Marketing FoundationMKT 2222 | Group Project: Carrefour | April 4th 2008 | | Group Members & Student Numbers:Fikri Fikrioglu – M00013290Mohammed Moin – M00074462Christos Andreou – M00022720Seminar Tutor: Paul GarneauSeminar Number: Seminar S03 | Table of ContentsBackground Information and Company Description of Carrefour 2The Marketing Environment 5SWOT Analysis 10 Consumer Decision Making Process 16Market Segmentation 20Positioning of the Company 22The Marketing Mix 23The Competitive Situation of the Company 26Primary Data Collection & Evaluation 30Conclusion 40Bibliography & References 43Appendix with News Clippings and News Items 44 | |

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Background Information and Description of Carrefour

The company we have chosen to conduct this group project on is the French retail company “Carrefour”. The Carrefour group is based in France; it was created by the Fournier and the
Defforey families in 1959 and opened their first supermarket in 1960 (Company Profile: History and Background Information on Carrefour SA, Online).

At the time the concept of a supermarket was still relatively new in France, therefore in order to enlighten consumers of the various services that its supermarket offered Carrefour launched an advertising campaign before its first supermarket was opened. The first Carrefour store opened in June 1960 and attracted more than 15,000 customers in the first two days alone.

In the past 40 years Carrefour has grown to become the world’s second-largest retailer (the largest being Wal-Mart) and the largest in Europe and currently operates under various names such as Champion, Shopi, Promocash and Dia, as well as Carrefour.

The Carrefour group was the first company to create the concept of a hypermarket. A hypermarket is larger even then a supermarket and the objectives are to allow consumers to carry out the majority of their shopping from one store. A hypermarket achieves this by selling not just food products, but also a wide range of other goods such as clothing and electronics items for example. Carrefour’s first hypermarket was opening in June 1963, it was estimated that each individual customer was purchasing three times as much as they usually did in supermarkets.

During the 1970’s and 1980’s the company continued its expansion into Europe and entered countries including Switzerland, Belgium, the United Kingdom and Italy. When entering these new markets the strategy Carrefour used was to stock local products rather than exporting goods from France. From 1978 to 1982 Carrefour opened more stores outside of France than inside France; the company was particularly profitable in countries such as Brazil, Argentina and Spain.

By 1985 Carrefour was operating in ten different countries in three continents, and had launched its own product label. The objective of Carrefour’s own brand of products was to be a low cost alternative for consumers, but at the same time still offer a good degree of quality. By 1988 the company had become the leading hypermarket retailer in France. In the early 1990’s government regulations meant there were restrictions on opening new hypermarkets in France and as a result of this Carrefour continued its expansion in other markets in various other countries.

The group currently operates four main grocery store formats: hypermarkets, supermarkets, hard discount and convenience stores. In 2000 the company merged with Promodès and became Europe’s largest operator of hypermarkets, supermarkets, hard discount stores and convenience stores (www.carrefour.com). The Carrefour group currently has over 12,500 stores; Carrefour also has many of its own brand products. The company has over 2,500 grocery products under its brand name “Carrefour” and over 1,000 grocery products with a new brand name called “No.1” which is aimed at the lower price segment of the market. The Carrefour group also sells more than 10,000 non-grocery products, and the company employs more than 450,000 workers worldwide.

The company’s success is largely due to offering its customers low prices while at the same time keeping its own costs low and putting the customer’s needs at the centre of it all. The company strives to continually adapt to its customers’ changing needs; this is done through developing its wide range of products to cater to consumers who are budget conscious as well as those who are after quality.

The Carrefour group operates in a number of different markets worldwide; however this report will be focusing on the market in Europe and in particular; Cyprus. In 2005 Carrefour merged with the retailer Chris Cash and Carry in Cyprus. Following this merger Carrefour had nine retail outlets in total in Cyprus; these consisted of five hypermarkets and four supermarkets. Following the opening of two new stores Carrefour currently has seven hypermarkets and four supermarkets.

The Carrefour group currently has a 12% market share of the grocery industry in Cyprus, with annual retail sales of approximately £100 million. Carrefour currently has a 25% market share of the hypermarket sales in Cyprus. Carrefour’s long term plans for its operation in Cyprus is to continue expansion and have at least 25 supermarkets. The company expects this continuous expansion will result in the creation of many new jobs in the country and estimates that it will employ around two thousand workers.

The grocery market in Cyprus is worth around £850 million and is segmented as shown below:

Hypermarket and Supermarkets: £400 million
Traditional Groceries: £200 million
Bakeries: £100 million
Convenience and Kiosk: £150 million
The overall market in Cyprus is growing at a rate of five to ten percent a year; however the traditional groceries and convenience and kiosk segments of the market are declining, this is a result of the hypermarkets growing at a faster rate.

The Marketing Environment

The business environment is made up of three levels which have an impact upon the organisation; the internal environment, the micro environment and the macro environment. The micro environment is made up of elements which have a direct impact and influence on the company and its operations. The micro environment is made up of stakeholders including; customers, competitors, distributors and suppliers.

The macro environment is made up of elements which affect not only the company but also all the stakeholders which are part of the micro environment as well. The macro environment is made up of elements over which the company generally has no control, for example; social and cultural forces, technological forces, economic forces and political and legal forces.

Micro Environment:

Customers
In order to be successful Carrefour must first of all understand what its target consumer’s needs and wants are. This is done through analysing and understanding the consumer behaviour (behaviour of Carrefour’s consumers will be investigated and described later on in the report).

Once the consumers’ needs have been identified it is important to group consumers into separate segments if possible. Segmenting the market allows the company to tailor the marketing mix to suit each individual segment, thus allowing for the needs of the consumers to be met more effectively and efficiently. One of the ways in which Carrefour has segmented its market is by creating its own brands such as “No 1”; this brand is aimed at consumers who want a lower price alternative, Carrefour also has other own brand products which are premium products aimed specifically at those who want a higher level of quality.

It is vital to continuously keep up with new trends in order to be able to offer customers exactly what they want because in the food industry consumer’s tastes and expectations often change. For example, in recent years customers have become more aware of the health implications of certain type of foods and this has lead to a trend where healthier foods are now demanded as well as the need to more clearly label the ingredients on food packaging.

Suppliers
The suppliers are an important factor which can determine the level of success a company can achieve. It is important to have a good relationship with suppliers to ensure on time deliveries and, to guarantee the quality of the goods delivered and to negotiate a lower price or bulk buying discounts.

Carrefour has a policy which is to try to use local suppliers as much as possible. The company also aims to build long term relationships with its suppliers and to offer a fair price to suppliers for their goods and service. However, Carrefour has been said to impose a limit on its suppliers for what they can charge the company for their products. This is a result of Carrefour taking part in “price wars” in many markets which has led to a fall in margins.
In order to gain cost savings and improve efficiency Carrefour has developed a collaborative approach with its suppliers. This means the company is not only trying to get the best possible price and bulk buying discounts from its suppliers, but is also working closely with them to optimise the performance of the supply chain.

Competitors
Another important factor that can have a significant influence on determining the success of a company is its competitors. In order to remain successful the company must monitor, analyse and meet consumer needs and expectations better than its competitors.

The strategies of its competitors will also have an effect on Carrefour’s strategy; for example Carrefour has a policy to be 3% cheaper than the other cheapest retailers in the market, this means that if a competitor were to reduce prices Carrefour would respond by also reducing its prices. This has led to some industry experts believing that a “Cyprus supermarket price war is imminent” (Waiting for Carrefour, available online at: http://www.financialmirror.com/more_news.php?id=2067)

Macro Environment:

Political and Legal Forces
Political and legal forces affect the company and its marketing strategy and decisions because the government sets the rules regarding what organisations can and cannot do, and the company must adhere to these rules.

Cyprus became part of the European Union in 2004 which means that companies operating in Cyprus are now subject to European Union-wide laws. European Union policies in regards to business are aimed at encouraging competition within markets and removing barriers to competition.

