In a market where competition is at it's peak, companies perpetually seek to win over new customers, new markets and to generate strong profits. They have thus banked on a new strategy to be more competitive: cost leadership. The strategy of cost leadership aims at directing the objectives of the company towards the minimization of it's total costs. The company is thus driven to find a sustainable reduction in unit costs in order to offer prices lower than those of competitors in the same sector. All the methods of distribution introduced this strategy, more precisely the hard discount which drew on this to evolve. Subsequently the distributor's brands were born, and then the big supermarket chains like Carrefour and Auchan began to enter the hard-discount market themselves, setting up their own (hard-discount) stores. Initially we will study the setting up of the strategy of domination by cost, hard discount, then distributor's brands, using the examples of Lidl and Leader Price. Next, we will see that this strategy is not enough to develop, that the lowering of costs is not the only factor to attract customers and finally that we can call into question the system of the hard discount.
[...] Like the majority of hard discount stores, Lidl is based on a strategy of cost leadership ie it seeks to reduce it's costs so as to be able to offer products at very low prices. The success of Lidl is founded on large volumes of purchases and is based on a reduced number of brand names. This is why the proposed selection was reduced to approximately 900 brands. Thus one does not play with the quantity of products but rather the production costs which will be the lowest. [...]
[...] Strategy of Cost Leadership The strategy of cost leadership consists of producing and selling cheaper than the competition. We need to minimize the manufacturing costs and of sale of the products, so that the quality of the product remains the same but the price will tend to drop vis-a-vis that of the big stores. The hard discounts were based on the strategy of efficiency, they will seek to lower all their costs to be able to offer their customers products less expensive than the competition Hard discount stores A Hard discount stores represents a self-service grocery store with reduced personnel, basic displays and a limited selection of staple products. [...]
[...] The strategy of cost leadership does not apply only to hard discount stores, the big retailers also offer many promotions and special offers One does everything to attract the maximum customers and make the most profit, therefore brands bet all on the price. Low price does not mean poor quality. Infact, since the arrival of discount stores offering low prices, one often considered the quality to be not up to the mark, but today one can say that this is not true. [...]
[...] In marketing it's own in-house brands, the distributer puts his credibility with the consumers on the line, because if the quality of the brand is not good, the image of the distributer will be tarnished Characteristics National brands Distributer's brands Advertising Strong Weak (Store, local newspapers, leaflets ) leaflet) Quality Considered to be Considered to be high average Price Considered to be Considered to be high average Risk related to Considered to be Considered to be quality weak average or high (for certain products) Packaging Sophisticated Average or classic Distributer's Average High margin Innovation High Low Distributer's brands follow two distinct strategies: - original strategy of the distributer's brands, namely that of flag- marks (materialized by the pictogram-initials of Crossroads on the free products of 1976 to 1985 or the Leclerc brand, appearing in 1996), seems to be gradually abandoned, as well as the strategy of the sub-brands of Intermarché (without the sign of belonging to the distributer), from now on largely a minority. [...]
[...] Conclusion Throughout this file we have tried to analyze the tendencies of a new strategy which touches our society, the economy and the population. This strategy is that of cost leadership which affects our stores more and more. In our society, where the consumer appreciates smart purchases, the various formats of distribution benefit from this development to launch a war without mercy, that of the competition of low prices in order to attract the maximum number of consumers and to be [...]
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