While I was doing some shopping for my camping trip over spring break, I noticed this simple laminated sign on the door as I was entering the store. What a simple and cost effective way to promote your store! Giant has branded itself as the cost effective grocery stores when compared with Safeway and Whole Foods. While Whole Foods is gaining clients due to the current organic trend, Giant is trying to protect its more price averse customer base. This, in my opinion, is a great way to do it and here’s why.
Advantages of Giant’s promotion
- Removes the appeal of other competitors – By accepting competitor coupons, customers can use coupons by Giant and coupons by Safeway, for example, without having to make two stops. Moreover, customers would get more bang for their buck when they use their manufacturer coupons at Giant rather than any other grocery store. While these price advantages will likely not work for the more upscale grocery store shoppers, such as those loyal to Whole Foods, the primary concern for Giant’s target market is price. For this reason, accepting competitor coupons and doubling manufacturer coupons removes all incentives to shop at other grocery stores where price is concerned.
- Minimal costs – The costs of this promotion is printing this simple page, laminating it and pasting it on the store doors. Additionally, if customers do take advantage of the promotion, there will be a decrease in unit revenue. However, the idea is to get customers to shop for more products at Giant thereby increasing the total revenue of the company.
- Minimal risk – If customers, though, chose not to take advantage of the promotion, Giant will have only lost an insignificant amount of money as this promotion does not require a dedicated (and costly) marketing team.
Just like every marketing promotion, this one is not devoid of disadvantages and risks.
Disadvantages of Giant’s promotion
- Creating deal-prone consumers – Promotions based on price are rather risky. As soon as a customer spots a grocery store providing even cheaper products, Giant has lost that customer. The obvious danger of this approach is creating deal-prone customers as opposed to encouraging customer loyalty.
- Potentially creating a price war – This promotion might, in worst case scenario, create a destructive pricing trend as cost-effective grocery stores try to beat each other on price. Because grocery stores sell commodity products, competing on anything other than price may be difficult.
- Customers might miss it – With customers dealing with a couple things at a time when going shopping, they might miss the promotion all together. I know that I almost missed it because I was replying to an email on my phone. I can also imagine mothers missing it as they try to deal with screaming kids in the shopping cart.
- Unlikely market share gain – This promotion is a good incentive to prevent current Giant customers from switching. Yet, as the promotion is only advertised on the door of the store, the promotion is unlikely to gain new customers for Giant. While shoppers may be notified of the Giant promotion by a friend, it would be rather unlikely. Unless the customer was going to the store, they will likely not see the promotion. As a result, while this is a great promotion to convince customers to keep shopping at Giant, it would definitely not be a good approach to try to gain new customers.
What are some advantages and disadvantages that you think of when you see this promotion?