Le Petit Chef faces a usual challenge: how to keep on growing on a mature market when differentiation though innovation is more and more expensive and profit tends to drop because of increased competition. Microwave oven has been a disruptive technology. For a mature technology, it is more a matter of optimizing the innovation triangle and implementing the right processes to align R&D, Operations and Marketing. Le Petit Chef needs to use synchronous innovation, to make sure their strategic positioning matches their processes and therefore their cost structure. They also might want to push for a disruptive technology like introducing fuzzy logic to sustain their competitive advantage.
What is the relevant context of this case?
The microwave market is global. Three main regions (USA, Europe and Japan) are served by major players and some local, smaller suppliers which tend to target the “less price sensitive high-end market” . The European market is quite fragmented due primarily to heterogeneous food preference and cooking habits, allowing regional players like which Le Petit Chef to offer tailored value propositions. Innovation in microwave industry comes:
•from core technology: better waves distribution, combi-oven, •from the development of accessories,
•from the improvement of the user interface.
Le Petit Chef microwave ovens account for 85% of the company sales. Le Petit Chef products “commanded premium prices for their perceived innovation and high quality performance” .
Thus, Innovation is paramount. Le Petit Chef enjoyed high margins until the position attracts both larger European players and Japanese competitors, eroding its competitive advantage.
What factors explain Le Petit Chef’s poor performance? What actions do you recommend to remedy this situation? Le Petit Chef suffers from adverse external factors. The market becomes mature, and players naturally develop various strategies to capture the higher profit of...