One of the objectives of these rules is to control the size of companies by limiting the market power they can gain through taking over or merging with other firms. Under European Union rules organisations must make a regulatory filing containing all the necessary information within seven days of announcing their plans to merge. Carrefour has taken part in mergers previously, such as when it merged with Chris Cash and Carry supermarkets when entering the Cyprus market in 2005. These EU rules will have to be taken into consideration before the company makes any further plans to expand by merging in the future. In the past Carrefour has come under criticism for its size and market dominance because with its increasing number of hypermarkets and supermarkets, a large proportion of small retailers have suffered severe consequences.

There are many pieces of legislation that will affect the company, for example legislations regarding employee relations. In each individual country that Carrefour operates in, there may be differing levels of minimum wage that are allowed as well as different laws relating to employee’s rights; all of these laws need to be understood and adhered to as they all have a direct influence on the business.

Economic Forces:
Economic forces can have a key influence on companies, the extent to an economic factor has an impact on a company may differ between industries. One of the many economic influences is the business cycle. Demand levels for luxury items are likely to fall during periods of recession, which is why it is important for companies such as Carrefour to have a varied product portfolio with a wide range of products. Although during periods of recession demand for premium priced items will fall, Carrefour also stocks many products under its own brand label “No1” which are sold at a lower price and demand for these items will likely rise during these periods.

When making decisions such as whether to invest in building new hypermarket or supermarket locations, Carrefour will have to take into account whether the economy is heading towards a boom or a slump. Interest rates will also be an economic factor which must be considered when making investment decisions as the cost of borrowing is a key factor in deciding whether to go through with the investment or not.

Social and Cultural Forces
Social and cultural factors are made up of the customs, traditions, lifestyles and values that are part of the society that the company operates in. Examples of social and cultural forces that affect Carrefour include demographics, social and cultural norms and social responsibility.

Demographic forces can help to forecast the size of markets as well as growth rates, therefore changes in population demographics can have an impact on the business. Cyprus has a population of just under 800,000 people and the population is growing at a rate of 0.5% per year while the median age of the population is 35.1 years. The company can use information such as this regarding demographics to assist when making decisions in relation to marketing strategy and whom they should aim their products at.

Carrefour operates in many different countries and in each of those countries the tastes and needs of the target population will differ due to differences in cultures. Therefore it is important for the company to research and find out what the needs of this particular market is in order to be able to successfully give the target market what they demand.

Social trends are also a factor. For example, in recent years consumers have become more health conscious and therefore food retailers have to label the ingredients more clearly on their products as well as stocking more healthy items.

A company as large as Carrefour also has many expectations placed on it concerning social responsibility, particularly when in regards to being environmentally friendly. Carrefour is aiming to take action on this issue by reducing levels of waste and reducing the amount of packaging on their products.

Technological Forces
Changes in technology and technological advancements can have a huge impact on the way the company carries out its processes and even on the way in which consumers carry out their weekly shopping.

Technological advancements can improve the efficiency of Carrefour’s processes, such as in inventory management, saving costs; it will then be possible to pass on these savings to the customers. Changes in technology can also affect the buying behaviours of consumers. Worldwide there has been an increase in recent years in online shopping and many food retailers are also beginning to offer this service. This may present an opportunity for the company because if there is sufficient demand from the market in Cyprus for online shopping, Carrefour may be able to exploit this.

However, although investing in technology has its benefits and may give a company a competitive advantage, it also has its risks. In the past Carrefour has attempted to run an online service in its home country France, however this proved to be unsuccessful and made a loss and in 2004 it was reported that Carrefour was considering selling its online shopping business.

Although it can be difficult to predict the impact that new technologies may have, it is important to monitor developments in relevant technology because it is clear that technological forces can present both opportunities and threats.

SWOT Analysis
SWOT analysis can be described as a tool that is applied to identify and analyse the strengths and weaknesses of a company. In addition to this, the opportunities and threats of a company can be gathered by doing some external research. The main aim of SWOT analysis can be identified as gathering information in order to maximise the strengths and take advantage of opportunities while identifying and reducing the possibility of threats and weaknesses. A SWOT analysis makes it possible to evaluate the performance of the company.

In nearly 30 countries Carrefour has approximately 10,000 stores and it operates under 3 store formats; hypermarkets, supermarkets and hard discount stores. After Wal-Mart, Carrefour is the largest retail company in the world. However, Carrefour has languished in terms of total sales in its home market; France. The SWOT analysis below shows the company’s strengths and weaknesses as well as the threats and opportunities that the company may be faced with. Strengths | Weaknesses | | | 1. Leader of the market | 1. Very slow growth in sales in France | 2.Aggressive Marketing Method | 2.Diminishing profitability | 3.Brand Name Recognition | 3.Losses for ooshop.com | 4.Concentrating on competitive prices | | Opportunities | | | Threats | 1.Market Expansion in Asia | | 2.Additional Stores | 1. Hard to compete with discount retailers | 3. Good Relationship with Coop Atlantique, Hyparlo and Finiper | 2. An increase in the labour expenses in Europe | | 3.Week retailing position in the Euro zone |

Strengths

Market Leader:

Carrefour can be identified as the leading retail company in Europe and the second biggest retailer in the world. In addition to this, it is also the market leader in Europe in terms of Supermarket chains. As mentioned before the company mainly operates under 3 main forms; hypermarkets, supermarkets and discount stores. Carrefour consists of around 6,500 stores which include approximately 800 hypermarkets, nearly 1500 supermarkets and almost 4,000 hard discount stores as well as 195 convenience stores and 175 cash and carry stores. Carrefour is in a leading position in its 3 main store formats; this allows the company to maintain its competitive position in the retail industry.

Aggressive Marketing Method:

The company focuses on sustainable regional growth in terms of applying specialised and qualified training to its employees to supply the local markets. Carrefour has in the past demonstrated its ability to adapt its retail style in order to fit into its markets effectively. With their aggressive marketing techniques, the company is trying to enlarge and expand in new markets by adapting its retail formats.

Brand Recognition:

The process of product positioning in every Carrefour store is an important development in order to ensure good brand recognition. According to Data monitor consultation (2005), the company currently operates under 17 different store names including; Carrefour, Champion, Shopi, Dia, and Promocash.

Furthermore, the company retails its own products under its main brands such as; Produit Carrefour, Firstline and Carrefour Bio. As a result the brand recognition rate is nearly 90%, with Carrefour’s own branded goods accounting for nearly 20% of its worldwide sales.

Focusing on Competitive Price:

Carrefour has a policy of setting competitive prices for its products in order to retain its leadership position. In Carrefour’s stores the company aims to offer the cheapest or at least second cheapest prices in comparison to competitors.

In 2004, Carrefour decreased its prices considerably. Carrefour’s focus on offering competitive prices to consumers helps the company maintain its market leadership position in the retail industry which is an extremely competitive industry.

Weaknesses

Slow growth of sales in France:

In 2004, almost 50 percent of Carrefour’s total sales were generated in France, where the company is the strongest retailer. Nonetheless, the total sales from the retail market rose by only 0.1 percent during 2004. The reason for this situation is that Carrefour is weak in terms of offering competitive prices, according to French consumers.

Carrefour has tried to address this problem by decreasing prices in all stores but revenue continues to decrease in France. In addition to this, the company’s competitors in France are increasing their market share at Carrefour’s expense while the French government is forcing retailers to decrease the price of products.

Diminishing Profitability:

In 2004, the operating income of the organisation was nearly €5.0 billion, a raise of 1.0 percent over 2003. The amount of net profit was nearly €1.5 billion in 2004, a fall of approximately 15 percent from 2003. The largest decreasing in terms of profits took place in Carrefour’s domestic market (France). The decreasing profits therefore might be a barrier for the future investments.

Online Sales Making a Loss:

“Ooshop.com” is Carrefour’s online shopping website which operates in France and Spain. In 2004 Carrefour’s online branch recorded losses of €17 million despite spite sales of €50 million. Carrefour has decided to sell its online business due to its inability to generate profits, despite the fact that online shopping is getting increasingly popular.

