MGMT3001 Trader Joe's Case (docx) - CliffsNotes (2024)

MGMT3001 10/12/22 Trader Joe's best follows the Focus-Differentiation strategy because not only are they not attempting to compete with other grocery stores' prices, their business model relies on the draw of their proprietary brands to generate revenue targeting a specific niche of customers. Although initially created to sell "healthful" and organic foods at a lower price, In terms of pricing, Trader Joe's falls below high-end stores like Erewhon and Whole Foods, but is still priced well above stores like Aldi and Cub that more strictly follow the cost strategy. What sets them apart is their exclusive branded products and their small-store model. One of Trader Joe's most important strategic resources is their proprietary brands exclusive to their stores. The Trader Joe's business model is built on "white label" goods, a method of branding referred to as private label manufacturing: Trader Joe's contracts with third- party manufacturers (oftentimes other large food brands like Wonderful pistachios, ConAgra, and Snak King) who sell them generic products but add the Trader Joe's exclusive branding. Trader Joe's is then able to sell these white label goods at a higher price than their generic counterparts. Their branding adds value to generic products, and in line with the focus- differentiation strategy, this value is targeted at a specific customer who would recognize that value. For TJ's, this target customer highly values organic and "green" branded products, is more educated, and is interested in more "worldly" cuisines. Trader Joe's also utilizes multiple other strategic resources. The smaller size and layout of TJ's stores contributes to their marketing strategy and their overall impression as a brand, while lowering facility costs and allowing them to be placed in more cosmopolitan areas where they can reach their target customer. TJ's also values their employees as a strategic resource- paying them more than competing grocery stores for part-time wages and offering generous benefit plans. The employee culture is very important to their brand, and has consistently been part of their brand strategy from inception; they target unemployed liberal-arts college graduates for positions and focus heavily on creating a welcoming customer experience.