Page 291 - (DK) The Business Book

DELIVERING THE GOODS 289

See also: Your workers are your customers 132–37 ■ Porter’s generic strategies
178–83 ■ Lean production 290–93 ■ Applying and testing ideas 310–11

immediately passed on to his
customers by way of lower prices,
which helped to boost sales.
Successful companies are able
to attract customers by supplying
high-quality goods and services at I don’t understand why
prices the buyer is willing to pay. anyone would hold something
Companies such as Dollar Tree in up and proudly say, ‘I paid
the US or Poundland in the UK base more for this than I needed to.’
their business model on offering Paul Foley
their customers as much as Managing director Aldi UK (1958–) Hyundai
possible for $1 or £1—for example,
The car manufacturer Hyundai
in June 2013 Poundland launched
is the fourth-largest in the
the world’s cheapest bra, which
world and the third-largest
retailed at £1. Offering more for
chaebol (conglomerate) in
less can be an effective business
South Korea. Its success is a
strategy, provided that the price direct result of its policy of
covers costs. Low prices that offer inflation has regularly outstripped offering customers a good deal
excellent value for money attract pay raises, and households have at a competitive price.
customers away from rivals. responded by seeking out retailers One way Hyundai has
that offer them more for less. grown its market share
More for less The secret to Lidl and Aldi’s is by offering the longest
Budget supermarket chains, such success is not solely due to their warranties in the auto
as Lidl and Aldi in Europe, have low prices. They also offer high- industry. Long warranties
used this strategy to great effect. quality products. For example, in are an obvious selling point,
These businesses have been able 2012, Lidl launched its own because if a new car breaks
to grow their market share at the designer aftershave called G.Bellini down during the warranty
period the buyer can return
expense of larger supermarket X-Bolt for $6.35 (£3.99). In blind tests
it to the manufacturer, who
chains. Since the financial crisis, the fragrance beat famous brand
will repair it free of charge.
names, such as Dior Homme, D&G
Hyundai’s warranties
The One, and Hugo Boss Bottled,
guarantee the engine for ten
which cost up to ten times more. years, cover the bodywork
The stores focus on offering for seven years, and offer
good value stock rather than an free roadside assistance in
attractive shopping experience. the event of a breakdown
They offer products on pallets for five years. Despite these
direct from the warehouse, and do long warranties, Hyundai still
not spend time or money displaying charges relatively low prices
their goods attractively. They also for its vehicles.
do not stock popular brands that Hyundai cars are also
shoppers will find elsewhere; most well equipped. Features such
as Bluetooth connectivity,
stock comes from less well-known
heated side-view mirrors, air
suppliers that the stores can obtain
conditioning, and LED running
at competitive prices.
Lidl’s supermarkets are basic, with lights are all standard.
a limited range of products, some of The challenge for entrepreneurs Hyundai competes by offering
which are displayed on warehouse is to offer outstanding value for its customers as much as
pallets. However, the products money, while also keeping costs possible for the price charged.
themselves can be of a high quality. low enough to trade profitably. ■