Running head: MARKETING PLAN

Marketing Plan: Grocery Delivery MKT/421

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Marketing Plan: Grocery Delivery Introduction Kroger is a company with a long history of servicing their customers for over 100 years, now it embarks on a new phase of service to those who have kept loyal as customers. Kroger will introduce a marketing plan to bring grocery delivery service to low income and elderly and its other entire customer base. Hopefully gain some new ones on the way. A marketing plan is needed to achieve the step by step process of making this service successful, there has to be some market research, creating a marketing plan, a budget, implementation, and evaluate the effectiveness of the marketing plan. In this paper we will breakdown the process from idea to implementation. History and Overview of Kroger In 1883, Barney Kroger opened a grocery store in Cincinnati, Ohio. "The son of a merchant, [Kroger] ran his business with a simple motto: 'Be particular. Never sell anything you would not want yourself'" (The Kroger Company, 2013, para. 1). Today Kroger's grocery stores rank as one of the nation's largest retailers. Kroger has evolved over the years to satisfy the changing needs of their customers, which has resulted in 2, 500 stores in more than 31 states, and annual sales of over $70 billion (The Kroger Company, 2013). Krogers growth and expansions are largely because of mergers and acquisitions. In 1983 Kroger merged with Dillon Companies to become a nationwide operation and in 1999 Kroger teamed up with Fred Meyer, Inc. to become a supermarket chain with the broadest geographical coverage (The Kroger Company, 2013). In response to customer needs of convenience, and onestop shopping, Kroger stores have grown and offer more variety and merchandise. New stores are approximately 65,000 square feet and packed with more than 50,000 items (The Kroger

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Company, 2013). Kroger has 1,900 in-store pharmacies filling more than 120 million prescriptions each year and the floral departments generate enough revenue to consider them the worlds largest florist (The Kroger Company, 2013). The Kroger Company has also played a vital role in industry firsts. Kroger was the first grocer in the United States to establish an in-house bakery and also the first to combine the sales both meat and groceries under the same roof (The Kroger Company, 2013). In addition to these firsts, Kroger was also one of the first grocers to begin manufacturing their own products. Throughout Krogers history it has pioneered the grocery industry. In the 1930s it was the first grocer to monitor product quality and test foods (The Kroger Company, 2013). In 1972 Kroger was the first grocery retailer to test the electronic scanner in America (The Kroger Company, 2013). 2013 will be another first for The Kroger Company The Kroger Company will implement a grocery delivery program for elderly and low income families with limited transportation. Krogers values of service, selection, and value continue to be the guiding values as another service is for the retail grocer (The Kroger Company, 2013). Kroger hopes this program will give back to the communities that have made them the successful grocers they have become since the first store opened in 1883. New Grocery Delivery Service We have decided to start a grocery delivery service and want to go over the description and what we will do with the service. There are many other companies that do a delivery service, and the customers can order online or call in to have their items ordered to get delivered. We will deliver to the elderly and low income families or to those who want to get their groceries delivered. We will also make sure that the customers are getting what they want or need with the service. This service will be very useful for the elderly so they do not have to carry their

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groceries in their home and for the low income families to save some gas money. Let us look at what the service will include. The delivery service will be the delivery of groceries and other items that the customer's order. We will gather all of the items and have them delivered in a timely manner. We will take the items to the customer and carry them to him or her into their homes. We will make sure that we put the bags where they want and make sure that they got everything they asked for. The delivery service will also help to get a customer base started and keep our customer relationship. The service will allow our customers to get the other things done that they need to and let us do the work of walking around the store for them. The delivery service will make a positive impact on the store by having our customer base and get more customers who are not able to get around very easily. The delivery service will be an exceptional addition to our store and will help with the customer base and to get new customers. SWOTT Analysis According to Kotler and Keller (2012), SWOT analysisan inventory of strengths, weaknesses, opportunities, and threatsis a strategic evaluation of a company's external and internal environment. Moreover, a thorough analysis, including an understanding of industry trends, is the foundation for a good marketing plan (Evans, 2008). In other words, one can neither pursue an opportunity without acquiring the required strengths nor prevent a threat without eliminating the vulnerable weaknesses. Subsequently, industry trends either help or hurt organizations regarding their opportunities and threats as well as their strengths and weaknesses. Therefore, the subject of this section is a SWOTT analysis for Kroger's new delivery service program. External Opportunities (including positive trends)

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Lack of customer mobility prevents grocery stores, such as Kroger, from capturing 100% of local business they should. Therefore, grocery delivery presents an opportunity to reach an additional portion of market as well as to increase positive public relations.

In addition, competitors like Meijer have launched e-commerce sites, offering the shipment of nonperishables to one's home (Tresslar, 2011). Hence, grocery delivery has the potential to extend Kroger's geographical coverage and market share beyond physical store locations.

Further, according to Rosehill (n.d.), "as the baby boomer population ages, the market for food delivery business focused on seniors is growing" (para. 1).

External Threats (including negative trends) The benefits of e-commerce and the increase need for grocery delivery also are threats if competitors, such as Meijer can get their products to current Kroger customers at a lower price. Other dangers include liabilityhome-delivery increases risks to product, to customer, and to employees (Rosehill, n.d.). Moreover, because Kroger must ensure business and delivery vehicles as well as bond employees to offer home-delivery, an additional threat is the increased costs affect Kroger's competitiveness. Internal Strengths Kroger operates 2,435 grocery stores and 791 convenience stores in more than 40 states as well as a manufacturer of 40% of units sold (The Kroger Company, 2012). Therefore, a major strength for grocery delivery is the economies of scalethe increased units enable lower per-unit cost on Kroger brands and increased purchase power on others.

