More than ten decades later, Save-On-Foods continues to maintain its legacy of customer service and value in the industry. The company, which operates under the parent firm Overwaitea Food Group, is among the leading chain of food companies located across Western Canada, including the lower mainland region of the country (“Our roots”, n.d.). Save on Foods stores host a myriad of products from brands, private labels such as Tesco and substandard brands.
While there lacks adequate data on the company’s sales and profitability over the years, it is blatant that the business has been growing in scale. For example, a report by CTV News revealed that by 2015, Save-On-Foods had opened four stores in South Regina with 40 more stores expected to be opened in the next couple of years (Stanley, 2015). Despite growing in scale, a market analysis of Save-On-Foods reveals that the firm is yet to achieve an optimum market share; an objective that should be pursued through growth strategies such as diversification, product development and market development.
The roots of Save-on-Foods date several decades ago in Cranbrook. Notably, Darrell Jones, the current President of Save-On-Foods had just completed school and landed a job as a bag boy in the local Overwaitea Foods in Cranbrook, British Columbia, in 1976 (“Our roots”, n.d.). His work at the food store enhanced his knowledge about the grocery industry. Years later, Darrell made a significant business step that led to the opening of the Save-On-Foods stores which operated exclusively in British Columbia and Alberta. Additionally, the majority of the Overwaitea stores were also converted into Save-On-Foods stores under the Pattison group. Today, the business has expanded, with more stores expected to be opened in Northern Canada.
Studies reveal that a SWOT analysis is an essential management framework for business. The tool enables organizations to choose an appropriate operational strategy (Gurel & Tat, 2017). Notably, by conducting an internal and external analysis, firms can identify and leverage on their strengths, improve on their weaknesses, seize opportunities that exist in the industry and react to threats that may affect their operations.
Similarly, SWOT analysis of Save-On-Foods reveals the internal and external factors surrounding the firm’s business operations.
One of the firm’s primary strengths is brand recognition. As is evident from the company’s background, Save-On-Foods has been in business for about 100 years (“Our roots”, n.d.). Therefore, the company can leverage the credibility of its brand compared to newly established firms and use this credibility for marketing its product and services.
Also, Save-On-Foods has a broad brand category relative to other market participants. Notably, the supermarket chain stocks private label brands and standard brands in all its stores. Stocking of private label brands enables the business to distinguish itself from other competitors by offering distinct products and creating its own unique marketing identity.
The distribution network is also a key strength in Save-On-Foods that distinguishes it from its competitors. The firm has a broad distribution channel in Canada, which is evidenced by the presence of numerous stores in Western and Central Canada. Through its vast distribution network, Save-On-Foods can practice intensive distribution and target a broad customer base from various parts of the country.
Furthermore, the firm has a customized setting that it leverages on. Notably, Save-On-Foods has health clinics in some of its stores to meet the needs of communities (“Our roots”, n.d.). The local-touch enables the business to stand-out from its competitors.
The analysis of Save-On-Foods operations reveals that its most significant weaknesses are Low margins, limited product line, limited geographical scope and employment issues. Notably, firms in the industry compete on prices, an aspect that drives down margins in the store. Also, the firm’s weakness lies in its limited product line that is restricted to groceries and few other commodities. As a result, the business losses majority of its consumers to stores that offer a wide array of products. Additionally, Save-On-Foods has few stores countrywide, thus limiting its ability to attract a broad customer base. Besides, employees’ reviews on glassdoor reveal that over the years, the firm has been grappling with multiple complains over employment unions.
Despite its numerous weaknesses, Save-On-Foods has a multitude of opportunities that it can seize to enhance its performance and competitiveness in the industry. Notably, the firm has a chance to enter new markets both locally and internationally, to increase its market share and customer base. Also, the company has an opportunity to introduce new products and services in its store to fulfil customers’ needs under one roof. Furthermore, Save-On-Foods has a chance of establishing further growth, profitability and online presence by capitalizing on the ongoing technological advancements.
The primary threats facing Save-On-Foods are competition from industrial players, existing and new government regulations, fluctuating cost of products and economic uncertainty. Notably, some marketing regulations established in the industry can constrain the company’s marketing operations. Also, the cost of raw materials, especially the groceries stocked by the firm keep changing, and this pattern can affect the firm’s margins. Furthermore, competition from other large retail players such as Sobeys, and economic uncertainties, especially in the current Covid-19 pandemic possesses a significant threat to the firm’s profitability.
