University of Pitesti

Faculty of Mechanics and Technology

Operational Management

-Project-

Mega Image

Supervisor: Student:

PhD Nicolae Viorel Cozma Cosmin

Summary

1. Company Overview

1.1. Product portfolio

1.2. Main competitors

1.3. Organizational structure

1.4. The company’s mission

2. Marketing environment analysis

2.1. Macro analysis

2.1.1. Economic Factors

2.1.2. Customer behaviour in times of economic crisis

2.1.3 Demographic Factors

2.1.4. Socio-cultural factors

2.1.5. Political and legal factors

2.1.6. Technological Factors

2.2. Microenvironment analysis

2.2.1. Suppliers

2.2.2. Customers

2.2.3 Competitors

2.2.4. Strengths:

2.2.5. Weaknesses:

2.3. Capacity Analysis

2.3.1. Ability trade

2.3.2. Financial Ability

2.3.3 Organizational capacity

2.4. Cause-effect analysis

2

2.5. Future actions to correct weaknesses

3. SWOT Analysis

4. Identifying strategic marketing objectives

4.1. The company's quantitative objectives refer to

4.2. Qualitative objectives:

5. Identify marketing strategy

3

1. Company Overview

Mega Image is a supermarket chain with a strong presence both internationally and nationally. As part of the Belgian group Delhaize Group, Mega Image is a dynamic company that is in the process of expansion. Its main activity is retail trade in specialized stores supermarkets type with predominant sale of food.

Founded in 1995, Mega Image is one of the first network of supermarkets appeared in the local market. Mega Image is part of the Delhaize Group, the international retailer founded in 1867 in Belgium which operates on three continents (U.S., Europe and Asia). Mega Image is a company in the process of expansion that aims to be the first choice in terms of fresh food, quality products and unique and diverse range of products, all offered in a pleasant environment.

The first supermarket, Mega Image Lizeanu, was opened in May 1995. By 2000 there were 9 other supermarkets open. In the same year the Belgian Delhaize Group Nederland BV acquired the 51% shares from the Greek investors in Mega Image. Mega Image participation to the capital progressively increased, reaching 70%, then to 100%.

In 2005, the company's legal form was changed from joint stock company to a limited liability company.

At the end of 2011, Mega Image is considered one of the largest supermarket chains in Romania and the largest chain of Bucharest. Network comprised 105 stores.

The company currently has a network of 194 supermarkets in Bucharest, Constanta, Brasov, Ploiesti, Pitesti, Mumbai and other cities, of which 142 and 52 Mega Image Shop & Go. The concept of Shop & Go, means that Mega Image makes available for those who want to become entrepreneurs, the possibility to take a shop and manage it. The retailer has offered franchises to Shop & Go convenience stores in early 2011.

Through continuous investment in technologies such as bakery ovens, last generation rotisseries, new types of display shelves for more efficient products, Mega Image will continue to focus on quality, variety and prices, development and remodeling its stores to provide a pleasant shopping experience to customers.

In 2012, Mega Image continues to open new stores under brands Mega Image and Shop & Go, and its expansion plans are supported by the work of new logistical center in Popesti Leordeni. Mega Image will continue to support local producers to provide Romanian clients specific products under its own brand "Romanian Tastes ".

4

1.1 Product portfolio

Mega Image product portfolio includes a various range of products depending on store size (medium, small, city). The product range is diverse, aiming to cover as many consumer needs: food, maintenance and hygiene, housekeeping, Elder equipment, clothing etc.. In addition to basic products offered by Mega Image there can be found premium products, specialties and delicacies in conjunction with the area where stores are located. There are also a number of own brand products as follows:

• 365 - Mega Image own brand that provides great quality and savings daily customer purchases.

• Bio - Represents own brand organic products.

• Care - quality food products.

• Delhaize - passion for freshness and quality can be found in every product Delhaize own brand.

• Eco - Includes range of non-food organic products.

• Romanian Tastes - Romanian traditional products.

• Le Boucher - constitutes brand for fresh meat and taste derived from the butcher shop.

1.2 Main competitors

Mega Image main competitors in the local market is Billa (63 units), Carrefour Market (52 units) and Cora (10 units).