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In addition, the existing geographical footprint for the organization allows ease of delivery, using closest inventory, personnel, and resources to reach customers at a lower cost.

Subsequently, the company currently sells about $19 billion in fuel, creating strength over competitors (The Kroger Company, 2013). In other words, Kroger does not have to pay for fuel, which is a high cost at present.

Employee safety and ethics also are strong, which help to mitigate liability threats (The Kroger Company, 2012).

Moreover, Kroger's fighting hunger campaigns create inroads and market strength for establishing grocery delivery with the elderly and low-income families.

Another well-established process is Kroger's acceptance of food assistance and other government programs.

Internal Weaknesses Strengths can be weaknesses. One possibility is Kroger can leverage offering the delivery of additional paid groceries to recipients whom receive donated food. However, the existence of the fighting hunger program can be a weakness of the new grocery delivery service because the charitable donations may already provide sufficient groceries to the target market. Further, the age diversity of Kroger employees can create a challenge with bonding as many employees are students. Marketing Research Kroger has to find ways to counteract its competition and one of those ways is to offer home delivery service to its customers. Finding new ways to satisfy the need of customers and

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devising a marketing strategy to achieve that can lead to the all-important goal of any company, which is growth. Marketing can lead to growth in both size and revenue, therefore marketing in an area of the business that would in affect lead to growth and more revenue makes sense. Krogers focus on customers first allows them to expand and get feedback immediately because of their involvement in customer service and ease of the publics access to store managers (The Kroger Company, 2013). The importance of marketing to any organization should not be taken lightly; it is the marketing plan put into place and implemented which that will make growth and revenue a possibility for an organization. Devising new ways to reach out to customers and keep them coming back are the result of good marketing. Research Approach Marketing research is important for the survival of any business, and Kroger is no different. We have decided to introduce our home delivery grocery system, but that decision did not just happen without thorough research to decide what the customer needed most in conjunction with what we as a company could offer. We started the process by sitting out fliers for potential home delivery grocery services at each check-out counter, and we watched the reactions from the customers. The method we used was the Observational Research method. According to Armstrong and Kotler (2011), "observational research involves gathering primary data by observing relevant people, actions, and situations" (p. 110). By watching the customers and listening to the conversation that some of them had with the check-out clerks regarding the fliers for the home delivery services, we could assess that the area in dire need of attention is the home delivery service for groceries. This was not just some complaining from elderly or disabled customers, by observing our customers we heard from customers of all walks of life that would benefit greatly from the home grocery service. Many working mothers strongly hinted that with

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their busy schedule, a home delivery system for their groceries would be a life saver. We even observed men who did the grocery shopping from a list made by their wives, and if they could get those groceries delivered to their homes they could make sure they got their task correctly and have time to complete other "honey do's" on their list. Placing the fliers, or the "bait," out has generated an abundance of observation material. Judging roughly, around 80% of the verbal feedback that we got from our observations was positive regarding the home delivery grocery system. Not everyone had positive comments but that percentage of people was very low. Also not every customer had a reaction one way or the other. Because the feedback was overwhelmingly high for the home delivery system based on our observational research, and this is the direction that Kroger will go. Consumer Analysis The buyers and/or consumers would be the customers that are in need of the grocery delivery service. Helping these customers out would show other potential customers that Kroger does care about their customers and that Kroger wants to make sure their customers are getting taken care of. Kroger aims to please their customers and they are proving it by showing their competitors and everyone else that they go above and beyond the call of duty to take care of their customers that have a hard time getting around and need that special assistance. The buyers and/or consumers of Krogers grocery delivery service are those that have problems getting around, need that extra assistance and for those that cannot drive any longer. Kroger going the extra step to help those who are unable to shop for themselves will raise the firm above its competitors as well as other local grocery stores. As much as it may be a damper for those that need the help, Kroger loves to help their customers or they would not have this amenity available. Having this amenity will get other customers to switch from their current

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grocery store over to the Kroger grocery store. Not only do the elderly use this great service but if someone that has gotten hurt and is unable to drive, this would be great for them too. This is a great service and can accommodate several different customers. Effect of consumer behaviors on marketing. To us here at Kroger the need fuels the means. After thoroughly researching the subject matter, the marketing strategy that we ultimately chose really was a very simple choice. The thing that made the choice so easy was the factors that influence the consumers purchasing decisions as well as the picture as a whole. The consumers that we are focusing on all have issues getting around without assistance. We found that if a service became available to these customers, they would shop more which would work out in a positive way for both the consumer as well as Kroger. The main factor for the elderly, disabled, low income that cannot afford to pay for a ride to the grocery store has to struggle out to the store. It has been and is still very much a huge inconvenience and hassle for those individuals. Our home delivery service removes that obstacle for these customers. Where before they would maybe try to get to the store once a month, working with our home delivery service they now can get groceries to their door steps however often they need them, no matter how large or small the order may be. Another factor was the weather. It was already hard enough on that group of people trying to get out but inclement weather made this event unbearable. Again, our home delivery service all but eliminated that obstacle also. Competitor Analysis The Kroger Company is looking to implement a grocery delivery program that services communities nationwide. Each store will have an order center within the store itself. This department will process and arrange for orders taken via telephone or e-mail. Kroger will

