Woolworths Case Study
Is Woolworths diluting its value proposition by dropping prices and increasing the product range?
• No, Woolworths is not diluting its value proposition by dropping prices and increasing the product range.
• Own-brand products bring great value and perceived quality, synonymous with the Woolworths brand.
• Reduced input costs do not result in a product quality alteration and therefore I suggest that no negative impact exists.
• Reduced pricing to remain competitive during tough economic conditions is a necessary move. Lost revenues due to margin erosion can be replaced via additional product lines.
• Retail strategy continues to be aimed at the niche high-income market. o Superior profits decrease.
• Entry into the ‘black diamonds’ new market opportunity does not dilute the value proposition. o Represents a shift in strategy away from the niche high-income market. o Purchasing power of the new segment is relevant and cannot be ignored. o Value proposition supports offering within the new market.
When the economic conditions change for the better, should Woolworths withdraw some of the added products?
• No, Woolworths must not withdraw any of the added products.
• Exhibit 3 indicates a decline in performance (2007 – 2009). o New product lines / extensions provide much needed revenue streams and consequential gains in market share.
• Exhibit 2 indicates that Woolworths market share has increased year on year since 2005 (8% – 9%). o Withdrawing products will reduce market penetration, negatively impacting any gains that have been made to date.
• Removing product lines will confuse the both key markets.
Is Woolworths changing its strategy?
• Yes, Woolworths is changing its strategy by moving into a new market. o ‘Black Diamonds’ market will require a vastly different approach to the niche high-income market. o New LSM groups present new challenges.
• 4-pillar system remains the core strategy however; product line expansions / extensions
• No, Woolworths is not diluting its value proposition by dropping prices and increasing the product range.
• Own-brand products bring great value and perceived quality, synonymous with the Woolworths brand.
• Reduced input costs do not result in a product quality alteration and therefore I suggest that no negative impact exists.
• Reduced pricing to remain competitive during tough economic conditions is a necessary move. Lost revenues due to margin erosion can be replaced via additional product lines.
• Retail strategy continues to be aimed at the niche high-income market. o Superior profits decrease.
• Entry into the ‘black diamonds’ new market opportunity does not dilute the value proposition. o Represents a shift in strategy away from the niche high-income market. o Purchasing power of the new segment is relevant and cannot be ignored. o Value proposition supports offering within the new market.
When the economic conditions change for the better, should Woolworths withdraw some of the added products?
• No, Woolworths must not withdraw any of the added products.
• Exhibit 3 indicates a decline in performance (2007 – 2009). o New product lines / extensions provide much needed revenue streams and consequential gains in market share.
• Exhibit 2 indicates that Woolworths market share has increased year on year since 2005 (8% – 9%). o Withdrawing products will reduce market penetration, negatively impacting any gains that have been made to date.
• Removing product lines will confuse the both key markets.
Is Woolworths changing its strategy?
• Yes, Woolworths is changing its strategy by moving into a new market. o ‘Black Diamonds’ market will require a vastly different approach to the niche high-income market. o New LSM groups present new challenges.
• 4-pillar system remains the core strategy however; product line expansions / extensions