Opportunities

Market expansion Potential in Asia:

In Asia Carrefour only operates its hypermarkets. Asia is the continent that holds most of the world’s population, therefore due to the size of the population, there is a significant chance for Carrefour to enhance its formats and add other segments such as hard discount stores and supermarkets.

Nowadays, the organisation is planning to dominate the Chinese market which is one of the biggest growing markets in the world. This opportunity of expanding and developing its formats to the Chinese market might bring great amount of profits to the company.

New Stores:

In 2004, Carrefour has enlarged its segments and purchased nearly 25 stores in Greece. These stores consist of 8 supermarkets and 18 convenience stores. Additionally, in the same year, the company purchased 12 hypermarkets in Poland.
In 2005 the organisation had plans to build 15 hypermarkets in China, 7 in Brazil, 6 in Colombia, 5 in Indonesia and finally 4 in Thailand. In 2005, they expect to open nearly 70 hypermarkets, approximately 150 supermarkets, 600 hard discount stores and 275 convenience stores. With the opening of so many new stores, the company has the opportunity to attract the business of many new customers.

Agreements with Coop Atlantique, Hyparlo and Finiper:

In 2004, the company made a franchise agreement with Coop Atlantique in order to support and preserve the position of its discount retail stores. Also, in 2005 the organisation reinforced its relationship with Hyparlo Company by purchasing 50 percent of its shares.

In the late 2005, the company also made an agreement with an Italian company called Finiper and bought most of its shares. Finiper owns nearly 25 hypermarkets in Italy which creates a chance for Carrefour to expand its market in Europe.

Threats Competing With Discount Retailers:

The main problem that Carrefour is facing in France is the hard Government rules and regulations. Since the 1990’s the French government requires food wholesalers to offer the same prices to all retail organisations. The main aim legislation was to defend the food manufacturers by stopping big companies from demanding large discounts. However, the new government regulation made it possible to create discount stores and stock exclusive goods.

Although Carrefour attempts to concentrate on price competitiveness, many of the products in competitor’s discount stores are priced 40% lower than Carrefour’s products. As a result of cheaper discount retailers, Carrefour is losing its reputation as the lowest price retailer in its domestic market. If the company responds by reducing prices further, it will cut the already small profit margins.

Increasing labour costs in Europe:

Europe is the key market Carrefour because over 80 percent of its income comes from Europe. However, the increasing labour cost in Europe is big threat for the company because the costs of labour are increasing from year to year. On the other hand, it might be a good idea for Carrefour to focus more on Asian markets because of the cheaper labour costs.
Weak retailing position in the Euro-zone:

The total sales and revenues at Euro-zone retailers were decreased in 2004 and 2005. The company started offering discounts and some promotions in order to increase sales, undermining organisational margins. The increasing standard purchase prices in the retailing sector made raw material prices and transportation costs rise. Therefore the number of sales in the Euro-zone is decreasing. If this trend continues it may have an adverse affect on Carrefour’s profits.

The Consumer Decision Making Process

When making a purchase consumers go through what is known as a “decision making process”. The decision making process consists of the following five steps; need recognition or problem recognition, information search, evaluation of alternatives, purchase and finally a post purchase evaluation (Jobber, 2007).

The first step in the consumer decision making process is “Need recognition/problem awareness”. During this stage of the decision making process, a consumer within the Carrefour target market will become aware of a problem and the need to address this problem, this need will most likely occur due to routine depletion over time. This may involve the consumer noticing that a bottle of milk is empty or that a box of cereal is almost finished for example. The recognition of a perceived need can also occur as a result of the consumer seeing an advertisement for a new product or a new promotional offer.

If the consumer feels that the importance of the recognised problem is high enough, for instance if it is necessary to carry out the weekly shopping soon because food stocks at home are beginning to run low or if a particular item is required rather urgently, then they will be sufficiently motivated to move onto the second step of the consumer decision making process.

The second step in the process is “Information search”. During this step the consumer will identify the different ways in which they can solve the problem. The purpose of information searching is for the consumer to gather as much information about the possible ways to solve the identified problem; consumers will seek information about products and brands and compare them to competitor’s products. This means that once the consumer has identified the need to go food shopping, they will seek information about Carrefour stores and will compare the ability of Carrefour to solve their problem against its competitors.

Information search can be an internal search or an external search. An internal search would involve the consumer using their memory to remember information and experiences of products they have used in the past. This internal search will often be sufficient when the consumer is considering the purchase of items which they frequently buy; items which are regularly found on their weekly shopping list for instance.

However, when an internal search does not provide adequate information, an external search is used. External information can be gathered from sources such as friends and family, advertisements, websites and consumer reports. If consumers were considering purchasing one of Carrefour’s premium price brand products which they had no prior experience of, they may decide to use external information search to build up their awareness of this product.

The next stage in the process is the evaluation of alternatives. By this stage the consumer will have gathered the relevant information in relation to which product brands may be able to satisfy their needs, and during this step of the consumer decision making process, the consumer will reduce the number of alternatives to a smaller set of brands which they will give consideration before making their final purchase.

The consumer will evaluate their shortlist of brands according to various choice criteria. For food items the choice criteria will usually include such factors as; taste, price and value for money, freshness of the product if it an item such as fruit and vegetables for example, and whether the food is healthy or not is an increasingly important factor in the consumer’s decision. Image may also be criteria as some customers may wish to purchase from one of Carrefour’s premium brands whereas others may be happy to purchase from one of Carrefour’s value brands if it means making a saving.

Once the consumer has narrowed down their alternatives to an evoked set they move onto the next stage of the consumer decision making process which is the purchase itself. When making the purchase there are two evaluation processes that the customers can go through. Consumers will either go through the high involvement evaluation and purchasing model or the low involvement evaluation and purchasing model.

When the consumer is purchasing items that they regularly buy and items that are relatively low cost such as breakfast cereals, snack foods, toothpaste and bread for example, they will be using the low involvement evaluation and purchasing model. This means that the consumer will be using a simple method of choosing which products to buy in order to minimise the time and effort it takes to carry out their shopping as the consequences of making the wrong choice when purchasing a particular brand will be relatively low.

With the low involvement model the consumer will become aware of a product, make a quick evaluation based on criteria such as price, looks and convenience and purchase the product. After using or consuming the product, if the consumer was satisfied it is likely they will make a repeat purchase in the future; otherwise they will try a different brand next time.

Carrefour however also stocks products which are sold at a premium price, as well as non food items such as kitchen appliances, clothing, and electronics items. When purchasing these types of items consumers will likely be using the high involvement evaluation and purchasing model because these items cost more and therefore making the wrong choice will have higher consequences.

With these items the consumer will carry out a more detailed evaluation before making the purchase. Using the high involvement evaluation model the consumer will firstly evaluate their personal beliefs and attitudes towards the brand; whether they like or dislike the brand’s image overall, if it is good value for money and whether it has good reliability and durability. The consumer will also consider other people’s views on the brand such as their friends and family; they will assess whether the other people approve of the potential purchase. Once the consumer has evaluated their personal beliefs as well as the beliefs of those whose opinions they value, then the purchase can take place.

After the purchase has been made, whether the purchase was made with either the high involvement or low involvement models, a post purchase evaluation will take place. The consumer will compare the experience they got from using or consuming the product with their expectations and decide whether they are satisfied or dissatisfied.

“Cognitive dissonance” is the term used to describe consumer’s feelings of anxiety or tension following a purchase; these feelings come as a result of them being unsure as to whether they have made the right choice. This is more likely to occur with purchases made with high involvement. Consumers can become more assured that they have made the right purchase when they see advertisements for the product they have bought or by speaking to other consumers who have purchased the same product.
Whether or not the product met, exceeded or failed to meet their expectations will affect the consumers’ perception of that brand in the future and will determine whether the consumer is likely to make a repeat purchase or not. As well as the quality of the product, the satisfaction received from the shopping experience at Carrefour will also be a determining factor when deciding whether the consumer will make a repeat purchase from the store.

Market Segmentation

Market segmentation is the processes of analysing a market in order identify the different types of consumers. Those with similar characteristics are matched together into various categories; a marketing strategy can then be determined for each separate segment (Jobber, D., 2007, Principles and Practice of Marketing, p275).