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implement an online and telephone order process that will be distribute to the retailer closest to the customer placing the order. Kroger currently competes with a number of retailers in the supermarket industry. The most prominent competitors are Wal-Mart, Albertsons, and Safeway. These are the largest retailers in the grocery industry and each of them maintain brick and mortar retail stores on top of online purchasing and ordering capabilities. In addition to these physical retailers there are a few online grocery delivery services that may also prove to be competitors in the delivery industry. These competitors are Schwans, Wegoshop.com, and the netgrocer.com. Identifying each competitors strengths and weaknesses will allow the competitive landscape to be set for the grocery delivery business plan. The first competitor to evaluate would be Wal-Mart. Wal-Mart is one of the worlds largest retailers not only in groceries but also other household items as well. The have an enormous selection available to consumers, which is not limited to grocery items (Wal-Mart Stores, Inc., 2013). They offer online order placement and because their nationwide coverage offer a large delivery area. Despite these benefits, Wal-Mart does not cater to low income or elderly persons as their primary customer base in the delivery service. A credit card is required to pay for the products ordered and a fee is charged for the delivery service (Wal-Mart Stores, Inc., 2013). The delivery program does not make exceptions for individuals on food assistance programs or that do not have Internet access to place orders. Kroger will have a competitive edge in this area. Kroger will allow telephone orders to be taken at a central order center, which will distribute to the closest retail outlet, or each individual store could be called to place an order. The second competitor is Safeway, Inc. Safeway also has a number of stores nationwide; however, they are strictly a grocer and are similar to Kroger, Inc. in products. Safeway offers its

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own product lines and has a variety of products to offer (Safeway, Inc., 2013). They also currently offer a grocery delivery service. Some of the features of Safeway delivery program are one-hour delivery windows, the ability to shop by history, and delivery is free for first time customers with a rewards program that offers free delivery the more a customer shops (Safeway, Inc., 2013). However, Safeways grocery delivery is also limited to online orders and if only first time delivery customers receive free delivery. Safeway is similar to Wal-Mart in that credit cards are the only accepted payment option. They do not accept cash or gift cards and low income food assistance is not available as a payment option as well (Safeway, Inc., 2013). Albertsons is another extremely large grocer retail chain that should be perceived as a competitor in the grocer market but Albertsons discontinued their delivery service of groceries in 2009 (Albertsons, LLC, 2013). Although on a retail, brick and mortar front, Albertsons is a viable competitor, in the grocery delivery service they are not, unless they choose to resume this service in the future (Albertsons, LLC, 2013). Kroger, Inc. will also face competitors that do own physical buildings and retail stores. The e-commerce and online shopping experience is growing rapidly and companies such as Schwans, wegoshop.com, and netgrocer.com offer an online competition that Kroger, Inc. should be aware of. Schwans has been in business since1952 and deals primarily in frozen food products (Schwan's Home Service, Inc., 2013). Schwans is limited in product variety; however, they have an established customer base that may inhibit new customers in some areas (Schwan's Home Service, Inc., 2013). They offer online shopping and quick delivery but like Krogers other competitors low income food assistance programs are not accepted as payment (Schwan's Home Service, Inc., 2013). Schwans does cannot deliver as wide-spread as Kroger and are not as well-known or as well branded.

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The other two online grocery delivery programs simply allow ordering online and individuals travel to grocery stores within their coverage area and deliver the groceries to the individuals requesting the products. If the delivery program does not have individuals it uses shipping providers, such as FedEx and UPS to deliver its product (NetGrocer.com, 2013) This could be competition in that the consumer is not limited to one grocery store and can request that the delivery service visit specific stores within the consumers local area to retrieve specific items (WeGoShop.com, 2013). Because these are individuals performing the service, food assistance programs are not likely to sponsor this; therefore, the consumers are required to pay out of their pockets for his or her groceries. After evaluating the potential competition for the grocery delivery program that Kroger, Inc. will be implementing there are a few distinct items that will provide Kroger with the competitive edge. Kroger should focus its program on local communities and assisting elderly individuals and low income households that cannot travel to the grocery store to purchase their own groceries. Because these individuals are the target market Kroger should focus on free or low cost delivery service and retrieving approval from low income food programs to accept them as forms of payment for the groceries delivered. Kroger, Inc. also makes allowances for not only online orders but also telephone orders as well accommodating people without Internet access. Segmentation In marketing identifying the target audience is the most important part of ones strategy, and this will allow the organization to efficiently market its targeted audience. However, knowing what demographics or what market to target for our delivery service can be very vast. Although Kroger caters to many types of customers, the new delivery service will target low-

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income families and the elderly. Therefore, we need to identify what service or services to offer and how the customer will have access to enjoy these services. Criteria Hence, criteria for market segmentation include customer needs, determining relevance and value. This establishes the different customer types that will benefit from these services and goods. The segmentation criteria also include geographywhere to place products and services. As a broad company Kroger should not just limit itself to offering this service to the elderly or low income, this service can also be used for the regular shopper at Kroger stores. Including health conscious customer along with the upscale and gourmet sections of exclusive foods that Kroger carries, segmenting a broad product market is the first step. As a marketer we must disaggregate all the customers that would need the service and identify the markets for Kroger to develop suitable marketing mixes (Perreault, Cannon, & McCarthy, 2011). In the chart below you can see a segmentation of the markets available to Kroger for marketing a delivery service.