In everything it does, Mega Image offers first quality and freshness, along with a unmistakable ambiance with character, original, intended primarily to provide customers the most comfortable and easy access to all products offered under varied assortments. This view is strengthened by the 7 pillars specific (proximity, product, promotion, store presentation, distribution, service, price), under the slogan "It's greener here".

Category of customers targeted by supermarket market segment (Mega Image supermarket default) is the proximity to consumers in stores.

5

1.3. Organizational structure

Is a flexible organizational structure, divided into departments, as follows:

• Department of Trade and Supply

• Accounting department

• Department of Human Resources and Administration

• Technical Department, research - development

• Marketing Department

• IT Department and Logistics

• Legal Department

• Department of expansion, public relations and safety

• Operational Department (stores structure)

The Marketing department seeks that the products offer of the company meets the expectations and needs of consumers. Customers will buy the products offered only if the market is insufficient, if the products are identical, are cheaper, more efficient and more beautiful. Thus, the main aim of the department is to make so that product meets "consumer needs". In the company Mega Image, Marketing is the tool which must provide profit by selling the company's products. However, this department conducts preliminary market research in product definition, market research further in setting sales targets, designing marketing strategy of the company and is involved in preparing the marketing of the company's business plan. The department also proposes marketing training seminars for staff directly involved in selling in stores (eg, "Success in retail - the role of the head of the shop in business), and ways to boost them (you get different bonuses if the sales target is achieved). This department defines and designs the content and conducts advertising campaigns.

The marketing department works with other departments, commercial and supply department to define the products offered by the company and the target group, the finance department (transmit all information relating to sales rate), operational department to retrieve store information about the structure and their staff, human resources and administrative department (employee motivation), the IT department to promote the company's products on internet web pages and to carry out electronic promotional materials (eg posters, flyers, business cards, etc.). Between all departments there is a close relationship, in order to meet the main target, the satisfied customers.

6

1.4. The company’s mission

• To provide employees an international working environment, challenging, enjoyable and conditions for development and promotion.

• To provide customers with a pleasant shopping experience in a friendly environment.

• To provide a variety of fresh, high quality and very prompt service.

• Compliance with environmental and social involvement.

• It is an innovative company that anticipates and satisfies it’s consumers.

2. Marketing environment analysis

2.1. Macro analysis

2.1.1. Economic Factors

Mega Image has adopted a policy of aggressive expansion in 2012 so as to extend the network of supermarkets in Bucharest and other large cities in the country, because it projected an economical growth of 0.5% for 2012, thus estimated populations consumption growth of 1.3% in 2012. Also, lower inflation increases the real incomes of the population, so the food retail market expected to increase domestic demand.

The supermarket segment is the most developed segment of the Romanian retail products. The main trend in Europe that retailers are increasingly diversifying their presence, both geographically and between formats, adopting multi-format strategies is felt even in Romania. Even though large groups have not yet developed locally all formats included in their international portfolio, retailers have already adjusted strategies in this regard. Figures presented by Roland Berger are relevant: if the average selling surface for newly opened stores was over 1,600 sqm in 2010, this figure fell in 2011 to less than 600 m and in the first half of 2012 to be at below 400 m. So if large formats dominated expansion between 2010-2011, now players in the industry are moving towards smaller formats (proximity stores, discounters and supermarkets) and many adopt a multi-format strategy.

7

2.1.2. Customer behaviour in times of economic crisis

Before the crisis During the crisis

Shopping was an opportunity to relax, spend time with family

Shopping in bulk (baskets full)

Curiosity as a motivator to try other brands

Spending any amount of money just to have a sense of saturation

Emotional buying decisions (packaging, smell, curiosity, recommendations, ego brand)

60% of customers (2011) went shopping unaccompanied

Basic needs: commodities, small amounts

Customers buy only brands that they already know, they are not willing to experiment

Prior establishment of a fixed amount of money that will be spent in stores

Rational purchasing decisions: price, quality, proven brand store

2.1.3 Demographic Factors

So far, the group Delhaize opened stores especially within the capital, which is due to higher purchasing power in this area compared to other major cities in the country. Proportion of population in urban areas is 52.5% in 2011 and 47.5% rural one, so most sales are achieved in urban areas, and mainly around the capital, because population density is higher.