Carrefour aims to be able to serve the needs of a very wide range of people. In order to best be able to accurately meet the different consumer’s needs, the company uses various forms of market segmentation.

Geographic segmentation is used by Carrefour; this means dividing the market by the nation, and also by regions. In the European market, Carrefour treats each individual country in which it operates as a separate segment. In addition to this, within each country the market is segmented further by regions; meaning the company deems the needs of those in the city centre to be different from those in the city suburbs; for example the company uses hypermarket store formats in the city suburbs but supermarket formats in city centres.

Carrefour regards each of its different store formats as separate segments, meaning that the company has; a hypermarket segment, a supermarket segment, a hard discount stores segment and a convenience store segment. In Cyprus, Carrefour also operates in the traditional grocery store segment; however as this is a declining market the company has no plans to expand its operations in this part of the market.

In its hypermarkets segment the company stocks around 80,000 different products in each store, this includes many non food items as well. Carrefour currently has over one thousand hypermarkets worldwide and it is estimated that 60% of Carrefour’s total sales comes from its hypermarket segment. In the supermarket segment stores generally stock around 10,000 different products which similarly to the hypermarkets also includes no food items such as household appliances as well. The stores which form the hard discount segment of the market are much smaller than supermarkets and hypermarkets, but the focus is on providing much lower prices rather than offering a huge range of products for consumers to choose from. Carrefour’s convenience store segments are aimed at local consumers, and offer general services such as dry cleaning, photography development, newspaper stalls and a selection of grocery items.

Psychographic segmentation is also used by Carrefour. The company segments consumers into groups based on different lifestyle and personality characteristics (Jobber, 2007). For example Carrefour have an own brand range of products which is aimed specifically for those who are health conscious.

Carrefour also uses behavioural segmentation to divide its consumers into separate segments; this means consumers are placed in segments based on what they will use the product for, how often they may purchase it and the benefits of the product which they find most important.

Positioning of the Company

The positioning of the company refers to the target market and the differential advantage. The target market refers to which market segments the company will operate in and the differential advantage refers to the differential features of the company's products (Jobber, 2007, p305).

Once the company has segmented the consumers into different segments based on the methods mentioned above, Carrefour uses differentiated marketing. This means that a specific marketing mix is developed for each of the various market segments that the company serves. This allows Carrefour to better understand, satisfy and exceed the needs of its consumers.

Carrefour aims to position itself in order to be able to meet the needs of consumers in all market segments. This means they have a line of products which are aimed at those who are more price conscious, a line of products aimed at those who demand a greater level of quality, a brand of products which are specifically made for the purpose of being a healthier option for the health conscious consumers and so on.

The differential advantage is the advantage gained from the product having a unique feature which sets it out from the competition. Carrefour’s various products have different differential advantages based on which target segment they are aimed at. For example many products have a price advantage as they are priced lower than competitors’ products, some products may provide premium levels of quality, and some products have unique features such as having reduced packaging which is beneficial for the environment.

The Marketing Mix

The marketing mix consists of four elements; the “4 P’s” which are price, promotion, place and product. Marketers must manage these elements to satisfy and exceed consumer’s expectations better than the competitors.

Product

Carrefour typically stocks more than 7,000 different products in its hypermarket stores and from 2004 to 2005 the number of products rose by 6% in the grocery department and 8% in the fresh products department. The company has carried out market research which found that consumers were demanding more non-food items; Carrefour responded to this by more than doubling the number of non-food products it offers in the past three years. It has increased its range of household appliances and textile products.

The company segments its markets geographically; therefore the products offered in its stores depend largely on the location of each store and needs and wants of the local population. Local suppliers are used and products and services are adapted to meet local tastes.

As well as selling products from other well known manufacturers, Carrefour also has its own brands of products which consist of around 11,000 food and household items. There is a focus on packaging in order to make the products stand out; each of Carrefour’s own brands has a specific colour combination which is used for the packaging of its items. Carrefour’s quality commitment and returns policy is emphasised on the labelling of all its products.

In order to differentiate its products Carrefour aims each product at a specific target segment. For example it’s “Agir Nutrition” range is aimed at those who are health conscious and its “Agir Bio” range is aimed at those who wish to purchase environmentally friendly items.

Price

One of the objectives of Carrefour is to have the lowest price in its stores within the market radius. Carrefour uses competition based pricing; this means that the company observes competitors prices aims to set its prices slightly lower than other retailers. However, despite having a lower price than competitors in many cases the company continues to lower prices further in order to meet and exceed its customer’s expectations.

The objective of its constant price reduction strategy is to attract a greater number of consumers to its stores and therefore increase its market share. Carrefour also offers customers a chance to sign up to a loyalty card scheme. With this loyalty card customers can receive further discounts and have access to exclusive offers. Carrefour also offers customers a “Pass Card” in some areas; this is a form of credit card which allows consumers to make purchases using credit.

Place

Carrefour wishes to satisfy and exceed its customers’ needs and part of this includes selling products where people want them and have easy and convenient access to them. Therefore Carrefour operates several different store formats.

Hypermarkets are located in city suburbs, supermarkets are located in city centres and rural areas and its convenience stores are located in well populated areas where there is easy and quick access to them, for example on a local high street. Carrefour also sells its products through its online shop, although this particular branch of the business has been performing poorly. As Carrefour sells many large household items such as TV sets and refrigerators for example, it offers a home delivery service for these types of items.

Carrefour operates many stores in many locations which stock a huge amount of products, therefore the transport of good from suppliers and producers to Carrefour stores must be efficiently managed and organised in order to avoid empty shelves. Carrefour uses a highly developed software system to manage inventory levels, to create forecasts and keep track of demand in order to ensure there are appropriate levels of stock available.

As Carrefour has a policy to use local suppliers as much as possible, this reduces the distance of transport needed therefore reducing costs. The company also reduces the number of intermediaries by having suppliers deliver goods to Carrefour’s own distribution warehouses. From here the products are re-distributed to Carrefour stores. Carrefour is also aiming to improve the efficiency of transport, for example in parts of France they now transport good by ships rather than trucks; this is a cheaper method and also causes less pollution.

Promotion

Carrefour uses various tools including; advertising, public relations and sales promotions; in order to inform consumers of their products and services and to persuade them to make a purchase.

Carrefour often uses television commercials to advertise any sales and promotions they may have currently running as well as special events. Carrefour stores are aimed at the local population which is why the company makes use of billboard advertisements in the surrounding areas as well as regularly distributing catalogues to homes which are located near a Carrefour hypermarket.

The company also produces three of their own magazines which are used for public relations purposes. The magazines used to inform consumers of any changes that Carrefour may be bringing in the near future, as well as informing consumers about the company’s policies. For example, recently the magazines have been used to give consumers the message that Carrefour is making an effort to become more environmentally friendly by reducing waste and reducing amounts of packaging on its products. As Carrefour is one of the biggest retailers in the world, there are often newspaper articles written about the company; these publications are for the most part good publicity for Carrefour.

Carrefour regularly uses sales promotions as a tool to encourage consumers to make further purchases by offering a special deal for a limited period of time. Carrefour’s sales promotions include offers such as ‘buy one get one free’ or ‘buy three for the price of to’ offers, as well as a general reduction of prices of popular items for a limited amount of time and discounts for those who hold a Carrefour loyalty card. Often when Carrefour has a major sales promotion running, it is accompanied by a major advertising campaign to promote it.

The competitive situation of the Company

Carrefour can be identified as the world’s second largest retail group after Wal-Mart with total revenues of over $46.0 billion in 1999 and approximately $47.0 billion market capitalisation in the beginning of 2000. However, Carrefour pulled out of the market in USA after performing unsuccessfully. There is great competition between Carrefour and its biggest rival ‘Wal-Mart’ but the company also faces competition from companies such as Metro and Aldi.

The competitive situation of the company can be explained by using Michael Porter’s five forces analysis. Porter’s ‘Five Forces’ framework consists of; threat of potential new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes and competitive rivalry.

