Trader Joe's

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Case 1: Trader Joe’s Distinctive Approach

Questions:

1. What retail classification best fits Trader Joe’s store-based strategy mix? Explain your answer.

With the exception of the fact that Trader Joe’s is a food retailer, this type of store can be classified as a category specialist. By definition, category specialists sell a narrow variety but deep assortment of products. As compared to the 25,000 products a typical supermarket sells, Trader Joe’s selling an average number of 3,000 product lines can be regarded as very narrow. The store sells an extensive assortment of organic foods, which cannot be competed with by a regular supermarket.

It can be classified as a category specialist for the instance that they also provide a very high level of information and service for their products. All their employees are friendly and are knowledgeable about the products. They provide nutritional and product information so its customers can make informed decisions. They are available to address customer queries, and they even feature a sampling area where customers can snack on freshly prepared products. Additionally, their own private label items could be considered a category specialist item since those cannot be purchased elsewhere. Their prices are competitive; Trader Joe’s sells organic foods for 25 to 30% less than the other organic food retailers like Whole Foods and Wild Oats.

2.Describe the vertical marketing system used by Trader Joe’s.

Trader Joe’s uses a Contractual vertical marketing system. By definition, contractual vertical marketing system consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of scale or sales impact through contractual agreements among channel members. Trader Joe’s purchased their products directly from suppliers, leaving out the middle man. There is no wholesaler needed for things such as storing, shipping, or any other...
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