Deivery service

Elderly & Low Income

Regular Customer

Health Concious

Upscale and Gourmet

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Ideally a good market will have the following criteria Homogeneous where customers in the market segment would be as possible, in this case they are. They are all grocery shoppers. They should also be heterogeneous meaning different in the way they respond to the marketing mix as well as substantial and be big enough for the store to be profitable. Finally the segment should be big enough to differentiate and identify customers from an operational stand point. These segments have been identified in the table above form the customer base of Kroger, another way that would help segmentation process is the use of the customer loyalty card used by most Kroger customers to see who falls in each segment by the products they buy (Perreault, Cannon, & McCarthy, 2011). Once the segmentation process has been completed then Kroger can put in place the marketing approach for each segment and advertise accordingly. Once this is done the best advertising will commence and it is free for the organization, word of mouth. This will create more interest and exposure to potential customers and draw in customers from other competitors for the service Kroger provides. From there on is all about the service to the customer. Target Market As discussed previously, the market segments available to Kroger include regular, healthconscious, gourmet, and in-need customers. Because elderly clients and low-income families inspired the grocery delivery service idea, the group will start with the latter market. Three important dimensions of a market segment include consumer behaviors, geography, and demographics (Perreault, Cannon, & McCarthy, 2011). The first two dimensions are pertinent because age and income demographics affect grocery purchases. However, geography has to be a focus because of the safety and liability concerns, which the SWOTT analysis outlines. Therefore, the team will start with the five cities with the highest concentration of customers in

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the target demographic and with the lowest crime rate. In other words, the trial of this service must pose the least amount of risk to employees. Consequently, a secondary concern is driving distance. The farther the employee from the store, the more difficult it is for others to assist in an emergency. Therefore, the initial target market will use a 20-mile radius to match restriction other delivery service providers have implemented (Willett, 2012). Once the infrastructure to support service is in place, the team will evaluate whether Internet sales with paid deliveryvia UPS or FedEx versus Kroger employeesis a feasible solution to offer home delivery to unsafe geographic locations as well as other market segments. The personal touch, especially to the elderly consumers, will be a good complement to the existing community relations and charity work by Kroger; therefore, the main target market for home groceries should continue to include local elderly consumers. Differentiation and Positioning Kroger already has a customer base that is loyal to the organization for its quality and brand of service. This service should be looked at as a new benefit to its customer base and a way for the company to gain more customers while helping those that cannot get to the store because of lack of transportation or physical handicap. To position the service the company must market it by informing, and persuading customers and government agencies of its benefits, by partnering with local governments that service the welfare programs for the elderly and low income families, who can advertise the benefit to those customers (Perreault, Cannon, & McCarthy, 2011). Another way to position the delivery service is the use of their remarkable card database that it currently uses for discounts within the store. Creating awareness of the delivery service to all customers through teaser campaigns, viral advertising will generate interest. Institutional

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advertising will also make a huge difference because everyone knows the Kroger brand it is easy to recognize the company has a long history. Differentiating the service is the key, most delivery service are done by smaller companies and Internet services. Kroger cuts out the middle man and can be accessed by the customer directly via phone, Internet, or by ordering in person. The next part in the marketing strategy is to gain market share from competitors, the approach here should be a direct attack at Krogers competitors. By employing TV an ad using the company brand along with a display of the service in action showing how Kroger can deliver groceries door-to-door and the competition makes its customer run to the store, resulting in the customer being unable to set up just in time for dinner with their family. This will create an immediate action from the customer to try out the service (Perreault, Cannon, & McCarthy, 2011). This will also show a differentiation of the brand comparison between Kroger and its competitors. Product Life Cycle Stage The delivery service will moves through the first three stages of the product life cycle will be within three to four months. The first thing that needs to be performed is product development. Once this stage is complete the service will be introduced to initiate service growth and have the service mature; the last stage is the declining stage. During the development stage, we decided on a target market of low income and elderly along as well as anyone else who wants to have his or her groceries or other products delivered to their homes. The next stage is the introduction stage. During the introduction stage, sales will start but will be low as we are introducing the delivery service to the public and the employees of the store ("NetMBA.com", 2010). In this stage we will begin to determine the price of the delivery service, distribution among employees,

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and promote the service to the public. The next stage is the growth stage. In this stage we will have rapid revenue growth and will be able to determine if the service will help those who cannot or decide not to go into the store. The last two stages are maturity and declining stages. The maturity stage is the most profitable of all these stages ("NetMBA.com", 2010). This stage will bring in most of our profit on the service. This stage will last longer than any of the other stages. The period of this stage will last many years or it could last only a year. The last stage is the declining stage. In this stage, the sales start to decline because the service is fully saturated ("NetMBA.com", 2010). This stage will come after the maturity stage of the life cycle. The last things to evaluate are the factors that can affect the service moving through the life cycle. The factors that will affect the service moving through the life cycle are disagreements about the service, not enough information, or major changes in regard to the service. We will have to make sure that the delivery service has the information required to move properly through the life cycle. Another factor would be a recession and consumers not being able to use the service as intended. These factors can all be very small and can be worked out as we are moving through the life cycle of the product. Effect of Product Life Cycle on Marketing Timing and patience are key elements within the process of bringing out a new product or service. For the service, Kroger will be providing home delivery of groceries to the selected group of customers. Timing and patience are also key players in the success or failure of this new service. There are growing pains and issues that we have to work through, especially during the product life cycle. We are aware of the possibilities, both good and bad, as well as have prepared plans to navigate through this time.

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When the home grocery delivery service is finally, we will encounter a shock right off the bat in the market introduction stage. This is a new service so not many customers know about or will be looking for the service. A good thing to help us here is that we are providing a service and not a product; the product would have cost us a large amount of money. Here in the marketing introduction stage the marketing team will advertise the service in locations that will be more likely to have elderly, disabled, and low income readers and patrons. The most successful marketing will be word of mouth and in-store promotions so it can be. We will be fine during this stage. Once we move into the market growth stage large profits will be seen. The word of mouth will be circulating, customers will want our service, and we will provide a superior service for our customers as well as turn a nice profit. The negative aspect is that our competitors will see the success, copy our ideas, and probably cut the cost of the service. As long as the service level is kept high, Kroger will endure the maturity stage and sales decline stages will not affect us as strongly in this industry, but we are prepared to tweak the home grocery delivery service down the road remain the best, if need be. Marketing Mix Product Although there are a few attributes to this service, the main attribute to Kroger's service is helping customers in need. The attributes are customer satisfaction, helping customers, making Kroger stand out from the other local grocery stores, and letting customers know Kroger will go out of the way for its customers. As most of us know it is not easy to carry grocery bags, even at a young age. This service will help those that have a hard time getting around, live in low income homes, or individuals