  After marketing studies it was observed that in the last three years it’s been dramatically reduced summer sales, reason being city population migration to seaside or mountain areas for spending holidays. In 2012, trying to capture the new demand formed in Constanta, Delhaize Group opened another store in addition to the three existing in Constanta (the second city in size and importance in Romania), and three stores near Brasov, this town was booming in recent years.

Depending on the age structure of the population and purchasing power you have to take into account the allocation of space for opening stores. Thus, underdeveloped neighbourhoods, mostly populated by poorly educated population, Mega Image opened small shops trying to offer a wider range of goods in comparison to surrounding agricultural markets. In central areas, without threats from competition, and populated by people with higher intellect and purchasing power, it opened large stores, fancier that meet customer requirements (eg Titulescu, Mihai Bravu, Tineretului, Ion Mihalache).

8

2.1.4. Socio-cultural factors

Cultural impact on business environment companies depends on a number of characteristics: fundamental cultural values are kept in time, every culture is composed of secondary cultures. It is well known that Mega Image stores assortment is different depending on the type of store, on the one hand its format (medium, small, city), on the other hand its concept (supermarket, discount software, mini). Thus we don’t find in the Village type stores (discount software), located in villages and small cities, rotisserie, deli or bakery because demand for these products is insignificant.

National consumer preference for Romanian genuine products, led to their product range called "Romanian Tastes" to meet customer needs, products that offer taste of another time of specific Romanian products (fresh cheese, cheese, cream, cookies, milk etc.), products that until recently only the products made at home, from parents or grandparents, met them.

Cultural environment is a key factor in the decision to locate a new store in a new area. First agreed to examine is whether this form of trade, language advertising, logo and slogan should be carefully chosen so as not to imply, offend, incite feelings, beliefs and expectations of prospective customers. For example, the "Black Lion" brand of Mega Image stores was chosen because it is considered a strong animal, like a man who comes to shop decided and sure of himself.

2.1.5. Political and legal factors

Unstable political decisions, bounces through laws, ordinances, changes and return to the same law, acts that are canceled by an emergency ordinance, determine the uncertainty in the formation and implementation of long term strategies, that environment becomes hostile.

Introducing the new system of deduction of VAT, the "VAT collection" brings relevant amends for business: they must keep a separate data which are receipts and payments to determine when they have the right to deduct VAT, obligation to pay VAT will change accounting programs, taxpayers are often in a position to finance from their own resources the amount of tax owed to the state, while the collection from customer after payment deadline occurs VAT, will create difficulties in keeping separate records of VAT, company income changes, and hence its cash flow, etc..

Meal tickets is a way of transfer funds to the company through corporate income tax exemption and sales growth due to consumption of the population, increased income from basic salary, and rule by encouraging while consumption and GDP.

9

2.1.6. Technological Factors

Mega Image stores invest mostly in information technologies that helps the supervision of the trade process.

In an attempt to adapt to market demands, the last major investment made by Mega Image has been done to implement the process of self-scanning and electronic labelling system. The process self - scanning is innovative, more efficient for shopping - on the one hand reduces the time spent waiting at the checkout counter and on the other hand the customer has at any moment the basket value and can add or cancel depending on budget items available, without the time-consuming counter "key" and without being placed in the delicate situation of not having enough money in your pocket. Electronic label system allows monitoring and updating prices for 3500 products.

2.2. Microenvironment analysis

2.2.1. Suppliers

      Products for sale are either delivered directly by suppliers or delivered through new logistics center in Popesti Leorideni, which has a total area of over 40.000 sqm, which centralizes the entire assortment of stores in the network.

Mega Image Suppliers are divided into:

• Product Suppliers

• Service Providers

• Providers of personal

• Suppliers of equipment

Product Suppliers are the source of raw material in sales process of the company. Mega Image collaborate 95% with domestic producers and direct importers, attempting to eliminate intermediaries, thus avoiding inflating the price of the product in the store entrance. For example: a competitive advantage is the supplier of fruits and vegetables. This is one of the partners of the firm and is a domestic manufacturer and direct importer (holding plantations of vegetables and exotic fruits). Supplier relationships we have with Delhaize group allow them to charge prices as low as possible to Mega Image stores and to the rest of our competitors prices slightly higher (this is possible because the service provider is one of the most important, on the fruit and vegetable market). Examples of such providers are many: Star Foods - manufacturer and distributor of sweets (croissants, snacks, dry toast, chips, etc.), Loulis (formerly Titan) producing bread, products of bread,

10

Brenac, Danone (fresh milk and milk products), Ifantis (meat products, meat, fresh, dried and frozen, etc).

