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Case: Woolworths

In: Business and Management

Submitted By unaidoo2
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1. By dropping prices and increasing product range, is Woolworths diluting its value proposition? No, Woolworths is not diluting its value proposition by dropping prices and increasing its 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. Entry into the ‘black diamonds’ new market opportunity does not dilute the value proposition.
- Represents a new market development and extension of product range within the higher LSM market.
- Purchasing power of the new segment is relevant and cannot be ignored.
- Value proposition supports offering within the new market.

2. When the economic conditions change for the better, should Woolworths withdraw some of the added products? Please Explain. No, Woolworths must not withdraw any of the added products. Before Woolworth introduced the added products, research and developments studies were conducted and it became apparent that there was the market for product range introduced New product lines shall never be seen as the cheaper substitutes, instead product line extension. Woolworth’s strategic positioning is fresh food, quality and innovation, premium pricing and niche markets Exhibit 3 indicates a decline in performance (2007 – 2009). Exhibit 3 indicates a decline in performance (2007 – 2009).
- New product lines / extensions provide much needed revenue streams and consequential gains in market share Exhibit 2 indicates that Woolworths market share has increased

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