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who just like to have their groceries delivered. This will help elderly individuals, who have a hard time lifting bulky and heavy bags. Our service team will make sure customers have exactly what they need and when it is needed. Helping those in low income housing will offer a benefit because they may not have a car, travel by public transportation, or no money for gas. Also there are customers who may not have time to shop because of busy schedules and want a service to do it for him or her. This is one less thing a busy customer would have to worry about fitting into his or her busy schedule. Helping those in need boosts up the profits for Kroger and keeps the customer's loyalty with Kroger. Kroger offers this service because it makes the customer happy and makes Kroger stand out from the other local grocery stores, in turn keeping the company in business. Price According to McDonald (2008), appropriate pricing is important not only to margins but also to quantity sold. In other words, "price has an interactive effect on the other elements of the marketing mix, so it is essential that it is a part of a conscious marketing scheme, with objectives that have been clearly defined" (McDonald, 2008, p. 206). Consequently, firms can minimize the time necessary to implement a price change, or they can maximize revenuea gradual, longterm approach (Berger, Grigoriev, & van Loon, 2011). Regarding the new grocery delivery service, base prices are simple. The individual grocery product's price is the same. The challenge is home delivery requires additional costsfuel and labor. However, the target consumers may not find the variable delivery charges or service fees affordable. Therefore, one approach is to make gradual price increases to products. If the company sells $1,000,000 in this new service in a year, the service charges may total $100,000or $10 for every $100 grocery bill. If Kroger spreads the overhead of grocery delivery over in-store sales as well, each customer will have an

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increase in pennies. For example, increasing $100 bill to $100.01 is only a 0.01% price change. Kroger averaged about $71.4 billion per year between 2010 and 2012 fiscal years, increasing from $67.7 billion to $75.3 billion in non-fuel sales (The Kroger Company, 2013). If the sales trend continues, 2013 should yield about $77.1 billion. See "Figure 1" in Appendix A. Therefore, a 0.01% price increase would improve the company's profit by an approximate $7.7 million. Hence, gradual change is better long-term versus changing the demanded quantity by drastically altering price. In conclusion, the new delivery service will leverage the increased revenue to allow zero charges for elderly and low-income customers within 20-mile radius of each store. For consumers outside this area as well as those ordering via the Internet, each order will include an additional fee, representing the standard shipping cost by weight and destination. Place The place and promotional strategy that we plan on using are advertising, word of mouth, mailings, our store website. The place strategy that we plan on using is making services convenient, accessible, low cost and reasonable for all customers. These strategies will help us be able to help all customers that are low- income families, elderly customers and everyone else who would like to have their groceries and other purchased items delivered to their home. While we are promoting the grocery delivery service, we have to follow all legal regulations on how and what we can promote (LearnMarketing.net, n.d.). Let us look at the place strategy that we will use. In the place strategy we will include transportation, selling price, service locations, and channel distribution. First, we will discuss the channel distribution. The channel distribution will be from the vendors that we already use and the store's warehouse. These vendors will help us keep all the products that we need to keep all the items stocked to be ready for distribution to all

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of our customers. The location for the delivery service will be at all our stores across the country and at any new stores that we plan to build and/or add in the future. Next, let us look at the transportation and selling price. The price of the delivery service will depend on how much the customer spends and we will charge a delivery fee. This fee will be charged when customers place their orders online or when they call in and make their orders. The transportation that will be used is a cargo van. This will make it easier to get all the orders delivered in one trip instead of two trips. This will help with smaller orders and being able to do more than one small order at a time. Next, let us look at how we are going to promote the delivery service to our customers. Effect of channel management decisions. Channel management has many different functions within it. One of the main things that have to be established with channel management is the responsibility of the specific product or service, making sure that the product (service in our case) comes with the highest quality for the customer, and that the service will provide customer satisfaction. Promoting the service is another thing that has to be handled within channel management. Word of mouth and a good marketing plan is a great way to the service up and running. Understanding and meeting the consumers needs is also a key in channel management because this will enable Kroger to produce a service that will target customers' needs. Having a strong strategy in place is an effective form of channel management. With the home grocery delivery system, Kroger should ensure that the service is producing effective results and if things need to be changed in order to be more competitive and to bring the effectiveness of the service up, then Kroger will have to ensure this is done. To analyze and break down channel management even more, there are a few steps that should be considered. Having knowledge of how the service functions is key and essential.

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Implementations are another key step, which enable the plan and service to come into play. Lastly, the monitoring step is detrimental to make sure the flow is proper. This enables appropriate changes to take place and to make the service more effective. Part of the business plan will detail the person that will be responsible for the financial part of the service. The plan will also include the person that will be committed to overseeing the service and the success of it. It will also show the person that will create the budget plan which will cover the overall expenses of the home delivery service. The marketing team will also need to be recognized, they essentially will be responsible for the service effectiveness. With channel management there must be relationships established as well. Knowing the targeted group is critical, so Kroger has done our homework to signify this low income, elderly, and disabled group of individuals that we will be servicing. Establishing the price of the service is another form of channel management. This step coincides with seeing how much the service will produce in revenue. At this point, Kroger can demand a spot in the marketplace and promote the service, ensuring competitive features and pricing. Promotion The way that we plan on promoting the delivery service to our customers is by using our website, mailings, flyers, and by our weekly advertisement. We will make it so that all our customers know about the delivery service and how they can make orders and how it works. We will send out mailings that will explain how the ordering process works, how they can order and to make sure that they all understand how we are doing the service. The mailings will explain how much the delivery fee to. The promotion is the biggest part of getting the marketing strategy going for the delivery service.