Contracting providers with a wide range of products is the goal. 75% of insured goods are delivered by important trusts (Nestlé, Brenac, First, Nivea, Natural Farm, Agroalim, Procter & Gamble, Henkel, Colgate-Palmolive, Delta, Danone, Carlsrom, Astese, Vincon, Coca Cola, Quadrant etc).

But the main concern and challenge in the plan is the implementation, for about three years, of own brand products. These are the best domestically in terms of price-quality ratio. Mega-Image own brand means:

• Products 365, which means the 365 days of the year (basically a product for every day), are either imported from Belgium, either produced domestically by certain companies, exclusive to Mega-Image.

• Delhaize products, that are imported from Belgium.

• Care Products, that are imported from Greece.

Contracts are periodic (maximum one year) and provide conditions for delivery of goods, delivery prices, the limit for display of products on store shelves, minimum selling prices charged by Mega Image (is negotiated a minimum mark, avoiding so practicing dumping prices - Unfair competition policy -), providing discounts, rebates, promotional prices, terms to return bad merchandise, outdated or damaged, paying bills, etc..

Service providers which Mega Image call are the ones on the financial-banking market, and those that provide electricity and water supply, waste collection.

Personnel providers have considerable influence in this business. They are represented primarily by the school, employment agencies and individuals looking for a job. Quality education is a very important factor. Thus, if the employee comes from a renowned business school that has strict requirements for graduation, is a great advantage for the enterprise. He no longer requires prior preparation and quality of services provided by the contact with customers is high quality.

Equipment suppliers provide products needed for shop fittings, all leading to its functioning: spatial structure store, refrigerated showcases, shelves, roasters, warm display cases, tables of vegetables, fruits, etc.. Also the relationship with them has a great influence on the activity because they are the ones who make sure that the store will be fully equipped to be open in time and to function properly. The main equipment suppliers are Con Pol Design, Axis Invest, System Center, ACMS, DAAS, Avitech, etc.. They belong to major industrial trusts.

11

2.2.2. Customers

The category of customers targeted by supermarket market segment (Mega Image supermarket default) is the proximity consumers of the stores. The customer structure is diversified. Marketing of products strictly necessary to meet the every day needs does not impose special conditions for only a certain segment of people in the market. It aims to satisfy all needs from a baby to a senior.

Nowadays, the customer profile of Mega Image is drawn according to sex, age, level of education and income. According to sex, most clients are female (63.4%). If we consider the age criterion, a significant share is held by persons aged 25-44 years (35.2%), followed by those aged 45-65 years (35%). Depending on the study, 43.9% of clients have a high educational level, following those with secondary education (41.2%). In relation to income, a significant percentage of customers have incomes between 1000-2500RON (42.6%), followed by income customers between 2500-3500RON (16.5%).

2.2.3 Competitors

The main players in the retail market in Romania are Carrefour, Kaufland, Auchan, Real, Cora - hypermarkets segment; Mega Image, Billa, Angst, Cris-Tim, GMarket - supermarket segment; Lidl, Penny Market, Profi - the discount segment; Metro and Selgros cash & carry segment.

Competitors of Mega Image chain stores are divided into:

Direct Competitors: Billa, Carrefour Express, Cris-Tim, Angst.

Indirect Competitors:

• Hypermarkets Carrefour, Cora, Auchan, Kaufland

• cash & carry stores in category: Metro, Selgros.

• Discount shop: Lidl, Penny Market, Profi

Unlike other competitors on the Romanian market, Mega Image doesn’t have a "fight" strategy with the competitors. Mega Image has the advantage of proximity to major hypermarket chains. There is a Mega Image store in every neighbourhood in Bucharest, even more so where there is a high population density. Consumers of Mega Image are both male and women aged between 24 and 44 years in urban areas. Mega Image has a wide range of products, with particular emphasis on fresh products. The company’s policy is that the fruits and vegetables aisle is placed at the entrance of each store, with a great emphasis on product quality.