1. Competitive Rivalry (in Europe):
Competitive rivalry refers to the structure of competition between firms in the industry, structure of costs, degree of differentiation and strategic objectives. A market which is highly competitive generally has many firms of relatively similar size within the market with no one dominant firm.

The competition between retail companies in Europe is very strong. The retailer’s margins in Europe can be said to be the smallest in any market in Europe. The rivalry within the retail market is very intense because the industry is extremely open; by visiting and investigating a competitor’s store, the marketing perspective of the company can be understood.

In addition, retailers located in Europe can be said to be globalising much more than any other industry in the world. Through globalisation, the retail organisations are trying to enlarge its markets in order to increase their reputation and make more profits. Only 2 out of 10 of the strongest retailers in the world are operating outside of the USA. Therefore, the reason under this situation could be defined as the economies of scale which are necessary for justifying actions in a saturated and low margin market which might be accomplished by significant market share. Moreover, Carrefour is having difficulties in growing in its domestic market because of strict government rules and regulations. This forces the company to invest more on the markets which are located elsewhere in Europe and beyond.

The entry of Wal-Mart into the European market has made the internal rivalry to grow further. As Wal-Mart is the largest retailer in the world, it is the biggest threat for Carrefour. Overall the retail market in Europe can be said to have a great degree of competition between competitors.

Although Carrefour is currently the largest retailer in Europe, it is not in a completely dominant position because its position is under threat from other firms such as Wal-Mart. In this market companies are forced to set competitive prices for their products in order to compete. Companies must also differentiate their products to attract customers away from their competitors. The quality of its products and sales promotions are others ways in which firms attempt to gain competitive advantage.

2. Threat of New Entrants:

New entrants to an industry can increase the level of competition in the market. The level of the threat of new entrants will be affected by the barriers to entry in the market. There are high barriers to entry in the retail industry because entry to this market requires very large amounts of capital and resources. As well as this existing companies also benefit from economies of scale as well as having established brands. This means that the threat of new entrants to the market may be quiet low. However there is always the possibility of a company emerging with the capital and technology required to compete in this market.

The entry of large companies established elsewhere into the European retail market is always done through the takeover of an existing European retailer. Takeover opportunities are however limited in the market and this can be identified as one of the major barriers to entry in the European retail market, which may mean that the threat of new entrants is relatively low.

3. Bargaining Power of Suppliers:
The power of suppliers refers to how much pressure a supplier can place on the company. The bargaining power of suppliers is high if there are few sellers and many buyers in the industry.

Due the Carrefour’s large size it can order from suppliers in large volumes, therefore benefiting from economies of scale and reducing costs. Carrefour’s policy is to use local suppliers as they believe consumers demand local products and ingredients. This may give these local suppliers a greater deal of bargaining power.

In relation to large, powerful companies such as Carrefour, it seems that the bargaining power of suppliers is actually quite low. Carrefour has been known to impose restrictions upon its suppliers limiting what they can charge; this also suggests that bargaining power of suppliers is rather low.

4. Threat of Substitutes:
The threat of substitutes refers to the buyer’s willingness to switch to a competitor’s product. The factors which affect willingness to substitute are switching costs; which are low in this market; and relative price and performance of the substitute. The threat of substitutes in the retail market is very high because consumers have a lot of similar products to choose from.

There are also other factors that affect the threat of substitutes. One method of decreasing the threat of substitutes which Carrefour has employed is designing a bonus card for those customers who are regular shoppers. With this scheme Carrefour offers some discounts and incentive for the consumers to regularly visit their stores.

However, all of these methods to hold consumers’ loyalty might become irrelevant if the prices of the substitute products are cheaper than Carrefour products. For example, in Germany, Aldi hypermarkets are offering lower prices for their quality products; therefore in order to compete and hold onto its customer base the competitors are forced to decrease their prices too.
In the retail market, the threat of substitutes does not only refer to the threat of consumers purchasing similar products, but also the threat of consumers choosing other forms of superstores which are located closer to them. Hence, the location of stores should be intelligently and carefully planned. 5. Bargaining Power of Buyers:
The bargaining power of buyers is high when there are a few buyers but many sellers in the market, if consumers purchase in high volumes or if customers in the market are price sensitive. Although there are many buyers in the market and each individual does not purchase in high volumes, the buyer has a relatively high power because consumers in this market are very price sensitive. The buyer has some degree of power because if they deem the price to be too high then they can simply go to another store and choose to purchase from a different retail company.

However, it can be argued that the power of buyers is limited in the retail market because there are relatively few different retailers for the consumers to choose from as a result of a small number of companies dominating the market. The fact that each individual buyer purchases in small quantities in comparison to a company’s total turnover also limits the power the buyers have.

Primary Data Collection and Evaluation

The Research Problem
The research problem that has been identified is; “To identify consumer’s opinions on Carrefour in comparison to its competitors”.

The reason it has been chosen to identify consumer’s opinions on Carrefour in comparison to its competitors is because as identified in the analysis of the competitive situation of the company, in the retail market competition between retailers is very strong and although Carrefour is the largest retailer in Europe it does not dominate the market and its position is under threat from several competitors.

In order to maintain its position as market leader Carrefour must differentiate its products and maintain competitive advantage by having competitive prices, good customer service, good product quality, a wide range of products to choose from and attractive sales promotions. In order to identify if any changes need to be made in regards to any of these aspects, first the consumer’s opinions on the current situation must be identified.

Research Design
The purpose of the research design is to create the best procedure to accomplish the research challenge and solve the defined research problem. The objective is to describe the beliefs, attitudes and opinions of consumers’ towards Carrefour, therefore the descriptive research approach will be used. It has been decided that a survey will be the best method of research as this will allow statistical analysis which can then be generalised to represent all Carrefour consumers’.

The survey will be carried out by distributing questionnaires; this is a quantitative data collection method. Quantitative research can be identified as taking a statistical sample of the findings to measure consumer’s attitudes, beliefs and preferences.

The survey approach can be named as the most common method of primary research collection. Survey methods are based on the usage of structured questionnaires given to a sample of a population. There are both advantages of conducting surveys as well as disadvantages.

Advantages: * Quantitative research methods can be generalised to be representative of the wider population if the sample size is large enough. * Since quantitative method is based on statistics, it is possible to compare and distinguish small differences between variables. * The results can be clearly summarized on a graph or table. * Easy to record respondents’ answers.

Disadvantages: * Restricted communication between researcher and respondent. * Limited understanding of attitudes and beliefs and deeper thoughts. * It may be difficult to develop effective survey questions. * Misinterpretation of data may take place. * Difficult to judge if respondents are giving truthful and accurate answers.

(Malthora & Birks. 2003, Marketing Research [2nd European Edition]: An applied Approach, London: Prentice Hall, p224-225)

The data was collected by group member Fikri Fikrioglu between March 15th 2008 and March 22nd 2008. The questionnaires will be handed out in person and a sample size of 50 has been selected. The sample will include both male and female respondents all of whom are located in Cyprus and aged 18 and over. The sampling method used is quota sampling; this will ensure that the person carrying out the questionnaire is able to select male and female respondents in roughly equal numbers.

The Questionnaire design can be seen on the following page:

Questionnaire Design

1- From which type of Stores do you usually shop?

A. Hypermarkets B. Supermarkets C. Convenience stores

2- What do you think about Carrefour Hypermarket’s products in comparison to competitors such as “Orphanides” in terms of:

1) The Price A. Very expensive B. Expensive C. Average D. Inexpensive E. Very Inexpensive

2) The Quality A. Very Good B. Good C. Average D. Unsatisfactory

3) Customer Services A. Very Good B. Good C. Average D. Unsatisfactory E. Very unsatisfactory

4.) Range of Products A. Wide B. Average C. Narrow

5) Product Promotions A. Very Good B. Good C. Average D. Unsatisfactory

Once the data has been collected from all respondents a spreadsheet software package will be used to help analyse the data; tables will be made from which graphs can be created.