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Sales promotion schedule. For a marketing plan to be successful there must be a stepby-step process to put the product or service in front of the intended audience. Kroger must use every available avenue to promote this service to all its customers and local institutions that work with low income and the elderly. Some promotional methods that the company can use are introductory sales, discounts for new enrollments, trial periods, and advertising to state government institutions using a sales force to put the information in front of the decision maker. Another option is the use of their Internet website to promote the service. For this sales promotion to be successful there has to be some market research done, create a campaign theme, advertisements, and select media outlets to put the message out to the public. The first step in the process is establishing guidelines in the initial sales promotion. In this initial stage the scope of the advertising campaign will be laid out and a planning phase will begin taking into consideration full use of the advertising budget, as it will be used (McQuerrey, 2012). Planning how the budget will be spent in the initial phase of planning will help keep all decisions in line. Step two Kroger marketers must set a timeline for the initial sale promotion. From that point marketers need to work backward to set up planning efforts for the intended launch date. For example, if Kroger wants to launch their sales promotion on March 1st and the time to develop an advertising plan is two months, the company would start in January for an on-time launch. Step three is to set up a budget for the initial sales promotion schedule. This budget should include the cost of developing an advertising plan, creating materials and advertisements as wells as buying airtime on TV and radio and other media outlets. Because customers may have a certain time in the day when they are in front of a computer, television, or radio, it

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important to plan out the peak times for advertising. Consequently, certain times may come at a premium if there are other advertisers looking to put their information out at the same time. Step four is determining the target market during the initial sales promotion. In this area taking the budget into consideration and determining which outlets to use is important to test the waters and look at the response to that particular campaign in that outlet (McQuerrey, 2012). Once the response is seen adjustments may need to be made to see where the efforts need to be made to improve or pull from that outlet. Flexibility is the key in this step because changes may need to be made immediately to make the most of the budget allotted for that particular outlet of the advertisement. Step five the advertising plan should be developed with messaging and branding in mind (McQuerrey, 2012). This is where the write, copy, graphic design along with web ads are produced. Video images and commercials are also planned out, the entire advertising plan can be done out in this step or unveiled one piece at a time. Kroger has the advantage here because it already has avenues in the TV commercials and web advertisement area. Another benefit is the direct mailing campaign to customers who are already Kroger plus cardholders and pull them in with a special trial offer to take advantage along with their discounts that already come with being a member. Step six involves the actual launch of the advertising plan as outlined in the initial sales promotion schedule (McQuerrey, 2012). At this point it would also be beneficial to create a tracking system to evaluate the effectiveness of the advertising campaign. As the plan develops small adjustment can be made to reach the desired audience effectively to achieve the desired response, another benefit is the ad or removal of advertising tools as needed. Down the road this

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information can be used for a second advertising campaign and make it more effective than the first. Finally Kroger needs to actively use its sales force to market and aggressively go after the state sponsored programs for those of low income or elderly to provide the delivery service at a discount or totally free to the customer. With a small fee to the state for offering the service and allowing their beneficiaries to take advantage of this service most notably the elderly would be the most benefited by this service, at times they depend on family members to help them get what they need or have to wait until someone is free to lend a hand. Kroger would benefit from pioneering a service that is only available to those with means to pay extra for the benefit. Along the way they can also help those in need within the population that may not have access to transportation or have any means to get the groceries inside their home. Advertising plan. The Kroger Company is implementing a new grocery delivery service primarily to benefit elderly and low income customers. While, all of Krogers customers will be welcome to utilize this service, the two target markets will be elderly individuals and low income people and families, as these consumers will receive the greatest benefits from the program. In creating an advertising plan for the delivery service, evaluation should be made into the demographics of our target market. For instance, the elderly populations will be more likely to be receptive to advertisements played on certain television channels or radio stations, in-store brochures, their physicians' offices, or other community senior programs that elderly individuals may participate in or have available to them. Low income individuals or families generally will be younger in age and view a different variety of television stations or listen to different types of music, and will be more likely to see advertisements in places such as the public aid or human

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services offices. Both demographics will have equal access to mail out brochures as well as community flyers and newspaper advertisements. Because of the variety of differences between the elderly target market and low income individuals and families, the major advertising campaigns, such as television and radio should target their specific market and be played at specific times and on specific channels throughout a day. Good market research can provide the information needed to determine the most efficient times of day and stations to advertise on for each target market. The advertisements intended to target elderly populations should depict elderly or aging individuals, often alone or couples. These individuals will be seen placing an order and the Kroger Company representative on the other end of the phone, Internet, or other order placing channel. After the order is received the elderly individual will describe the benefits and attributes the delivery service program provides them with, and then customers will see the order being delivered. Some of the attributes and features awarded to elderly individuals would include the benefit of not having to leave the house in times of illness or not having to struggle with walking around the store because of unavoidable age-related health ailments. The advertisements intended for low income individuals or families will be similar in the depiction of showing the ordering process; however, the individuals ordering the service would be a mother, with two small children. This mother will promote the benefits that low-income families will experience in utilizing this program, such as being able to use their public assistance to purchase delivered groceries and not having to shop with small children, as well as the use of the extra money not spent for gas on other basic needs, such as medications or utility bills. While the television and radio advertisements will address specific consumer demographics, the print advertisement can reach all potential customers, including the two