12

The top 10 general retailers in 2011:

Place Brand Annual turnover (bil. lei)

Market share(%)

1 Kaufland 4,76 5,832 Carrefour 3,9 4,893 Real 3,3 4,094 Penny 1,6 2,025 Auchan 1,5 1,876 Lidl 1,45 1,817 Cora 1,37 1,728 Billa 1,14 1,439 Mega Image 0,883 1,110 Profi 0.733 0,9

Billa is the main competitor of the company, with a market share of 1.43% in 2011. This retailer directly compete with Mega Image, with similar products targeting the same market segment.

2.2.4. Strengths:

• Billa stores are special buildings designed in its own foundation, carried out on large areas;

• have large parking areas;

• selling space that allows greater light exposure of goods, this allows the prices to be clearly visible for each product;

• have at least ten cash registers allowing rapid collection from customers;

• effective management programs that are found in each and every store for determining stocks at any time.

• maintaining a larger period of time of products at promotional prices

2.2.5. Weaknesses:

• they aren’t proximity shops, being in less accessible areas;

13

• product segmentation: does not have a highly developed premium segment and no diversified range of private labels;

• low number of stores in Bucharest and in the provinces;

• the Work program in stores;

• do not develop training programs of customer care for employees.

Carrefour is considered by consumers as having the best prices, as well as the second largest market share of hypermarkets segment in Bucharest. This is largely due to the promotional offers that Carrefour release quite often, such as the "buy a product and the second you can get for half the price!", "Buy two identical items and get the 3rd one free", or "If you find cheaper elsewhere we'll give you 10 times the difference "and intense publicity through advertisements, posters or brochures. Regarding competitor Stategy, Carrefour placed street posters next to its major competitor, announcing such shock offers.

Cora hypermarket offers its loyal customers a loyalty card that they can have discounts on certain promotional products and can be given points based on the amount of purchases made in return for which they receive a free product choice. Discounts on certain products is not the reduction made on the moment, but decrease the amount of future purchases within such reduction, thus making the costumer come back into the store.

A study conducted by the company Mega Image on why customers choose competitors or Mega Image stores, based on questionnaires that clients were asked to choose from the list three reasons why they shop at a store are listed:

Reason/Store Billa Carrefour Cora Real Auchan Kaufland Mega Image

Better prices % 67 65 54 65 46 87 45Closer to my home or the place I am working

% 45 29,7 15 34 45 32 68

Product diversity

% 56 89 75,2 87 87 55 47,3

Product Quality

% 35 43 54 85 35 45 59

Services % 36 17 16,2 11 30 12 25The store environment

% 12 27 45 10,8 25 9,9 17

14

As we can see, the main competitive advantage of Billa and Kaufland stores is the better prices. Carrefour, Cora, Real and Auchan were chosen mainly for wide range of products. Mega Image has a competitive advantage by proximity.

2.3. Capacity Analysis

2.3.1. Ability trade

In a difficult context, Mega Image had a very good year 2011, which confirmed its leading position in the supermarket segment. This performance was achieved both by a positive trend in sales recorded in the same stores (like for like - existing stores in 2010) and an extraordinary organic expansion (33 stores: +35 new stores and -2 shops closed due to problems in partnerships locations).

Mega Image continued expansion plans in the southeast, with most shops open and penetrate new cities Bucharest and Pitesti, Busteni and other smaller towns. Thus, Mega Image ended 2011 with 105 stores (96 Mega Image and 9 of Shop & Go) confirming its position as the most dynamic trader for the last two years (2010 and 2011) and increasing its market share both in Bucharest and in Romania.

Award for "Best Retail Strategy" by the magazine Business Review was another recognition of the dynamism that Mega Image has.

2.3.2. Financial Ability

The income of the Belgian Delhaize Group, owner of Mega Image supermarkets rose by 32% last year in South-East Asia, to 2.5 billion euros, positively influenced by taking Delta Maxi retail network and the excellent results in Romania.

Belgian Delhaize Group revenues in South-East Asia increased by 32% in 2011 compared to 2010, to 2.5 billion euros and operating profit in these regions increased by 18.7%, from 69 to 82 million euros.

On the positive balance of the group contributed, among others, the excellent results in Romania, where Delhaize owns Mega Image supermarket network, with 105 units in 2011.

The entire group, Delhaize had revenues of 21.119 billion euros, up 1.3% in 2011 compared to 2012, but operating profit fell by 18.1% to 812 million euros.