Possible research Errors
Carrying out questionnaires face-to-face is rather time consuming and due to time constraints this is the main reason why the sample size could not be larger. Also due to time limitations it was not possible to carry out any qualitative research such as focus groups, which may have allowed us to gain a deeper understanding of consumers’ motivations. These factors may have a limiting affect on the ability to achieve the research objectives.

Findings and Analysis

From what type of Stores do you usually shop?

a) Hypermarkets
b) Supermarkets
c) Convenience Stores

Types of Stores that Customers usually go to
56%
32%
12%
a)Hypermarkets
b)Supermarkets
c)Convenience Stores 50 respondents were asked which the most common type of stores they shop from. According to the data shown in the pie chart above, most of the participants prefer to shop from hypermarkets. The reason for this situation might be the availability of products in hypermarkets; consumers find a much wider range of products in hypermarkets compared to supermarkets and smaller shops. In addition, the findings also show that over 30 percent of respondents shop from supermarkets while only 12 percent of the research population shop from smaller stores. This suggest that consumers prefer to visit larger stores as this gives them the convenience of being able to carry out all their shopping under one roof and gives them greater choice of products.

The data may also suggest that consumers have more access to larger stores then they do to local convenience stores, this is possibly due to large retailers such as Carrefour building more large stores with which small local stores cannot compete

What do you think about Carrefour Hypermarket’s products in comparison to the competitors such as ‘Orphanides’ in terms of:

The Price

A. Very expensive B. Expensive C. Average D. Inexpensive E. Very Inexpensive

Customer Satisfaction with the Price of the CARREFOUR Products
0
5
10
15
20
25
30
Number of
Respondents

Very Inexpensive
Inexpensive
Average
Expensive
Very Expensive

The 50 respondents were asked their beliefs towards the price of Carrefour’s products in comparison to the competitors. The bar chart above shows that the majority of participants believe that the price of the Carrefour’s products is average compared to other stores’.

However there are a larger proportion of participants who find the prices of Carrefour products are cheaper than the other retailers compared to the number of people who find Carrefour’s prices to be more expensive than other retailers.

Carrefour’s policy is to offer significantly lower prices than its competitors, however according to the research only 15 participants responded that Carrefour’s prices are inexpensive or very inexpensive compared to other retailers. While most felt the prices were similar, and 9 actually found Carrefour’s prices higher than other retailers where they shop. This suggests that Carrefour may have to review its prices as its competitors are responding to its price cuts by lowering their own prices.

What do you think about Carrefour Hypermarket’s products in comparison to the competitors such as ‘Orphanides‘ in terms of

The Quality a. Very Good b. Good c. Average d. Unsatisfactory

Customer Satisfaction towards the 'Quality' of
Carrefour's products
24%
40%
26%
10%
a) Very Good
b) Good
c) Average
d) Unsatisfactory

The respondents were asked about the quality of Carrefour’s products in comparison to other retailer’s products. The pie chart above describes the percentage of customer satisfaction towards the quality of the products.

A total of 64% of respondents find Carrefour’s quality either good or very good while 26% find quality to be average in comparison. This is reasonably good for the company as only 10% of respondents find quality unsatisfactory.
Generally it can be concluded that customers are quite satisfied with the quality standards of Carrefour products. However, the company prides itself on offering good quality along with low prices so it will want to reduce the percentage of consumers unsatisfied by quality currently. Further research may be required by Carrefour in order identify the areas in which consumers are not satisfied with quality.

What do you think about Carrefour Hypermarket’s products in comparison to the competitors such as ‘Orphanides‘ in terms of

Customer Services A. Very Good B. Good C. Average D. Unsatisfactory

Customer Satisfaction towards the quality of
Customer Services
0
5
10
15
20
25
1
Number of Respondents
a) Very Good
b) Good
c) Average
d) Unsatisfactory

Participants were asked their degree of satisfaction towards Carrefour customer service. The chart above shows that most of the respondents find customer service very good or good, while some find it average. Encouragingly, only 2 people believe that quality of the customer services are unsatisfactory. Customer service is crucial and the company should strive to maintain this good degree of satisfaction from consumers. The high degree of customer satisfaction can be an advantage for the company as it may increase brand loyalty and encourage customers to keep returning to Carrefour for their shopping as they are generally very happy with the overall shopping experience at Carrefour stores
What do you think about Carrefour Hypermarket’s products in comparison to the competitors such as ‘Orphanides' in terms of

Range of Products A. Wide B. Average C. Narrow

Customer Satisfaction towards the Range of
Carrefour's products
52%
44%
4%
a) Wide
b) Average
c) Narrow

The pie chart above shows that more that 50 percent of respondents believe that Carrefour Hypermarket have a wide range of products compared to other retailers. In addition 44% of participants think that the range of products is average. Only 4% felt the product range was too narrow.

Although most consumers already find the range to be wide, if Carrefour were to increase the range of products further, many of the 44% who feel the product range is average or similar compared to competitors may be tempted to shop at Carrefour more often. This data suggests that increasing the product range further may present an opportunity to attract more consumers.

What do you think about Carrefour Hypermarket’s products in comparison to the competitors such as ‘Orphanides‘ in terms of

Sales Promotions A. Very Good B. Good C. Average D. Unsatisfactory

Customers Beliefs towards Carrefour Sales
Promotions
7
13
15
15
0
5
10
15
20

Number of Participants
d. Unsatisfactory
c. Average
b. Good
a. Very Good

Respondents were asked about their satisfaction towards the sales promotions Carrefour offers, in comparison to those offered by other retailers. The findings show that a large proportion of consumers are unsatisfied with Carrefour’s sales promotions.

The main aim of sales promotions can be to attract customers to buy more than the usual amount for a limited period. It can also be used to attract new customers. Customer satisfaction can also improve if consumers feel Carrefour offers good promotions often.

This is an area where Carrefour must investigate further in order to improve. If the company’s competitors are providing consumers with better sales promotions then they will attract more customers, this may lead to Carrefour losing customers and therefore market share as a result.
Conclusions

Since opening its first supermarket back in 1960, Carrefour has grown to become the world’s second largest retailer and the largest in Europe. Carrefour operates in several countries in Europe and around the world and is the market leader in Europe. However, despite its’ market leadership position and its high degree of brand recognition, Carrefour does not completely dominate the European retail market and its continued success in the future cannot be one hundred percent guaranteed.

The retail market in Europe is hugely competitive and switching costs for consumers have been found to be low, this means that consumers can easily switch from shopping at one retailer to another. Because of this it is important to differentiate the products as well as offer competitive prices. Carrefour has a policy to offer its products at a price which is slightly lower than its competitors; this has proven to be a successful method in the past. However, competitors are responding by lowering their prices also, and as we have found through the primary research, the majority of consumers in Cyprus now feel that Carrefour’s prices are only “average”; they are neither high nor are they particularly low; this suggests that other retailers have lowered their prices as well. During the SWOT analysis it was also found that in France many consumers actually perceive Carrefour as being weak when it comes to offering low prices.

In order to be successful in the future Carrefour can no longer depend solely on having the lowest prices. The company will also find it difficult to continue lowering prices because the margins in the market are already very low.

We believe Carrefour can however continue to be successful in the future and maintain its position as the leading retailer in Europe and the second largest retailer in the world. The company’s performance in its home market of France have not been particularly impressive in the last few years, and according to the BBC News article “Sign of The Times For Carrefour” (accessed April 1st 2008 online, available at: http://news.bbc.co.uk/1/hi/business/4229419.stm) France accounts for fifty percent of Carrefour’s global market.

Despite this downturn in performance in its home market, which is also its largest market currently, one of the reasons why we believe Carrefour can continue to be successful and maintain its position as the second largest retailer in the world and largest in Europe is because the company is constantly taking advantage of its opportunities and expanding into new markets, both in Europe and outside Europe. Carrefour’s focus is on “winning market share and leadership positions rather than just opining new square meters” (Kuipers, P., 2005, Carrefour: Cosmopolite on Crossroads, Elsevier Food International Vol 8, issue 3).

