Marketing Strategies

For this project you will analyze the following case study about the grocery retailer “Trader Joe’s and work to develop and market a new dessert item for the chain. Review the following and for background:

The Company

With a near cult following, Trader Joe’s has carved out a successful position in the competitive grocery market. Started in Los Angeles in 1958 by Joe Coulombe as a convenience store, Trader Joe’s was dramatically re-positioned in the 1960s as a store with luxurious food at low prices. Trader Joe’s has grown to 474 stores in 41 states. Estimated annual sales exceeding $13 billion. The company has 38,000 employees.

The Shopping Experience

What makes Trader Joe’s a unique grocery shopping experience? Trader Joe’s stores are not large—about 10,000 square feet—and carry a limited number of items to keep costs down. While there are fewer items (2,500 to 3,000), the items are often unique. More than 70 percent of the merchandise is private label, including Charles Shaw wine that sells for about $3.29 per bottle! Private label has been part of Trader Joe’s product strategy for more than 30 years. According to Trader Joe’s president, Doug Rauch, “We went into private label because of the value opportunity, so we could put our destiny in our hands.” And over the years, consumers’ confidence in these offerings has grown, allowing Trader Joe’s to try new things and experiment with other offerings. Private-label offerings allow Trader Joe’s to knock at least 20 percent off the cost of its products. And all private-label offerings boast no artificial colors, flavors, or preservatives.

Don’t let the low prices fool you—the merchandise quality is upscale. In addition to organic fruits and vegetables and other grocery staples such as milk, cheese, and meat, there are unusual items such as Trader Joe’s own chocolate-covered, peanut butter–filled pretzels, and exotic cheeses such as an Indian Paneer and a white Stilton with mango and ginger chunks.

The Search for New Products

Trader Joe’s uses a group of trained employees called “the tasting panel” to evaluate, critique, and improve its varied lines of house brands. New-product ideas have been uncovered in an airport in Thailand and a small restaurant in Italy and brought back to Trader Joe’s and the tasting panel. This constant influx of new, tasty, critically reviewed products replaces the bottom 10 percent of products. Rotating out the bottom 10 percent isn’t easy, but it ensures a constant flow of new products for customers to try, according to Matt Sloan, vice president of merchandising.

And customers are willing to travel to take advantage of the value provided by Trader Joe’s. Trader Joe’s has become to Manhattan supermarkets what Walmart is to middle America grocery stores. The values offered by Trader Joe’s exceed the convenience of the local market. According to Jon Hauptman of consulting firm Willard Bishop, there are price-gap “tipping points” where consumers are willing to pay more for additional convenience. Hauptman says this price gap typically is around 10 percent. Since Trader Joe’s prices are easily more than 10 percent lower for similar items (generally 20 percent lower) and offered in a more upbeat shopping environment, consumers are willing to trade convenience and tote their Trader Joe’s shopping bags through the subways of Manhattan.

Sampling is a key promotional tool. For a grand opening in Newport News, Virginia, customers were able to try Atlantic smoked salmon and hot cider in the morning followed by roasted red pepper soup, sweet potato bisque, and Tuscan Italian bread in the afternoon. Employees answer customer questions and offer food suggestions. Handwritten suggestions on labels offer ideas for foods that work well together. Recipe cards are available with additional food preparation ideas.

Looking for a special dessert? How about a frozen pumpkin cheesecake or strawberries dipped in white chocolate? “People will think you’ve gone through so much trouble, or they’ll say, ‘You got that at Trader Joe’s,” says Trader Joe’s Danny Owens.

Your Assignment

You are a marketing specialist tasked with creating a tempting dessert that can effectively compete with Trader Joe’s frozen pumpkin cheesecake and strawberries dipped in white chocolate. Then, your assignment is to develop a marketing plan to launch the new dessert nationally.

Before reading any further, you should review Appendix A “Building an effective Marketing Plan” (pp. 56-70) and Chapters 21-22. Please feel free to look up marketing plans in other literature, as well, as you may need it for the paper. As you can see, marketing plans often differ in nature and content depending on many factors such as the nature of the industry, management needs, and the purpose of the plan. However, most plans follow a similar structure. A product or brand plan would include all of the following components (below). Please use this framework to develop the marketing plan for your new dessert:

1. Executive Summary – a very short (200-250 words) summary outlining the goals and recommendations included in the plan.
2. Situation Analysis – a concise description (350-700 words) of the current relevant conditions in the market:
   1. Market Summary
      1. Market Needs
      2. Competition
      3. Market Trends
   2. SWOT Analysis
      1. Strengths
      2. Weaknesses
      3. Opportunities
      4. Threats
3. Marketing Strategies – The main body of the plan explaining the logic by which you hope to achieve your marketing objectives. This includes identifying the target market, outlining the marketing mix strategies and the level of expenditure.
   1. Marketing Objectives
      1. Marketing Strategies
         1. Marketing Tactics
   2. Target market
      1. Demographics
      2. Psychographics
   3. Product positioning (USP)
   4. Marketing Mix
      1. Pricing
         1. Quantity
      2. Product review
         1. Features, benefits
         2. Points of difference
      3. Promotion
         1. IMC
            1. Message
            2. Media
            3. Advertising
            4. Sales Promotion
      4. Distribution
         1. Types
   5. Implementation Milestones
4. Annotated Bibliography – Please be sure to attach an annotated bibliography to your marketing plan that documents all your sources for the project. You do not need to type a regular reference page, only the annotated bibliography is needed for giving the references used.

Assignment Instructions

In doing this project, you will demonstrate a sound understanding of Marketing Principles and the various methods for developing overall marketing strategy. You are to present your marketing plan in a professional manner. Your marketing plan will include a title page, table of contents, an annotated bibliography.  Be sure to reference the textbook and cite any and all sources correctly.

Sources: Trader Joe’s: This case was prepared by Professor Linda Rochford, associate professor of marketing, University of Minnesota, Duluth, from the following sources: “Trader Joe’s Company,” www.hovers.com; SN’s Top 75 Retailers for 2009, supermarketnews.com, accessed October 15, 2009; David Orgel, “Trader Joe’s President Shares Secrets of Success,” Supermarket News, February 6, 2006; Joy Buchanan, “More Than Just Goat Cheese,” Knight-Ridder/Tribune Business News, December 9, 2005; Mark Hamstra, “Convenience Only One Small Part of Total Value Equation,” Supermarket News, July 17, 2006; and “Behind the Scenes at Trader Joe’s,” Private Label Buyer 20, no. 4 (April 2006).