| The supermarket industry has undergone dramatic changes in the past few years. Alternative retail formats such as mass merchandisers, price clubs, and supercenters have encroached upon supermarket sales to pose a serious threat. A concurrent trend in the supermarket industry, in past driven by growing competition, is the movement towards developing customer databases. The impetus behind these data collection efforts is a hope that data can be used to improve marketing decisions and thereby improve retailer position vis-a-vis new competitors. However, a common refrain in industry reports is that most retailers are struggling to leverage this information. This thesis presents a series of three essays to demonstrate how the information contained in retailer's databases can be used to guide marketing decisions, such as pricing and customer retention strategy, when confronted with new competition.; The thesis makes contributions to both marketing theory and practice. Past research on supermarket competition has primarily focused on stores that are identical in terms of product offerings, cost structure, and pricing policies. Little attention has been given to the growing competition from mass-discounters and supercenters. This thesis contributes to this emerging area by addressing how consumer behavior changes when a low-priced competitor enters the market, and how traditional supermarkets can use the information in their database to better compete with the new entrant. The research is also salient to the growing body of literature focusing on database marketing. The first essay of the thesis shows how a supermarket manager can use point-of-sales data to develop profitable pricing policies. Similarly, the last chapter of the thesis demonstrates how a retailer can exploit the information contained in its frequent shopper database to understand and interact with their most valuable customers. |