Vescera, Z. (2019, August 9). Canada’s online grocery market poised for major expansion. Vancouver Sun. Retrieved from https://vancouversun.com/news/national/canadas-online-grocery-market-poised-for-major-expansion
In his article, Vescera presents different expert opinions on the projected changes in the Canadian grocery market. Notably, the author asserts that Canada is experiencing a significant shift from traditional on-site purchasing to online buying of groceries, a practice that will reshape the grocery market (Vescera, 2019). However, the author also acknowledges that the degree of online grocery shopping in Canada continues to lag behind that of other developed countries such as the United States and the United Kingdom.
Through the expert opinion of different industrial players, the author also highlights some of the factors that are seemingly driving consumer’s online purchase. Gleizer, one of the industrial experts, asserts that demographic factors are the key drivers of the online grocery market (Vescera, 2019). Notably, the expert argues that the Canadian demography is characterized by an ageing population that is less mobile to purchase groceries from supermarkets and a young population that is highly committed to multiple jobs, that they lack time to shop. Therefore, in pursuit of creating value and fulfilling consumer demand and needs, supermarkets and retailers are slowly penetrating the online grocery market.
The selected article relates to the Save-On-Foods company in the sense that it addresses issues that significantly impact the company’s operations. As noted, Save-On-Foods has a stronghold in the grocery product line, which is a primary topic of focus in the article. As Vescera (2019) suggests, the market is slowly changing with the changes in consumers’ purchasing behaviour. Therefore, as a participant in the industry, Save-On-Foods is also affected by the issue addressed in the article.
Save-On-Foods operates a business-to-customer (B2C) marketing model. Notably, this type of market applies where businesses market their goods and services to consumers (Reklaitis & Pipeliene, 2019). Similarly, Save-On-Foods focuses its marketing to the final consumers rather than other companies, as is the case of business-to-business (B2B) marketing model.
As part of its B2C marketing model, Save-On-Foods primary target market is the quality conscious middle-class individuals. Notably, the company mainly targets persons that are quality-oriented through its standard brands and private label brands. This class of individuals are considered quality-oriented because they consume specific brands of products based on the perception of the quality of the commodity rather than its price.
The company’s target market is also based on psychographics. As the literature suggests, psychographic segmentation of consumers is based on factors such as personality, lifestyle, and values (Liu et al., 2019). Similarly, Save-On-Foods also targets its consumers through psychographics, such as lifestyle. For example, the firm utilizes lifestyle as an essential psychographic factor in targeting its consumer. Notably, the firm likely considered consumer behaviour in predicting the degree of preference for online purchases in the grocery market. Using this data, Save-On-Foods can target online users in its online sale platform.
Furthermore, Save-On-Foods also targets its consumers based on demographics, notably age. Although the firm focuses on people of all ages in its product offerings, its marketing methods suggest that it has distinguished target demographics. Notably, the firm’s online platform appears to target the elderly who cannot make purchases in stores and the young-overworked population that has limited time to shop.
Additionally, the firm’s target market in terms of location is Western Canada. Notably, over the years, Save-On-Foods has mainly opened stores in Western Canada such as Alberta, Manitoba and British Columbia. However, it is rumoured that the firm will soon expand its operations to other parts of the country such as Northern Canada, to help broaden its customer base and market share.
Type of Products and Services
The products and services offered by Save-On-Foods can be classified as consumer products. This category of products constitutes of finished goods sold to the ultimate users (Dutta & Saha, n.d.). The consumer products offered by Save-On-Foods differ from industrial products in the sense that the latter is sold and used in the manufacturing of other products. Notably, Save-On-Foods sells different brands of finished products to the final consumers such as sandwiches, meat, fresh fruits and vegetables and freshly baked treats. Also, the firm offers consumer services such as nutrition tours and health clinics in some of its stores.
Furthermore, from a marketing perspective, the consumer products offered by Save-On-Foods can be classified based on the manner in which consumers purchase them. In this context, consumer products fall under four categories; convenience, shopping, speciality and unsought.
