Woolworths – During Tough Times - case study
1. By dropping prices and increasing product range, is Woolworths diluting its value proposition?
Woolworths is not diluting its value proposition by dropping prices as they still intend to deliver good quality products, superior packaging and excellent customer relations. They still intend to deliver on that promise and ensure that the consumer prefers its products and services above their competitors in the long run, thus maintaining the key to a sustainable competitive advantage (Hough, 2011).
In the case study the divisional director for foods, Mr Julian Novack, mentions that because they carry a large portion of own-brand products, they are able to exert greater control over the prices by optimising the production process and reduce the input costs. Woolworths consulted with its suppliers to find ways to reduce pricing on their products and reviewed its entire supply chain, reducing unnecessary packaging, improving their logistics and also keeping an eye on price of commodities such as wheat. By making effective changes in their value chain Woolworths is able to increase the value delivered to their customers (Hough, 2011).
2. When the economic conditions change for the better, should Woolworths withdraw some of the added product?
Woolworths should not withdraws the added product ranges and extensions as they are able to assist in increasing revenue for the retailer. The divisional director for foods mentions in the case study that Woolworths wants to move in to a relevant and competitive supermarket business which means that they must carry the full range of product required by a consumer when doing their shopping. To have a narrow selection range which will require the consumer to stop off elsewhere to complete their shopping, thus decreasing convenience, they are losing out on the full consumer cash value and sending customers to the competition.
By having made a choice of entering the “black diamond” market, Woolworths has also engaged with
Woolworths is not diluting its value proposition by dropping prices as they still intend to deliver good quality products, superior packaging and excellent customer relations. They still intend to deliver on that promise and ensure that the consumer prefers its products and services above their competitors in the long run, thus maintaining the key to a sustainable competitive advantage (Hough, 2011).
In the case study the divisional director for foods, Mr Julian Novack, mentions that because they carry a large portion of own-brand products, they are able to exert greater control over the prices by optimising the production process and reduce the input costs. Woolworths consulted with its suppliers to find ways to reduce pricing on their products and reviewed its entire supply chain, reducing unnecessary packaging, improving their logistics and also keeping an eye on price of commodities such as wheat. By making effective changes in their value chain Woolworths is able to increase the value delivered to their customers (Hough, 2011).
2. When the economic conditions change for the better, should Woolworths withdraw some of the added product?
Woolworths should not withdraws the added product ranges and extensions as they are able to assist in increasing revenue for the retailer. The divisional director for foods mentions in the case study that Woolworths wants to move in to a relevant and competitive supermarket business which means that they must carry the full range of product required by a consumer when doing their shopping. To have a narrow selection range which will require the consumer to stop off elsewhere to complete their shopping, thus decreasing convenience, they are losing out on the full consumer cash value and sending customers to the competition.
By having made a choice of entering the “black diamond” market, Woolworths has also engaged with
References: Hough, Johan. (2011). Crafting and Executing Strategy: McGraw hill. Shevel, Adele. (2009). Woolies cuts prices to attract new market. Retrieved 16/09, 2013, from http://www.bizcommunity.com/Article/196/182/32400.html