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targeted markets as well as the general populations. Print advertisement will be distributed as brochures in-store, mail outs, newspaper inserts, or strategic community locations throughout the nation. The print advertisements will include information regarding the service, general benefits and attributes, pricing, as well as the specialized pricing for low income and elderly consumers. It will also inform consumers how to place orders for deliver, such as via the Internet, phone, or fax. The print advertisement will be distributed to customers within the store as a brochure that is handed to them with their purchase receipt at checkout. This will ensure current customers become aware of the service and provide word of mouth to others, such as parents, grandparents, friends, and relatives. Additionally, the print media could be distributed to newspapers as inserts to be included with their weekly advertisements and coupons. Identifying local community areas to place brochures in will also be vital. These would be areas where target market consumers would be known to visit or likely to see advertisement material. The elderly may be more likely to see or be open to advertisement found in their senior community programs, doctors offices, or their churches, whereas low income families may be more likely to see advertisement in daycares, the public aid office, food pantries, or other low income assistance program offices. In addition to these advertising channels and media outlets, The Kroger Company will also sponsor a number of local community events and awareness programs, which will allow for distribution of information and material as well as take advantage of the public relations opportunities that present themselves. Public relations opportunities. All communities offer a number of public relation opportunities. Local The Kroger Company stores will participate in local wellness fairs, food drives, and other community events as advertised. Additionally, increased contact with food

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pantries as well as providing food donations items and the brochures for the delivery service will assist in getting Kroger brand identified and the delivery service known. Each Kroger store will be obligated to identify and participate in a number of local community events. Management of each store should look for events that benefit the local community, with emphasis on our target market of elderly individuals and low income people and families. One area that may be utilized to gain access to the different types of public events would be local public aid departments. These organizations often provide food assistance and public aid recipients with information regarding wellness, food, and other community outreach programs as well as providing donations and supplying basic need items. Taking advantage of these organizational outreach programs will help brand the grocery delivery service and inform the public that it is a service that is available to them. In addition to local community events The Kroger Company will identify public relational opportunities on a national level as well. There are a number of awareness programs, such as National Public Health Week, Poverty in America Awareness Month, and Nutrition Month, that Kroger Corporate should take advantage of. They can monitor these programs and identify areas where Kroger could take advantage of public relation opportunities throughout the service life cycle. The Kroger Company is already heavily involved in the Feeding America movement (The Kroger Company, 2013). Krogers involvement in this hunger prevention program is an already public relations avenue that Kroger should continue to take advantage of as part of the newly implemented delivery service (Feeding America, 2013). Kroger could prepare donation bags with the delivery service brochure placed inside, which aids the movement and also provides an excellent opportunity to advertise to a target market. By utilizing already established

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local community events and national awareness events, Kroger can create an advertising program that includes donations as well as brochures. This will increase Krogers image with consumers on both a local and national level. It also promotes and informs consumers of the new delivery service and hits the targeted market audiences. Budget Merchandise expenses, including advertising, warehousing, and transportation, have cost Kroger about 80% of sales (The Kroger Company, 2013). Therefore, the target budget for the introduction of the grocery delivery service will be 80% of the incremental $7.7 million the team projected earlier. The table "Figure 2" in Appendix A summarizes the allocation of this additional $6.2 million budget. Mostly these values will supplement existing budgeted dollars. For example, advertising costs in 2012 were $553 million, which this project can leverage existing commercials and weekly inserts. Hence, $0.5 million is a substantial increase. In addition to airtime and print expenses, Kroger must consider the preparation for promotional launches and people costs as well as unforeseen miscellaneous expenses, so the plan includes $1.0 million for general and administrative costs. The remaining $4.7 million will fund the logistical expenses, such as additional delivery vans, insurance, fuel, and 14-gallon bins to transport perishable food as well as to separate customer orders. For the initial investment, the company will lease vehicles, so the project has a lower exit cost. Hence, the numbers for vans and associated insurance are annual. The fuel expense is an estimation of 10,000 miles per year times 500 vans with a 15 mile-per-gallon efficiency, so this expense will vary and will require adjustment if project continues. For budgetary purposes, calculations use $3 per-gallon internal fuel costs, $1,000 per-year insurance policy, and $4,000 per-year lease rate.

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Measurement and Control Identifying quantifiable elements to evaluate, monitor and control your marketing plan begins with establishing goals. Establishing quantifiable goals that must be met within a certain time frame gives you context within which to evaluate whether your marketing campaigns are bringing in enough leads or sales. Based on whether you are on track to meet your goals or not, you can adjust your plan accordingly. In most marketing plans, the quantifiable elements are the number of new leads or sales brought in (Allen, 2013). Having a plan in mind will set ones goals in which will lead them to success. One should evaluate the positives and negatives to ensure the plan will profit the company. Kroger must evaluate all angles of this plan in order for the plan to come through and be successful. Looking at retail stores that have this plan in place can give Kroger an idea of what it will take for this plan to continue running. Efficient monitoring of a marketing plan ensures that your investment is not wasted; without knowing how effective each strategy is, you may be throwing away money on useless efforts. As you plan and execute a marketing plan, build in monitoring tools from the beginning and be ruthless in eliminating strategies that are not worth the time and money you spend creating them. With a regular program of evaluation, you can end up with a streamlined, powerful marketing system (eHow.com, 2013). Since Kroger has many stores in different states, it would not hurt to put this marketing plan into play in a couple of the most populated areas and the not populated areas to test it out. Kroger should keep in mind where their stores are located to ensure that each of those cities and states will be just as profitable. What may work in one city and state, may not work in another. Kroger could even set up a test pilot before launching the final product to see if the plan is worth launching. Kroger must think smart about this in order to stay on top and to stay above their