Convenience products are goods and service that consumers frequently purchase without spending much time on comparing brands. For example, products such as Freshex Laundry detergents, fruits and vegetables sold in Save-On-Foods stores can be grouped as convenience consumer goods. Notably, the products are consumer goods because the ultimate consumer uses the detergent for laundry purpose and the groceries in preparation of food. However, if some consumers purchase the products for commercial purposes, such as buying groceries for use in the preparation of food in a restaurant, or use of detergents in dry-cleaning outlets, the goods can be categorized as industrial products. Besides, the commodities are also convenient products because it is typical of every household to purchase detergents and groceries frequently.
Additionally, Save-On-Foods stocks speciality consumer products in all its stores. Speciality products are commodities that consumers purchase due to either the loyalty they hold towards the brand or the unique features of the merchandise relative to other brands. In the context of Save-On-Foods, speciality goods can be categorized as the standard line of private label products from firms such as Tesco and Western Family. For example, there are several brands of jams and condiments stocked in Save-On-Foods stores. However, some consumers may mainly purchase Tesco products because of the loyalty they have towards the brand. In such a scenario, the jams and condiments can be categorized as speciality products because consumers are aware of the brand they want and may be willing to spend time to get it.
However, based on analysis of Save-On-Foods’ product line, it is evident that the firm does not sell unsought and shopping goods. Unsought commodities are products that consumers purchase in instances where they perceive the danger of not owning such commodities. Often, this category of products constitutes safety merchandises such as fire extinguishers and manuals. On the other hand, shopping products are commodities that consumers are likely to compare with other goods in the market before making a purchase such as electronic and clothes. The absence of these two categories of consumer products in Save-On-Foods implies that customers have to seek the commodities in other stores, an area that the firm ought to improve on.
Channel of Distribution of Prawns in Save-On-Foods
One of the product lines in Save-On-Foods is ocean food, notably prawns, which are directly sold to the ultimate consumer. Like other commodities in the supermarket, the sale of prawns follows a specific channel of distribution before the final purchase at the store. Notably, Save-On-Foods utilizes a consumer marketing channel of distribution whereby the prawns move from the producer to the retailer and finally to the consumers.
The movement of prawns from the source of production to the consumer involves a series of supply chain activities, including sourcing. Notably, the prawns sold in Save-On-Foods stores are obtained from two Vietnamese suppliers among them the Western Family. The firm likely sources the prawns from two suppliers to ensure a steady supply of the commodity and fulfilment of consumer demand in instances where one supplier is not able to meet the demand target.
At the sourcing phase, the prawns are harvested from farms run by the Western Family and prepared for storage. Due to the perishability of the commodity, the producer, in this context, Western Family, observes some seafood measures such as deheading the prawns, washing and storing them in low temperatures to slow down bacterial growth and retain their freshness before distribution to the stores.
After harvest, the prawns are stored in the producer’s warehouses for further preparation, awaiting purchase orders from Save-On-Foods stores. Usually, the warehouses have special equipment for handling the prawns to prevent them from going bad. Notably, refrigeration equipment is installed in the producer’s warehouse to facilitate the storage of the prawns in low temperatures to reduce enzyme activity and preserve them for longer durations. Additionally, it is at the warehouse that the different varieties of prawns are packed in special bags of 340-gram ready for distribution.
Ones the purchase order is issued, the prawns are transported from the producer’s warehouses using the latter’s trucks to the retailer’s stores. The supermarket qualifies as a retailer because it sells the prawns in smaller quantities of assorted bags to the final consumers, unlike wholesalers, who sell the product in bulk to retailers for resale. In the stores, the products are placed in the frozen case and priced ready for sale to the ultimate consumer.
The channel of distribution of prawns constitutes of various regulatory boards whose role is to ensure that the goods are responsibly sourced and safe for consumption. For example, the Canadian Food Inspection Agency is highly involved in the activities of Western Family. Notably, the agency establishes the requirements for the producer to have processing facilities that comply with the local health standards on harvest, preparation and preservation of prawns before sale to wholesalers and retailers. Also, the agency establishes a food and safety plan for the retailers, Save-On-Foods, to ensure that the seafood is stored appropriately before the sale.
Furthermore, Save-On-Foods is also part of the Ocean Wise program that promotes the sustainability of seafood. Notably, the Aquaculture Stewardship Council certifies the prawns with the highest standard to ensure that they are delicious and environmentally responsible (Blank, 2018). Some of the criteria utilized in approving the seafood species include assessment of whether the prawns are abundant and resilient to fishing pressures and whether they are harvested in ways that limit damage to marine habitats (“Sustainable seafood”, n.d.). In essence, the Aquaculture board acts as a system of regulating the standard of seafood sold in Save-On-Foods stores.
