company hasnt
ventured into offering any discount schemes or adding value to their products since the
beginning.
It is recommended the company re-evaluates its pricing strategy, as this plays a major role in
influencing where a customer shops. This can be done by forming a better relationship with the
stores supplier, as prices set for products rely on the suppliers price. Further, the company must
concentrate on below-the-line promotions, as it lacks finance for above-the-line promotions. They
must focus on raising awareness to existing and potential customers. The company can also tie-up
with Sudexo to distribute gift passes to attract customers. Another suggestion is to hold discount
schemes such as a combination of Buy 2-get-1 Free programmes or Buy larger quantities, win
12
a small pack schemes. Loyalty schemes
can also be used to lure customers by offering privilege

cards to frequent customers and regular gift packages. Concluding, the company must enhance

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

their promotional mix and adopt suitable pricing strategies to attract and increase clientele,
resulting in reduced competition.

EVALUATION
The sampling size can reduce the reliability of the study. Biased answers given in interviews can
lead to inaccurate results. Further the internet is vast, and cannot be completely trusted.

SUMMARY
Shivraj Super Shoppee, a local super market is now facing increased completion by the hypermarket Star Bazaar. The aim of this report is to devise and analyse suitable strategies that Shivraj
can use to reduce competition.
Research Question
What strategies can a local supermarket, Shivraj adopt to reduce its competition with the
hypermarket, Star Bazaar?
Method
Main analysis is based on primary research. Questionnaires were given to randomly-selected
potential and existing clients of Shivraj to gain insight into their views and preferences compared
to Star Bazaar. Shivrajs manager was interviewed to obtain information on the current strategies
employed. Some information was taken from the internet.
13

Main Findings

Shivraj has not employed any promotional strategies till-date to reduce competition.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

Its pricing strategies are not as effective as competitors.

Home Delivery services, Location and Customer loyalty are Shivrajs focal strengths.

Recommendations

Aggressive promotion must be conducted to make people aware of the store.

Discount schemes, loyalty schemes and Buy-more-get some free schemes must be
applied to attract and retain customers.

The store must try reducing intermediaries to achieve lower product prices.

Evaluation
The retail market is growing rapidly; hence the sample size taken can have their own
geographical and financial limitations.

REFERENCES

Internet References
Giri1212.
"Introduction."
Scribd.
N.p.,
n.d.
<http://www.scribd.com/doc/20940126/Introduction>.

Web.

02

Aug.

2012.

Http://www.business-standard.com. N.p., n.d. Web. 21 Aug. 2013. <http://www.businessstandard.com/india/news/star-bazaar-pats-itselfslowdown-strategy/423123/>.

"Future
Group."
AuthorSTREAM.
N.p.,
n.d.
Web.
24
July
2012.
<http://www.authorstream.com/Presentation/shivpal-239382-future-group-retail-others-misc-pptpowerpoint/>.
"Tuesday Mar 5." Investopedia. N.p., n.d. Web. 04 Aug. 2012. <http://www.investopedia.com/>.
"Porter's Five Forces." Vector Study. N.p., n.d. Web. 02 Mar. 2013. <http://vectorstudy.com>.
"Strategy Tools." Mind Tools New Articles RSS. N.p., n.d. Web. 23 Nov. 2012
<http://www.mindtools.com/pages/main/newMN_STR.htm>.
14

"Porters Five Forces Model of Competition." Porters Five Forces Model of Competition. N.p.,
n.d. Web. 01 Mar. 2013. <http://www.managementstudyguide.com/porters-model-ofcompetetion.htm>.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

"How to Structure a Business and Management Internal Assessment." Tim Woods RSS2. N.p., n.d.
Web. 02 July 2012. <http://www.timwoods.org/2012/10/02/how-to-structure-a-business-andmanagement-internal-assessment/>.
"Strategic Management." Strategic Management - A Complete Study Guide. N.p., n.d. Web. 07
Mar. 2013. <http://managementstudyguide.com/strategic-management.htm>.
"Star Bazaar | About Star Bazaar." Star Bazaar | About Star Bazaar. N.p., n.d. Web.
10 Mar. 2013. <https://www.starbazaarindia.com/about_starbazaar.html>.

Books References
Stimpson, Peter, and Alex Smith. Business and Management for the IB Diploma. Cambridge:
Cambridge UP, 2011. Print. n.d. 09 Aug. 2012.
Hoang, Paul. Business & Management. [Melton, Vic.]: IBID, 2007. Print. n.d. 02 August 2012
Barratt, Michael, and Andy Mottershead. Business Studies AS AND A LEVELS. Harlow: Pearson
Education Limited, 2000. Print.

APPENDIX I

Questionnaire given out to potential and existing customers and analysis

of answers

Questionnaire for Costomers:

Name of Customer:
1

Age:

Where do you usually buy your household goods from?

_____Save Money Supermarket

_____Shivraj Super Shoppee
_____ Another Local Supermarket
_____ D-Mart
_____ Star Bazaar
_____ Another Hypermarket
2

What is the reason you have been shopping from this shop?

