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Thread: Tisdale discussion 2 Post: RE: Tisdale discussion 2 Author:

Posted Date: September 20, 2018 8:07 PM Status: Published Overall Rating:

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Angela Gould

Sara,

I think you made a good point about Aldi and Whole Foods. Aldi is the example I used for low- cost strategy as well. There is an Aldi near me, which is a college town, but not a Whole Foods. I live in a rural area and the cost of living is not high, so as you would expect, there is an Aldi, but not Whole Foods. College kids do go to Aldi, for the costs and don't mind the lack of convenience of having to return your own cart and bag your own groceries. So, in this market, the low cost-strategy thrives. Non-college students who want the convenience and selection that Whole Foods provides are the target audience for a business that uses this differentiation strategy. It is interesting to look at what strategies work for difference products or services on the same type of customer, such as traditional college students. It seems they will go with the low cost strategy such as Aldi for groceries, but go with high costs that have stand apart from other brands for items such as cell phones and other electronics.

Thread: Tisdale discussion 2 Post: Tisdale discussion 2 Author:

Posted Date: September 19, 2018 1:10 PM Status: Published Overall Rating: Sara Tisdale

What are the main differences between a low-cost strategy and a differentiation strategy? Give an example of a company which follows a low- cost strategy (not Wal-Mart).

Low-cost strategy is as simple as providing a product at a price lower than competitions, which can result in a very powerful position within the industry. Differentiation strategy involves offering a common product with a twist.

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The product can be offered by many competitors but your product is different and unique in some way. Examples of differentiation include “superior reliability, better design, superior functions and features, better point of sale service, etc.” (Hill, Schilling, Joes, 2017, p 149).

An example of a company that follows a low-cost strategy is Old Navy. Old Navy offers basic apparel pieces such as vests, jeans, t-shirts, and pajamas. Their styles adjust slightly based on trend, but they can always be counted on for low cost basics. Similarly, stores like American Apparel, The Gap, and J Crew offer a line of consistent basics but at much higher costs. Old Navy is the low cost alternative in the basic apparel brand and they are able to hold strong to that position. By sticking to consistent, basic items, and not be trendy customers can count on Old Navy to be consistent and unwavering with costs.

Another example of a low-cost strategy followed by a company is Aldi. Aldi in the grocery store world is extremely basic. However, its followers and loyal customers makes it a very respect brand. Aldi does not pay for fancy stocking displays and often doesn’t take the food out of the box or container it was shipped on. Name brands are hard to come by at Aldi and the check-out process is very simple. Advertising and marketing strategies are extremely basic. All of this combined with a minimalist footprint helps Aldi keeps costs low.

Now an example of a company which follows a differentiation strategy (not Target). Explain why you chose these companies. Is their strategy working for each of them. Why? or Why Not?

A company that follows the differentiation strategy is Whole Foods. Every town, big or small, has some sort of grocery store. Whole Foods are only found in upscale, well-educated neighborhoods that put a price on premium goods. The Whole Foods customer wants to know where their food is coming from, how the animals were treated, and they want to have many organic options. Whole Foods differentiates itself in the grocery store market by color coding most of its product with sustainability information and animal welfare standards. Whole Foods stores are bright, clean, and staffed by engaging and unique workers that place customer relationships at the forefront. Whole Foods offers a high end olive and cheese bar and often allows customers to shop with a glass of wine or beer. Whole Foods offers all of this at a price but a unique and different experience to the consumer.

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I chose Old Navy, Aldi, and Whole foods because they play a role in my personal and network consumer experience. As someone that interacts with college aged students, I am very aware of how they shop and engage in the market. Aldi is a very popular college student grocery store because they are bottom line oriented. Personally, my wife and I shop at Whole Foods and we don’t mind the extra cost of the unique and specialized experience we have at Whole Foods. I believe the strategies are working well for all three companies discussed because they’ve been a part of the consumer market for decades and I do not see that changing. When I think of a company whose searching for the right strategy I think of J.C. Penny. Personally I cannot believe that chain still exists. They’ve changed their business model and identity so many times in the last 10 years and that tells me their struggling

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