Question

Generic Business Level Strategies of the company Kroger? What has the company done historically? What potential future business-level strategies are available to the firm?

Answer 1

1. Kroger is an American retail company. It is the largest supermarket in US.

Business level strategies help the company to determine whom to serve, how to serve and what to serve.

A generic business level strategy helps the company to focus on its competitve advantage and position itself better in an industry. This helps in staying away from areas which are occupied by other generic strategies of competitors.

Porter specifies 3 heads of generic strategies. Cost leadership, differentiation and focus. The head focus can further lead to focussed cost leadership and focussed differentiation.

Cost leadership involves lowering cost. Kroger company provides lot of discount coupons, conducts promotional campaigns and also ensure effecient supply chain to ensure lower production costs and hence lower cosnumer price. However, Kroger is aligning itself more towards differentiation strategy. Under this strategy it aims to target a broader market by ensuring that its product is considered unique and stands out from others. To ensure this Kroger is following consumer first strategy. It is also focussed more on health oriented products such as sourcing 100% cage free eggs. Apart from this, Kroger is also using its brand logo effectively and does intensive advertising to promote itself and create a loyalty among consumers. Focus involves two things - low cost and best value. It aims to target to the narrow segment by givig them customized products at lower costs.

The differentiation strategy and cost leadership are the parts focussed more by Kroger.

2. Kroger has aquired lot of companies. It has lot of manufacturing bases. It trades under several brand names in several countries. It has several distribution centres. All these have helped Kroger to build an effecient supply chain, build large presence in markets, have wider access to customers. All these helped Kroger to lower its cost effectively to attract consumers. It was however facing huge competition from other cost leadership companies. Kroger also followed differentiation strategy by promoting itself as a company which values organic chain more and customer first policy. It has started expanding private label products. All of this would lead to brand loyalty by consumers and would bring it out as standing apart from others.

3. Kroger is currently caught in the middle. As it is operating in both cost leadership and differentiation segment. It will lose out its core advantage if does not find out one strong ground. Since Kroger has been for long following cost leadership strategy and has faced intense competition of lowering costs from other competitors combined with the fact that lowering cost beyond a particular point becomes difficult, its future business level strategy should be to align more towards differentiation. This should focus on customer first by enhancing the use of technology, associate itself with products which are socially responsible and diversifying itself.

Kroger can also adopt focussed differentiation strategy by identifying products which are favourite of niche segment and then customizing the products accordingly and sell them. This can be done by innovating products and diversifying its segments,