15

Mega Image activity in Romania is supported mainly by investments made by the group, so that the positive results of the group indicates that it will continue to support the company's expansion policy.

2.3.3 Organizational capacity

The organizational structure is flexible and is influenced by a number of internal factors (among them most notably, sales volume and extension of shops that make business volume increase, this is reflected in the increased need for staff) and outside factors, trying to continually adapt to the company staff needs (see Annex 1).

Review of the work procedures at the store, reorganize to streamline work and better distribution of working time, generated organizational structure changes (appearance of new jobs or complete reorganization of existing ones). There are constantly encouraged promotion within the company, to put in front the middle-management level employees with potential. There are also loyalty programs, whose main objective is to control the staff flow.

2.4. Cause-effect analysis

Nr. Week points Compared to Cause Effect1. Reduced assortments,

although varied by type of raw

The main competitor: Billa

Reduced shelf space

Space-saving storage

Decrease turnover

2. Decrease in sales in the premium segment

Second quarter of 2012 compared to the year 2011

high pricesSmall number of

customers for this product

segment

Decrease turnover

3. Eco segment sales decreased

Last quarter of 2012 compared to the year 2011

high pricesinsufficient promotion

Decrease turnover

4. High costs of expired and damaged products

Last quarter of 2012 compared to that of 2011

Decreased customer traffic

employee negligence

sales decline

5 lack of parking The main competitor: Billa

Lack of space (usually rented)Low number of

own construction

loss of customers

16

2.5. Future actions to correct weaknesses

Regarding small assortment we believe we should expand stores where you can rent storages together and so space will be higher and sales room will expand so that the rack can be exposed to several products thus increasing the possibility of having several types of products. On the other hand, we may reorganize goods on the shelf and thus eliminate products that showed low sales, using of space being more efficient.

To increase sales of premium products and ECO is needed a better negotiation with suppliers, and thus will decrease the price of products. Also, better promote of these types of products will attract customers.

To avoid the products to expire there should be a higher turnover and orders must be reviewed before being made so that if the products are not sold, not to remain more in store. Any penalties and sanctions for employees who do not respect handling and arranging products.

Most of Mega Image stores are located in rented buildings and often lacks space and an outdoor arrangement. It is therefore advisable to seek out those places which gives the advantage of outdoor space, or else to resort to property ownership.

17

3. SWOT Analysis

Strengths Weaknesses• The quality, variety and freshness• Proximity: at least one store in every neighborhood• Accessibility prices "always low prices"• Employee Kindness: customer orientation ("our client - our partner")• Safety: Dept existence of "food safety" (audit quality)• close relations with customers• Products 'exclusive': sauces, breads• Conducting periodic review assortments• Easy to find the products sought to identify desired districts• Quality standards: Mystery Shopper

• Mostly basic assortments• Categories few products, although various• Market share decreased: in 2011 occupies 10th place in the top 10 general retailers• reduced Promotions• reduced shelf space• reduced storage space• low sales in the premium segment and Eco• There is no parking at all stores amenjate• High costs of investment in very short periods: low cash flow

OPPORTUNITIES THREATS• Adoption of a policy of aggressive expansion: supermarkets segments are growing• Extension chain stores in large cities and towns developed punţin• Creating new jobs• Market orientation to convenience stores• Taking other chains• Creating new exclusive products• Introduction of self-scaning process• Introduction of electronic tags

• Competitors extension outside the capital markets due to increasing consumer needs• Instability of political decisions• Lack of job security• Reduced demand for food• Introduction of "VAT collection": changes in accounting, separate records, changes in cash flows of the company.

18

4. Identifying strategic marketing objectives

Increasingly fierce competitive environment in which organizations of any kind operate today, compel them to particular regard to the establishment, implementation and maintaining competitive advantage. In order to create competitive advantage the organizations need to set some realistic goals, clear and specific to a particular time horizon, which can be measured, and to be receptive and embraces the audience.

4.1. The company's quantitative objectives refer to:

• Annual turnover: turnover increase by 40% by the end of 2013.

• Market share: Market share increased by 25% in the next 6 months.

• Sales: Increase sales through the sales equation = Traffic * rate * medium cost . So, we want to increase the number of visitors / day with 10%, acquisition rate of 5% and 5% in average basket, in the following 6 months.