Like other firms in the supermarket industry, Save-On-Foods utilizes promotional strategies to communicate value to its customers. Also, the supermarket chain indulges in promotional strategies to build on lasting consumer relationships that are vital for boosting its sales and profitability. Among the promotional strategies utilized by the firm include advertisements, public relations and digital marketing.
Advertisement is the most common promotional strategy that Save-On-Foods has relied on for years to communicate value to its customers. Notably, the firm invests in TV and online campaigns that aim to popularize its promised value to the target market. For example, recently, the grocery chain began a TV and online advert that emphasizes the message “Amazing food, for real-life” (Powell, 2019). The light-hearted TV and online campaign emphasize the value promised to consumers who purchase groceries and other products from the chain store.
Save-On-Foods derives multiple benefits from utilizing advertisements as a promotional strategy. First, advertisement increases the company’s visibility in the highly competitive industry. By displaying its value proposition in public media such as TV and online ads, Save-On-Foods reaches out to a broad range of Canadian consumers who have access to TV and digital platforms such as YouTube. Second, advertisements enable the firm to save significantly in promoting its value and products. Notably, using a single TV and online campaign, Save-On-Foods communicates value to millions of residents in Canada at a given time.
Apart from advertising, Save-On-Foods also utilizes public relations as a promotional strategy of communicating with its target market. As the literature suggests, public relations are “a comprehensive, all-encompassing public awareness and information program or campaign directed to mass or specialized audiences to influence sales or use of a company’s products or services” (Papasolomou, Thrassou, Vronstis & Sabova, 2014, p.7). In other words, public relations entail a deliberate release of information to the public to communicate the firm’s value and boost its sales.
Similarly, Save-On-Foods communicates with its target market through the use of public relations in the form of stories in the company’s website and online platforms such as YouTube. For example, in one of the firm’s YouTube videos, Darren Jones speaks about the story behind Save-On-Foods and the values of the firm. In his story, the President mentions that “great people are the key to great services” and proceeds to aver that great services are offered at Save-On-Foods stores (“Save-On-Foods”, 2014). In this scenario, the President uses the video to communicate a deliberate message to the target consumers about the great services offered at the supermarket chain.
One of the benefits that Save-On-Foods derives from using public relations is reduced promotional costs and the ability to communicate a trustworthy corporate image to consumers. Notably, when used proactively, public relations videos enable the firm to save significantly by delivering the message of value to a vast pool of target consumers at a single time. Besides, public relations also allow the company to dramatize the company’s operations, thus boosting its corporate image.
Additionally, Save-On-Foods utilizes digital marketing as a strategy for communicating with the target market. For instance, the firm, in partnership with invoke created a digital platform where consumers can communicate directly with professionals in the store’s departments such as nutrition and pharmacy outlets. This form of digital marketing enables the firm to communicate directly with its consumers and receive feedback about its products and services.
Throughout its history, Save-On-Foods has significantly been involved in socially responsible behaviour either directly or indirectly towards communities. As the literature suggests, social responsibility encompasses all activities that promote societal needs and sustainability (Fordham & Robinson, 2018). Over the years, the firm has individually taken or partnered with other organizations to promote the welfare of societies in which it operates and foster sustainable practices within its supply chain.
Save-On-Foods’ dimensions of social responsibility can be classified into two; ethical and philanthropic. On the one hand, there is evidence of the firm’s participation in environmentally ethical practices. For example, information from the company’s website reveals that Save-On-Foods, in partnership with the Aquaculture Stewardship Council, is committed to sustainable, ocean-friendly seafood (“Sustainable seafood”, n.d.). The environmental conservation practices adopted by the firm, such as purchasing seafood from suppliers certified by the council is significant evidence of its involvement in socially responsible environmental practices.
Furthermore, Save-On-Foods also indulges in the philanthropic dimension of social responsibility. This category of socially responsible practices involves donating essential goods and services to needy communities. So far, Save-On-Foods is involved in multiple philanthropic activities such as the BC food bank whereby the firm provides weekly, monthly and annual support to food banks through its local stores (“Community Support”, n.d). This initiative helps feed thousands of people who lack food in Western and Central Canada. The firm is also involved in the donation of food to Ronald McDonald House to help enhance the quality of life of families residing in the area (“Community Support”, n.d.). These and other charity activities that are undertaken by Save-On-Foods is a blatant indication of its significant involvement in socially responsible behaviour.