The company has demonstrated its ability in the past to adapt its marketing and the format of its stores to meet the needs and wants of the various markets in which it operates, as found during the SWOT report. Therefore by expanding into new markets it may reduce the level of dependency on its domestic market, France. This may mean that a slight drop in sales in France which the company has experienced recently may not have as large an impact upon the overall sales levels of the company.

Another one of the reasons why we believe Carrefour can continue to be successful in the future is because of its very large size and extremely high level of brand recognition. These elements give Carrefour a great advantage in many areas. For example regarding suppliers; Carrefour are able to place orders in large volumes therefore earning economies of scale which helps to reduce costs. The well established reputation and size of the firm as well as its policy of working very closely together with suppliers also ensures that they can get the best deal possible from suppliers and therefore reduce costs.

As previously mentioned Carrefour are no longer perceived by consumers to offer the lowest prices in some of its markets such as France. However, another one of Carrefour’s strengths which will be a crucial factor when it comes to remaining successful in the future is its ability to differentiate its products and services through a number of different methods as well as through price such as; quality, customer service and segmenting its market and creating a specific brand to cater to the needs and demands of each segment.

The findings from the primary research carried out show that there is a good degree of customer satisfaction in regards to the quality of Carrefour’s products. This is encouraging because quality is an element which is highly valued by consumers. As well as aiming to offer low prices Carrefour also aims to provide quality products, and according to the research customers are generally quite pleased with the level of quality. This can be of great advantage to Carrefour as consumers may be willing to pay a slightly higher price if they trust that they will get high quality products from Carrefour.

The findings of the primary research also showed that consumers were generally very happy with Carrefour’s customer service. By offering good customer service it can improve brand loyalty, and help to ensure that consumers are happy with the overall shopping experience at Carrefour’s stores, and this of course will improve the likelihood of them coming back to Carrefour.

This high degree of brand loyalty is another reason why we judge that Carrefour will be able to maintain its position as market leader in the future. As well as this, Carrefour’s dedication to monitoring and keeping track of consumers buying habits and any new trends that may be developing allow them to continuously update its service to suit the consumer’s needs. For example recently people have become more conscious about protecting the environment and many believe large companies such as Carrefour have a responsibility in this. Carrefour have seen this as an opportunity and have taken advantage by introducing a line of its own brand products which is more environmentally friendly as it has significantly less packaging.

In conclusion, we believe strongly that although Carrefour faces many obstacles such as having to regain lost market share in France which is a very important market for the company; having to improve the perceived value of sales promotions because primary market research revealed this is one area where customers were not particularly satisfied; and having to deal with the threat of strong competitors such as Wal-Mart, Carrefour has the power, customer base, resources and a strong enough customer orientated marketing strategy which will allow the company to successfully maintain its leadership position in its markets, enter new markets successfully in Europe and the rest of the world, and maintain its position as the second largest retailer in the world.

Bibliography
Carrefour company website:

www.carrefour.com

References 1) Holtreman, A, 2000. Carrefour vs. Wal-Mart: The Battle for Global Retail Dominance. Online, Accessed March 20th 2008, available on the internet at: http://www2.agsm.edu.au/agsm/web.nsf/AttachmentsByTitle/CARREFOUR.PDF/$FILE/CARREFOUR.PDF

2) Waiting for Carrefour, Online, accessed March 19th 2008. Available online at: http://www.financialmirror.com/more_news.php?id=2067

3) Carrefour SA – Company Profile: History and Background Information on Carrefour SA. Online. Accessed March 9th 2008. Available online at: http://www.referenceforbusiness.com/history2/52/Carrefour-Sa.html

4) Carrefour S.A. Company Profile, 2005, Data Monitors, Online, accessed March 7th 2008. Available online at: http://213.194.86.162/Webtools/Basvurular/webpubpic/file/Carrefour.pdf

5) European Food Industry Profile, June 2007. Food Retail Industry Profile: Europe, p1-24.

6) Company Spotlight: Carrefour, April 2007, Marketwatch: Global Round-up, Vol. 6 Issue 4, p 67-72.

7) Gueri, L., Gousset, S., 2006. Carrefour Report No 2. Royal Institute of Technology. p2-11

8) Dossett, A., Rugman, A. M., 2005, Wal-Mart and Carrefour as Home-Region Multi-nationals. European Retail Digest, Issue 45, p61-65.

9) Kuipers, P., 2005, Carrefour: Cosmopolite on Crossroads, Elsevier Food International Vol 8, issue 3.

10) Sign of the Times for Carrefour, Feb 2005. Online. Accessed April 1st 2008, available online: http://news.bbc.co.uk/1/hi/business/4229419.stm.

Textbooks used:

Jobber, D., 2007, Principles and Practice of Marketing, McGraw Hill (5th Edition).

Malthora & Birks, 2003, Marketing Research [2nd European Edition]: An applied Approach, London: Prentice Hall.

Appendix

News Clippings & Articles on Carrefour:
Below are a number of news articles and items about Carrefour which are relevant from a marketing perspective.

News Item One:
Source: PEGGY HOLLINGER (2005, January 25). Hypermarket hell: a price war forces Carrefour to defend the home front: The store group's executive chairman is under pressure as he tries to improve its performance in France in the face of fierce competition, Peggy Hollinger writes: :[LONDON 1ST EDITION]. Financial Times, p. 15. Retrieved April 4, 2008, from Financial Times database. (Document ID: 783572031).

For five years, its French hypermarkets have been losing market share - not only to "hard discounters" such as Germany's Aldi and Lidl but also to Leclerc, Carrefour's main domestic rival. Repeated consumer surveys show that, while shoppers value Carrefour for its quality, it is rated behind Leclerc on price.
When parts of the strategy were unveiled at the time of the last profit warning in October, they were hailed by analysts and shareholders as exactly what Carrefour needed to regain momentum in France. Many say Carrefour should have gone down this road much earlier, a view that has not escaped its own board. "With hindsight we should have tackled pricing 12 months before we did," says one director. But Carrefour was fighting fires on too many fronts, after an ambitious international expansion during the 1990s culminated in its merger with Promode`s, another retail group.
China, where Carrefour has operated for nine years, will remain at the centre of the group's global strategy. Carrefour's success there has been the envy of other retailers and, say analysts, Mr [Daniel Bernard] has proved to be an adept diplomat for the group. With hypermarkets in 18 of China's 22 largest cities and an estimated potential for up to 500 outlets, China could be crucial for the group's growth prospects. This could give Mr Bernard a strong bargaining tool to use with his unhappy shareholders.
Store managers are now allowed to cut prices on some key products, allowing them to meet local competition head-on. They are given incentives to ensure their stores are competitive against local rivals. Carrefour is also aiming to get benefits out of the hypermarket loyalty programme it introduced last April and is making efforts to revamp its non-food side, which suffered sharply declining sales last year.
Under pressure at home, Carrefour has been forced to scale back its international investment. In 1997, more than 50 per cent of capital expenditure was focused on the developing economies of Latin America and Asia, Merrill Lynch's retail team estimates. By last year that had fallen to about 20 per cent.

News Item Two:
Source: ADAM JONES and ELIZABETH RIGBY (2006, March 10). Carrefour gets competitive CORPORATE TURNROUND: The new head of the French hypermarket is increasing market share by cutting prices, say Adam Jones and Elizabeth Rigby :[LONDON 1ST EDITION]. Financial Times, p. 10. Retrieved April 4, 2008, from Financial Times database. (Document ID: 1000754091).