_____ Good Prices

_____Good quality products
_____Store loyalty
_____ Convenience

15

Number:

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

Which OTHER shop would be your first preference if your current shop shut down?

_____Save Money Supermarket

_____Shivraj Super Shoppee
_____Star Bazaar
_____D-Mart
_____ Other Local Super Market
_____ Other Hyper Market
4

What is the range of your income?

_____ Rs 1000 - 3000

_____ Rs 3000 - 8000
_____ Rs 8000 - 15000
_____ Rs 15000 - 25000
_____ Rs 25000 50000
5

Is your preference based on the service provided by the store?

_____ Yes
_____ No
6

How often do you do your household shopping?

_____ Weekly
_____Once in two weeks
_____ Monthly
7

Is your shopping planned?

_____ Yes (I go monthly or weekly)

_____ No (Most of the stuff I buy is just a phone call away)
8

Do you think that the home delivery service is helpful and one of the main reasons why shopping
is less planned?

_____ Yes
_____No

16

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

Does planned shopping pave out to be cheaper or expensive?

_____Cheap
_____ Expensive
10 Do you prefer shopping under a single roof or do you prefer going to different shops according to
the products sold there?
_____ Single
_____Several
11 Do discount schemes and other pricing schemes affect where you shop from?
_____ Yes
_____ No
12 How much are youll willing to spend on your shopping? _____________

Analysis of Answers to the Questionnaire:

Answer to Question 1: Most individuals in the local area shopped from Star Bazaar (16 %)
followed by Shivraj (14 %) while 9 % shopped from both Shivraj and Star Bazaar. Whereas, only
6 % shopped from the other local supermarkets.
Answer to Question 2: It was found that 28% preferred to shop at Shivraj due its convenience,
followed by it prices which is 28% for its Home delivery Service, followed by their loyalty to the
store (14%). While the factors that were least appealing to shop from Shivraj were the products
and quality offered (12 %), Prices (11 %) and its service (7 %).
In contrast, Star Bazaars main attraction was for its prices (42 %), followed by the large variety
of it products sold (25 %). Convenience of the store only consisted of 14 % relatively low in
comparison to Shivraj. While store loyalty and home delivery services were the factors that
reduced the stores attractiveness.
Answer to Question 3: Since most number of customers shopped from Shivraj, they said their
17
next choice from the other local super
markets would be Save Money Super market, considering

it is the oldest.

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

Answer to Question 4: The average income of the sample size was 17,800. This thereby
affecting where the individual shops from, indicating that the stores prices for products play a
crucial role in determine where they shop from.
Answer to Question 5: 70 % of customers said that the services provided by the store did not
determine where they shopped from.
Answer to Question 6: 45 % of the individuals part of the sample said they go household
shopping once every two weeks, while 25 % go once a week and 30 % once a month.
Answer to Question 7: 20 % of individuals said their shopping was both planned at times and
unplanned when required, while 45 % said it was planned. The remaining (35 %) said their
household shopping was unplanned and they usually called for what they needed over the phone
or walked down to the store in the vicinity.
Answer to Question 8: Majority of the individuals (68 %) said they thought home delivery
services were very helpful.
Answer to Question 9: 76 % of the individuals said planned shopping turns out to be cheaper.
Answer to Question 10: Most individuals said they prefer shopping under one roof (75 %) while
25 % shop from different places on the basis of what they require.
Answer to Question 11: A vast number of individuals said the discount rates and other attractive
pricing schemes offered by a shop, account for where they prefer shopping from.
Answer to Question 12: The average amount that individuals are willing to spend on their hourhold shopping for the month lies between the range of 8,000 to 10,000 rupees.

18

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

APPENDIX II Questionnaire given to Shivrajs manager

Shivraj Questionnaire
1

How long have youll been part of the market?

a. Since 2000, so about 12 and a half years.

Has clientele reduced since star bazaar or D-Mart?

a. Yes, it has relatively.

If yes, how are you coping with it?

a. We have brought in a few more products; we have not devised anything else as we have a
large number of regular customers who shop from us since years.
19

What are the pricing strategies youll use?

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

a. We use mark-up pricing strategies, adding a 1.5 rupee profit to the cost of purchase of the
product from our supplier.

Do youll sell at the normal MRP?

a. Yes, we do.

Are there any Discount schemes?

a. Not unless, the company the products that we include in our shop are running such a
scheme.

What other marketing techniques do youll use?

a. We do not use too much as we have a very limited budget, we send out occasional flyers
in newspapers, but mainly rely on word of mouth.

What is your target audience?

a. Our target audience is vast from little children to adults.

Are there any new shops that pose a threat?

a. A shop called Laxmi has recently opened, which seems to have gained large clientele.

10 Do customers bargain?
a. Occasionally, when they think they can get better prices.

11 Do youll focus on home delivery?

a. Yes, we do have the service.
20

12 What is the USP of your store?

Anam Ankolkar - 53002130004

A

R.M.B - S.Y.B.M.S

a. It is how we retain our customers and the vast product range we include in comparison to
other local super markets.

13 What are the special items youll sell?

a. We sell everything from children toys, cosmetics and household goods.

21