Part 2: Recommendations
Synthesis of information from the marketing analysis reveals that Save-On-Foods has multiple strengths, such as brand recognition, that can be leveraged to increase its competitiveness in the industry. However, the study also shows that there are various areas of weaknesses that the firm ought to improve on, threats that it should react to and opportunities it should seize to boost its performance and profitability in the industry. After considering these factors, a few recommendations have been made on the specific objectives, growth strategies and pricing tactics that the firm should pursue to keep up with competitive forces.
Based on a critical analysis of Save-On-Foods’ current situation, it is recommended that for the next two years, the firm should pursue the objective of enhancing its market share. As noted, the firm has a limited geographical presence in Canada, a probable cause for its low margins, as the company can only serve a small customer base. Therefore, it is suggested that the management of the company should consider enhancing the firm’s market share by expanding its geographical coverage. Besides opening additional stores in Western and Central Canada, Save-On-Foods should also launch its operations in Northern Canada to counter the existing competition in those regions. By the end of the two years, the firm should have opened at least ten stores to have a significant market share in the areas.
- Growth Strategies
As part of fulfilling the recommended objective of enhancing its market share, Save-On-Foods should pursue product development as a growth strategy. As noted, one of the company’s significant weakness is its limited product offerings. Notably, the firm focuses mainly on the sale of groceries, a practice that forces consumers in need of other shopping products to visit different stores. To enhance its market share, keep up with competition and meet consumers needs under one roof, Save-On-Foods should pursue product development by incorporating new product offerings in the existing market, including electronics and clothes.
Furthermore, Save-On-Foods should pursue market development as a growth strategy to enhance its market share. Notably, the conducted market analysis reveals that one of the weaknesses of the firm is its limited geographical presence. Also, the study shows that the company has an opportunity to expand its operations in the domestic and international market. Therefore, market development is a viable growth opportunity that Save-On-Foods should seize to enable the firm to enhance its market share and profitability by tapping into a new pool of quality-oriented middle-class consumers.
Apart from product and market development, Save-On-Foods should consider pursuing diversification as a growth strategy. As the name suggests, diversification entails the expansion of market heterogeneity of enterprise products (Lee, 2019). In the industry’s context, diversification may involve the introduction of new products for a new target market. As noted, Save-On-Foods mainly targets middle-class consumers who are quality-oriented. As such, the majority of the products sold by the firm are mostly of standard prices. Apart from relying on the middle-income market, the firm should consider introducing a new category of luxurious brands of products to target the high-income, quality-oriented consumers to help facilitate an increase in the company’s profits.
- Pricing Strategy
Given the competitive nature of the industry, Save-On-Foods should follow a competitive-based pricing strategy. Based on the course materials, this pricing strategy entails setting prices based on charges set by competitors. Notably, Save-On-Foods should gather data on the prices set by its industrial rivals such as Sobeys and IGA, and utilize the information to structure the prices of its products. Use of competition-based pricing may help the firm keep up with the competitive forces and avoid losing customers by charging higher than other industrial participants.
Besides adopting competition-based pricing, Save-On-Foods should utilize discounting as a promotion strategy for its products. Under this category of promotion, the firm may choose to slightly reduce the price of certain goods and services to encourage increased purchase among consumers. Use of discounts as a promotion strategy may not only help Save-On-Foods facilitate purchases in slow-moving commodities but also trigger an increase in the firm’s margins through increased volume of sales.
Apart from directly selling its products and services, Save-On-Foods should consider adopting franchising as a complementary distribution strategy, notably in areas where the firm lacks market presence. This form of distribution involves the use of licensing to allow a franchisor sell commodity in the parent company’s name. Notably, Save-On-Foods should permit franchisors in other parts of the country to sell products and services in its name. The proposed distribution strategy would help Save-On-Foods boost its market share by expanding its operations in other regions while avoiding the costs of running additional physical stores in the new markets. If adhered to, the proposed recommendations will enable Save-On-Foods to maintain its legacy in the industry, remain competitive and profitable in the long-run.
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