If the managers of one of Carrefour's hypermarkets in France should ever doubt Jose Luis Duran's commitment to competitive pricing, they need only look at their bonus payment for confirmation.
Since he became chief executive of Carrefour, the world's second biggest retailer, just over a year ago, Mr Duran has vowed not to be beaten on price by rival grocers in its home market.
Store managers now find the size of their bonus partly depends on how well their prices compare with those of rival hypermarket operators, such as Leclerc and Auchan.
"Pricing is something which is not negotiable at Carrefour today," says the 41-year-old. "If somebody (a store manager) has a doubt, a major part of their bonus is linked to the price competitiveness position."
In 2005, this and other measures gave Carrefour a new dynamism in France. By cutting prices - and changing its way of working to ensure they stay low - its market share in food grew 0.6 per cent in 2005, the first time it has posted a full-year gain since 2000.
Growth has come at a heavy cost. Carrefour disclosed yesterday that operating profits fell 16 per cent in France, its biggest market. But for Mr [Duran], the pain is an unavoidable part of his strategy to reposition Carrefour both at home and abroad. "It is the price we knew we had to pay."
Mr Duran says he cannot predict whether prices will tumble in 2006, while insisting that "we have already managed the company in a 2005 price war environment". Yet whatever happens, he is confident that, following its "transitional" year in 2005, Carrefour has the scale and the market position to price low, gain share and preserve its level of profitability. "For me there is one main player and its name is Carrefour."
Internationally, during Mr Duran's first year at the helm, Carrefour has shuffled assets. It has withdrawn from places where is it weaker, such as Japan and Mexico, and acquired in markets where it feels it has more potential, such as Brazil and Taiwan. Mr Duran admits that there is potential for further change. In South Korea, Malaysia, Thailand and Switzerland, Carrefour needs to grow faster, he believes.

News Item Three:
Source: Carrefour trips up :[LONDON 1ST EDITION]. (2007, January 13). Financial Times,p. 12. Retrieved April 4, 2008, from Financial Times database. (Document ID: 1193815901).

Carrefour, the world's second-largest retailer, has stumbled on the road to recovery. Two years ago, the French supermarket chain put in place a strategic plan, which seemed to be delivering a slow but sure turnaround. Fourth-quarter figures, though, belie this. Like- for-like sales fell in all main markets and overall were down 1.5 per cent year-on-year. Poor performance was poorly explained. Yes, there was a calendar impact; yes, October was warm. But Metro, its closest European competitor, increased sales domestically and in the rest of Europe.
Aggressive promotions by domestic rivals caused significant damage. Carrefour decided not to match these, calling them "irrational". This smacks of the old Carrefour, which seemed to consider itself above such lowly considerations as price competitiveness. Under this management, though, it reflects the belief that sales should not be bought at any cost. This is moot. There is a limit to price falls since Carrefour's competitors, like Carrefour itself, face severe margin pressure. But, after a blip, price deflation has returned to France with a vengeance.
Shareholders are unlikely to be helped out by bid interest. With a near-Euros 40bn enterprise value, Carrefour would probably be too big for private equity. Although the shares have fallen 9 per cent since September, at about 15 times forward consensus earnings they still do not look cheap. Investors have little choice but to wait and see - while crossing fingers.

News Item Four:
Source: ADAM JONES (2006, July 13). Carrefour sales continue to rise in home market RETAIL :[LONDON 1ST EDITION]. Financial Times,p. 22. Retrieved April 4, 2008, from Financial Times database. (Document ID: 1076211511).

Carrefour, the world's second-biggest retailer, last night provided further evidence of improving sales at its formerly lacklustre French hypermarkets.
The grocer said like-for-like hypermarket sales in France rose 3.6 per cent in the second quarter of 2006, excluding petrol. This was an acceleration of the 3.2 per cent gain noted in the first quarter.
Its French supermarkets also showed an improvement, reporting a 4.7 per cent comparable increase in sales, following a 4 per cent gain in the first quarter.
Under Jose Luis Duran, the Spaniard who has been chief executive since early 2005, one of Carrefour's chief tasks has been to reinvigorate its core French operation, which had lost customers to no-frills discounters such as Lidl of Germany.
Prices were cut to regain competitiveness, prompting a 16 per cent profit decline in France last year.
The sales increase in Carrefour hypermarkets in the second quarter was driven by a strong performance in fresh food, the company said, adding that its domestic market share in food had increased by 0.8 per cent in the three-month period.
However, it added that like-for-like sales of "non-food" items actually fell 3 per cent in the period, in spite of the football World Cup boosting sales of consumer electronics.
Across the Carrefour group, sales for the second quarter were Euros 21.4bn (Dollars 27.2bn), an increase of 9.1 per cent on the same period last year. This was better than the consensus forecast of Euros 21.2bn by a Reuterssurvey of analysts.
In Spain, its second-biggest market, Carrefour warned that "a weakening of the macro-economic background" was starting to hamper consumer confidence, while trading in Italy and Belgium was difficult.
Carrefour's Chinese operation delivered a like-for-like sales increase of 6.3 per cent - its best in five quarters - and trading was strong in Argentina and Columbia.
Carrefour said it remained on track to open about 1.5m sq m of new store space in 2006 as forecast, through a mixture of store extensions, openings and acquisitions.

News Item Five:
Source: JOE LEAHY, ELIZABETH RIGBY (2007, November 16).Carrefour plans India entry with low-key 'cash-and-carry' format :[ASIA EDITION]. Financial Times,p. 17. Retrieved April 4, 2008, from Financial Times database. (Document ID: 1384107031).

Carrefour of France is planning to enter India through the wholesale "cash-and-carry" format as it seeks to tap one of the world's most promising retail markets, people familiar with the plan say.
The move into wholesaling will allow the world's second-largest retailer to build a presence in India without falling foul of foreign-ownership rules that prohibit offshore supermarket and hypermarket operators from opening front-end retail stores.
It comes at a time of increasing opposition to the entry of organised retailing in India, with mobs in some states attacking stores owned by Reliance Retail, one of the country's fastest growing domestic operators.
"This makes sense at a time when there is huge political sensitivity regarding foreign retail," said a person familiar with Carrefour's plans. "You want to keep the lowest possible profile at the moment."
Carrefour's move follows in the steps of Wal-Mart, the world's largest retailer, which is entering India in a wholesale joint venture with Bharti, a domestic group.
The French grocer, alongside Tesco, has been eyeing the Indian market for a long time. Earlier this year it was in advanced discussions with Wadia Group, one of India's prominent industrial conglomerates, about a prospective deal, but failed to agree terms. Talks with Dubai-based Landmark Holdings also came to nothing.
Foreign retailers are not permitted to operate so-called multi- brand front-end stores in India, such as those owned gobally by Carrefour, Wal-Mart or Tesco. But single-brand stores, such those opened by Gucci or Zegna, are allowed.
Organised retailing has only about 5 per cent market penetration in India. But it is attracting increasing opposition from the nation's estimated 12m small shopkeepers, who fear that supermarkets and convenience stores will put them out of business.
Under the cash-and-carry format, the shopkeepers themselves become the customers.
"The very fact that India has millions of small businesses and it's possible to be an efficient supplier to those small businesses makes more sense than trying to directly connect with the hundreds of millions of consumers at this point," said Arvind Singhal, chairman of Technopak Advisors, a consultancy and research firm.

News Item Six:
Source: Ahmed El Amin (2nd September 2005). More pressure for processors, Carrefour promises price cuts. Dairy Reporter.com, Online, retrieved April 4th 2008 from: http://www.dairyreporter.com/news/ng.asp?id=62256-carrefour-supermarkets-retailers
France's Carrefour, the world's second largest retailer after Wal-Mart, has upped the stakes in the supermarket battle for market share by announcing further price cuts and overseas expansion are in the offing.
The price cut announcement yesterday signals the food and goods retailer may also put pressure on its suppliers, whose margins are also hurting.
Like many of its competitors the supermarket group is currently engaged in price wars in many of its markets, including in its base in France, where it is attempting to regain market share from rival chains. As a result margins have fallen.
The pressure on price, low sales growth and consolidation are the top trends affecting the group's market in Europe. Carrefour is the top retailer in the French market, number one in Europe and is a leader in Asia. Food accounts for 60 per cent of the group's sales worldwide.
In France price cuts has allowed the company to boost market share by only 0.2 per cent, Carrefour reported. Operating profit fell in France by 14.8 per cent. France accounts for about half of Carrefour's sales.
Carrefour's general strategy has been to sell off underperforming assets and buy other retailers. The company has also continued its expansion into Asia and Latin America. A new management team, a move towards more joint ventures in foreign markets and a more collaborative relationship with key suppliers also underpin the group's push to drive growth.