Whole Foods planned on opening a new cheaper store that was
aimed at millennials in 2015, but keeping the natural food element.
Discuss some of the points below.
a. Suppose Whole Foods adopts a cost leadership strategy for its
new business. What would be the advantages and disadvantages of
this strategy?
b. Suppose Whole Foods adopts a differentiation strategy for its
new business. What would be the advantages and disadvantages of
this strategy?
c. Suppose Whole Foods adopts a focused cost leadership strategy
for its new business. What would be the advantages and
disadvantages of this strategy?
d. Suppose Whole Foods adopts a focused differentiation strategy
for its new business. What would be the advantages and
disadvantages of this strategy?
a. The advantages of pursuing a cost leadership strategy, in this case, is that it would attract the Millenials who want to try new products but were not able to due to high price, whole foods can enjoy a large revenue as the number of Millenials are high so they can enjoy a higher market share since the cost is low very few players would engage in a price war leading to lesser competition.
The disadvantage is that low cost might be perceived to have low quality also, large volume of sales would be required to sustain the business as the margins are thin, expenses should also be ket low to ensure that the profitability is maintained
b. The advantages of pursuing a differentiation leadership strategy, in this case, is that it would target the consumers who are insensitive to a price change as the product has a loyal fan base, the barriers to entry by competition would be low as the model is difficult to replicate.
The disadvantage is that in some cases over differentiation might lead to disconnect with the customers which is not valued by them, the price premium charged for differentiated products in some cases might not be accepted by the consumers readily.
c. The advantages is that it only focuses on a specific target group that understand the value proposition of the product. The disadvantage is that the market might be too niche to have enough buyers for the product service.
d. The advantage is that they can charge a very high premium for their products as the products are unique and made for only specific people, the level of expertise in making the product improves manifolds.
The disadvantage is that there might be very limited demand in the niche due to to the small market size and high price , also there is a risk of the niche being diluted by a bigger competition .
Whole Foods planned on opening a new cheaper store that was aimed at millennials in 2015,...
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