This book examines and explains the current situation and problems of supermarket chains in England. Supermarket chains are operating in a profitable market but they are confronted with the problem of high competition and compared to manufacturers they have only few possibilities to differentiate. Especially the importance of differentiation is questioned in this book. It is examined whether differentiation is really essential for gaining competitive advantage. For a comprehensive and substantiated demonstration secondary theoreatical data and a study with primary data is used. With theories of manufacturers and retailers possibilities for differentiation are identified. Aspects of customer perceptions are considered as important as differentiation and thus, included and linked to differentiation strategies. A study ascertained best practice by surveying students to examine perceived differentiation factors. Upon critical success factors perceived added value is identified as a major issue of differentiation strategies and included in this study. The research led to the fact that differentiation is not conducted by all supermarkets and that undifferentiation can also be a profitable strategy. Hence, positioning strategies solely based on differentiation is seen as inadequate. For a successful applied competitor based strategy a combination of differentiation types, price and differentiation interdependencies, market segmentation and customers' critical success factors is suggested.

Chapter 3.3.1, Differentiation in retailing: While Porter bases his work on manufacturers, Walters & Knee suggest a similar conceptual model for retailers with productivity led (e.g. effective cost management and economies of scales) and marketing led differentiation (e.g. product range characteristics or customer services). This model is similar to Porter’s generic strategies and does not give deepened information about differentiation elements. Only one empirical study analyses retailing with a focus on differentiation. Morschett, Swoboda & Schramm-Klein surveyed managers of food retailers and customers in Germany, Switzerland and Austria. Hypermarkets, supermarkets, convenience stores, discounters and others were analysed based on a pool of items derived by marketing mix elements. It provides evidence for three differentiation strategies: Price, quality (product and service) and convenience. He refers beside others to Wortzel who provides a conceptual approach for retail differentiation with product, service and personality (includes also convenience and location) and price leadership. Wortzel names a particular level of advertising and promotion as a matter of course but not as a positioning strategy. These categorisations are tried to include in further considerations of Mintzbergs’ differentiation types and expanded with ideas of other retail authors who touch differentiation. Chapter 3.3.2, Price differentiation: Instead of cost-leadership the term price should be preferred and included into perceived differentiation strategies. Lower relative costs are rather part of the resource-based approach as they are the result of e.g. better manufacturing facilities and can not be perceived by customers. But an equation of price with other differentiation strategies like Mintzberg suggests is disputable because a strong interdependency between perceived value and price can not be ignored. Varley rates price as the second important factor in retail positioning strategies. A market skimming pricing strategy in retailing might be the same as Porter’s differentiation strategy and means a consistently price merchandise above the market and stores that do this appeal to people who are less concerned with price and willing to pay for exclusivity, quality, convenience, service, assortment and prestige. A market penetration pricing, which means no differentiation and low prices, is in general used by so called discounters. Walters & Knee and Seth & Randall mention that price is always relevant but argument that low prices cannot make an abiding differential advantage. According to them most customers have only the vaguest awareness of the overall price differences between stores and it is rather a matter of managing the price reputation or image. Chapter 3.3.3, Image differentiation: Image has its roots in marketing scholars. According to Hawkins, Best & Coney image is the interpretation of a brand that is influenced by product attributes, benefits, usage situations, users, and manufacturer/marketer characteristics. Aaker lists further aspects like relative price, celebrity/person, intangibles, lifestyle/personality, product class, competitors, and country/geographic area and describes image as a set of associations. Store image is according to Hawkins, Best & Coney similar to brand image and Berman & Evans determine that an image represents how a given retailer is perceived by consumers and others. Aaker and Hawkins, Best & Coney points out that positioning is closely related to image but two aspects distinguish image and positioning. On the one hand positioning implies a reference that is usually being competition and on the other hand it can reflect what a brand is trying to be perceived. Image can also affect strategies. It is admitted by different authors that image is a possibility for differentiation. According to Kotler image consists of a set of brand beliefs that vary from true attributes and others like the effect of selective perception. Martineau makes a similar distinction with functional qualities and psychological attributes. Differentiation as functional qualities is then communicated or just connected with other psychological attributes like intangibles or advertising campaigns to create image. Thus, differentiation can be seen as a true attribute which is fundamental for building image and image is just a result of additional supportive marketing actions. The other way around, image can contribute to differentiation and gives a retailer uniqueness that can not be easily duplicated. Especially when product performance and mode of distribution are very difficult to differentiate, image may be the only source of positive differentiation. Thus, image shows that customer perceived value is more than differentiation but image might be also a significant part of differentiation as a strategy. Chapter 3.3.4, Support differentiation: With no effect on the product itself support differentiation is something that goes alongside the product and is in general achieved by service. Service has become a major focus of many retailers differentiation strategies and the potential scope of a retailers service mix is very wide. Services should be run to suit the convenience of customers and convenience is defined as the state of being able to proceed with something without difficulty. Services that provide convenience are basic to the operation of any retail store. Such services include convenient shopping hours, attractive displays, adequate parking, effective personal selling, pleasing and effective store layout and appearance, convenient store location, computer-aided centres to help locate products, shopping carts, etc. Even though enhanced convenience could be easy achieved through e. g. aesthetically pleasing or logically layout and free bagging or carry-out services Seth & Randall criticise that shopping experience is still clinical, unexciting and undifferentiated. Mc Goldrick also criticises that the retail industry in general is characterised by rather dull and uniform selling environments. According to Seth & Randal the basic weekly main shop is acceptable but a chore with finding the way around the aisles, little assistance, shortage of meaningful information, queuing at check-outs and so on are still the same problems. A good location is also a matter of convenience but seems to be crucial and not relevant for differentiation. The big five players have all similar location characteristics: large stores on highly accessible sites with significant dedicated same-level free parking and easy commercial vehicle access.

• Competetitive Advantage

• differentiation

• customer perception

• United Kingdom

• advertising

Cornelia Obitz finished her studies at the University of Northumbria in England and received her Bachelor degree in International Business Administration in 2008. Currently she is doing an internship in the field of education and sustainability at the Bionade GmbH in Germany.