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competitors. Kroger must keep all of this in mind when strategizing. Marketing efforts that are ineffective are a drain of time and money for your company; by evaluating each strategy, you can pare down a marketing plan to the most powerful parts. For the most efficient marketing plan, conduct a review of your marketing strategy periodically throughout the year. Begin each new effort by building in monitoring mechanisms that will make the evaluation process a natural part of each marketing campaign or activity. (eHow.com, 2013) With this plan, Kroger will rank high above their competitors. Most of all, they will have very happy customers. Customers will continue to come back and they will spread the word to their friends and family. The final and end goal would be for Kroger to have a successful delivery service for their customers and for Krogers customers to be happy. Conclusion As we can see a strategic marketing plan that is well thought out and tweaked along the way cam make an advertising campaign successful. The need for Kroger to realize this new service shows the commitment it has to its customers and the vision to look ahead and satisfy a need and be profitable in satisfying that need. By looking inward, realizing their strength and resources Kroger is able to put into place a advertising campaign through all mediums of communication as well as track their progress and evaluate their success. This will give Kroger and edge against all its competitors and make it a market leader.

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Appendix A Figure 1: Three-year supermarket sales in millions plus 2013 estimation, using three-year average growth from the 2012 adjusted result of $73.8 billion (The Kroger Company, 2013).

Figure 2: Initial budget for grocery delivery service. Expense Delivery vans (500 x $4,000 annual lease) 14-gallon delivery bins (100,000 x $12) Fuel costs Administrative (miscellaneous) costs Incremental advertising costs Insurance costs (500 x $1,000 annual policy) First Year $2,000,000 1,200,000 1,000,000 1,000,000 500,000 500,000

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References Albertsons, LLC. (2013). Albertsons. Retrieved from http://www.albertsons.com/about.html Allen, K. (2013). How to Identify the Quantifiable Elements to Evaluate, Monitor and Control Your Marketing Plan. Chron Small Business. Retrieved from http://smallbusiness.chron.com/identify-quantifiable-elements-evaluate-monitor-controlmarketing-plan-14676.html Armstrong, G. & Kotler, P. (2011). Marketing: An introduction (10th ed.). Upper Saddle River, NJ: Prentice Hall. Berger, A., Grigoriev, A., & van Loon, J. (2011, February). Price strategy implementation. Computers & Operations Research, 38(2), 420-426. Retrieved from http://www.sciencedirect.com/science/article/pii/S0305054810001310 eHow.com. (2013). How to Monitor & Control Effectiveness of a Marketing Plan. Retrieved from http://www.ehow.com/how_7594702_monitor-control-effectiveness-marketingplan.html#ixzz2QwyWbXnM Evans, M. (2008). Build a strong foundation now. Quick Printing, 31(7), 56-57. Retrieved from http://search.proquest.com/docview/222773081?accountid=35812 Feeding America. (2013). Feeding America: Hunger-Relief Charity. Retrieved from http://feedingamerica.org/ Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Upper Saddle River, NJ: Prentice Hall. LearnMarketing.net. (n.d). The Marketing Mix. Retrieved from http://www.learnmarketing.net/marketingmix.htm

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McDonald, M. (2008). Malcolm Mcdonald on Marketing Planning: Understanding Marketing Plans and Strategy. London, United Kingdom: Kogan Page Ltd. McQuerrey, L. (2012, April). How to Develop an Initial Sales Promotion Schedule & Create an Advertising Plan. Chron Small Business. Retrieved from http://smallbusiness.chron.com/develop-initial-sales-promotion-schedule-createadvertising-plan-20359.html NetGrocer.com. (2013). Net Grocer. Retrieved from http://netgrocer.com/ NetMBA.com. (2010). Retrieved April12,2013fromhttp://www.netmba.com/marketing/product/lifecycle Perreault, W. D. Jr., Cannon, J. P., & McCarthy, E. J. (2011). Basic marketing: A marketing strategy planning approach (18th ed.). New York, NY: McGraw-Hill Irwin. Rosehill, K. (n.d.). How to Do a Business Delivering Food to Seniors. Retrieved from http://smallbusiness.chron.com/business-delivering-food-seniors-23284.html Safeway, Inc.. (2013). Safeway. Retrieved from http://shop.safeway.com/superstore/default.asp?brandid=1& page=corphome Schwan's Home Service, Inc.. (2013). Schwans. Retrieved from http://www.schwans.com/customerService/faq.aspx The Kroger Company. (2012). 2012 Sustainability Report. Retrieved from http://sustainability.kroger.com/2012KrogerSustainabilityReport.pdf The Kroger Company. (2013). Community. Retrieved from http://www.kroger.com/community/ The Kroger Company. (2013). Form 10-K: Annual Report. Retrieved from http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=106409&fid=8735728

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The Kroger Company. (2013). History of Kroger. Retrieved from http://www.thekrogerco.com/about-kroger/history-of-kroger Tresslar, T. (2011, Feb 01). Meijer starts grocery delivery. Dayton Daily News. Retrieved from http://search.proquest.com/docview/848787009?accountid=35812 Wal-Mart Stores, Inc.. (2013). Wal-Mart To Go. Retrieved from http://delivery.walmart.com/usdestore/help/helppageslinkscontainer.jsp;jsessionid=+7Hs8h0LDJ5w1pn-PT0Ug**.oses4338-atg02?divid=aboutWalmart&prepage=/usdestore/index.jsp%3Fnull#aboutWalmart WeGoShop.com. (2013). We Go Shop. Retrieved from http://www.wegoshop.com/ Willett, H. G. (2012, February 8). Home delivery emerging as next grocery trend. Knoxvillebiz.com. Retrieved from http://www.knoxnews.com/news/2012/feb/08/homedelivery-emerging-as-next-grocery-trend/