Trader Joe's: Cheap GourmetPutting A Special Twist on the Price-Value Equation

Synopsis

Trader Joe's unique price and value strategy has made it one of the nation's fastest-growing, most popular food stores. Trader Joe's understands that success comes not only from what products you offer customers or the prices you charge. It comes from offering the combination of products and prices that produces the greatest customer valuewhat customers get for the prices they pay. Trader Joe's isn't really a gourmet food store. Then again, it's not a discount food store either. It's a bit of both. Call it "cheap gourmet." It offers gourmet-caliber, one-of-a-kind products at bargain prices, all served up in a festive, vacation-like atmosphere that makes shopping fun. Trader Joe's stocks only a limited assortment of about 2,000 specialty products. However, the assortment is uniquely Trader Joe's, including special concoctions of gourmet packaged foods and sauces, ready-to-eat soups, fresh and frozen entrees, snacks, and dessertsall free of artificial colors, flavors, and preservatives. For all this, Trader Joe's keeps its prices low through lean operations, a near-fanatical focus on saving money, and by spending almost nothing on advertising. Whatever you call it, Trader Joe's inventive price-value positioning has earned it an almost cult-like following of devoted customers who love what they get for the prices they pay.

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Discussion Questions

1. Does Trader Joe's employ good-value pricing or value-added pricing? Explain.

2. Does Trader Joe's pricing strategy truly differentiate it from the competition?

3. Is Trader Joe's pricing strategy sustainable? Explain.