Supermarket differentiation in the UK (PDF)

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 and, 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.