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Cost Management-final                                                                                                       21

EXHIBIT 8

SEGMENTING THE BRITISH FROZEN FOOD INDUSTRY

Distribution Channels

Supermarkets

Producers'         Retailers' Brands               Brands

Independent Grocery Retailers

Specialist Freezer Stores

Caterers

P

R

. :

Vegetables

O

Fruits

D

Meat

U

Products

C

Desserts

T

T

Convenience

Y

P

E

S

Ready Meals

Note : The above matrix identifies five categories of frozen food, and five distribution channels. While the basic distinction of customers is between retail and catering, within retailing there are three distinct categories of outlet, supermarkets, independent grocery and specialist retailers of frozen foods ("home freezer centres"). In addition, different market conditions exist for processors supplying frozen foods for sale under their own brand names as opposed to those supplying frozen foods for sale under the brand name of the retailer.

3. Analyse segment attractiveness : Competitive assessments using industry structure analysis or core competencies analysis can also be used to evaluate the profitability of different segments. However, the competitive focus shifts to an analysis of the different segments.

For example, in the frozen foods industry segmentation, independent grocers and caterers may be willing to substitute fresh fruits and vegetables for frozen goods. Therefore, the threat of substitutes within the segments and from outside sources must be carefully examined.

In addition, the interrelationship among segments must be carefully considered. For ex­ample, caterers may purchase frozen food items from supermarkets at bargain prices. Segments may be natural buyers, sellers or substitutes for one another.

In the automobile industry, the luxury car and sports car segments were high-priced, high-margin products with less intense competition than other automobile segments. The intro­duction of high-quality, lower-priced Acura, Lexus and Infinity autos changed the com­petitive structure of these high-priced segments.

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