• Aggressive expansion: expanding chain stores, open 25 Mega Image stores Province and Village by the end of 2013.

• Accessibility: there is a shop in Bucharest every 700m over the next five years.

• Competitive pricing and accuracy: monitoring and updating prices for the 3500 competition products using electronic price label system.

• Premium segment and ECO: increased sales in premium segment and ECO with 5% in the next 6 months.

• Own Brand: introduction of 20 new products in the segment own brand and own brand segment sales increased 10% in the next 6 months.

• The process of self-scanning: increase average customers by 20% in the next 6 months by introducing to 50 stores a procedure called self-scanning. The process is innovative, more efficient shopping - on the one hand reduces the time spent waiting at the checkout counter and on the other hand the customer has at any time in front of the basket value and can add or cancel a product depending on the available budget, without being placed in the delicate situation of not having enough money in your pocket.

4.2. Qualitative objectives:

• Satisfy a wider range of customers, from children to seniors.

• Attracting new customers and retaining existing ones through competitive pricing.

19

• Coverage of customer needs through constant statistics regarding customer satisfaction.

• Improve customer relationships: keywords in the company on customer relationships are brief, warm, sincere, friendly.

• Decrease in complaints by 5% in 2013 compared to 2012.

• Development of internal training programs as Store Managers Trainee program. It is designed for selected individuals to develop the skills for a better understanding of working procedures and activities of the company.

• Set up meetings between departments to promote knowledge workers, leading to greater activity by the company.

• Increase awareness

• Increase image through social involvement: a continuing challenge to protect the environment and its natural riches (technologies resulting in a low power consumption, recycled packaging, waste selective collection and recycling, green products).

5. Identify marketing strategy

The company's marketing strategy is based on two main pillars:

Promotions

Product placement

Although promotions are not the primary element for supermarkets, Mega Image is trying to loyal their customers through various promotions. The main tools for implementation are:

• Promotional brochures: to be found in store or distribute regular to the customers.

• Promotional Campaigns "Always low prices".

• Secondary placements: allocated by contract for various suppliers.

• Contests for customers: organized either on the company website www.mega-image.ro or Facebook http://www.facebook.com/MegaImageRomania?ref=ts&fref=ts.

These tools make Mega Image different on the market with campaigns that promotes "normal prices" and avoid price fluctuations, while promoting their own brands that balance between high quality and affordable prices. Moreover, customers will have

20

the opportunity to buy their favourite products at promotional prices, these promotions being more and more frequent than competitors.

The company's vision was to ease product placement for clients to identify desired regions and find the products sought, with great flexibility when building new stores. Tools for product placement are:

• Placing key-aisles: always at entrance the fruits and vegetables aisle to highlight the fresh and clean, and then districts with own brand with the best quality-price ratio, followed by other aisles with different products.

• Secondary placements: optimal and full use of selling space (depends very much on time to which we refer, if for example we are in the Christmas period we will be made pyramid with sweets, candies, toys, decorations, etc.).

• Areas with "impulse" products that are usually at the cash register.

• Cross-merchandising: different products associated in the minds of consumers (for example, if a client wants a bag of popcorn or peanuts then soft drinks are located near, he will purchase refreshments).

Thus, we obtain a logical placement (Building basket of goods) and make more placements for high-turnover products. Howerver, customers enjoy the ease of shopping by cross-merchandising policy and ease of purchase.

Depending on market dynamics, the company is pursuing a growth strategy, adopting a policy of aggressive expansion in the extension of the network of supermarkets in Bucharest and other large cities in the country. In 2012, Mega Image has opened 89 stores, followed in 2013 by another 25 stores. However, this strategy is also one offensive, seeking to increase market share by volume of sales and number of customers.

Towards market structure, the company is pursuing a differentiated strategy addressing proximity consumers. With a wide range of products from commodity to premium products and even exclusive ones, Mega Image covers a wide range of products that cover most of the needs of customers.

The company is responsive to market changes by adopting a proactive strategy. Thus, regular tests of assortment, highlights the products that do not sell and identifies products according to customer requests to place them in stores.

21

Annex 1: Organisation chart of the company

22

Bibliography

1. Annual Report 2011 Delhaize Group

2. www.mega-image.ro

3. www.delhaize.com

23