IndexIntroductionA Brief OverviewTrader Joe's and Market OrientationCustomer FocusCorporate StructureResponse to the MarketTrader Joe's: The BrandThe Product LineThe Shopping ExperienceConclusionReferencesIntroductionThis report will examine Trader Joe's, a small chain of specialty stores in California which has grown to become a treasured American staple with 474 locations in 43 states. How has Trader Joe's successfully differentiated itself from large competitors like Whole Foods? The answer lies in their market orientation which implements a strong customer-oriented approach. Success is further achieved through a unique product mix of private label items and a shopping experience that has cultivated a beloved brand with a loyal customer base. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original EssayA Brief OverviewTrader Joe's (TJ's) traces its quirky and interesting roots to California, where it opened its doors in 1967 thanks to the original Joe - Joe Coulombe (Trader Joe's, 2018). The name serves to provoke images of traders in the South Seas. This nautical motif has remained with the company over the years and is synonymous with the charming store branding. In 1972, TJ's launched its first private label product – a bag of granola – and never looked back (Trader Joe's, 2018). Stores are now made up of more than 80% private label items which has fostered a loyal customer base. According to Mallinger and Rossy (2007), TJ's targets more educated consumers as they tend to be more open to the unique product offerings that stores provide. However, being rooted in California, an additional consumer segment was likely to be savvy health food shoppers, which led the store to provide healthier (e.g., organic) versions of many of its products. Although TJ's claims it is a specialty store, it has the stereotype of an unpretentious, good-value health food store, differentiating it from Whole Foods which has earned the nickname "Whole Paycheck." From the beginning, Trader Joe's mission was to provide quality food and beverages at a good price. Creating value for its customers has been at the heart of its mission. As they say: "We only focus on what matters: great food + great prices = value." TJ's is able to offer low prices every day thanks to their private label items that they purchase directly from suppliers. The quality of the items speaks for itself through the sales volume. According to a report from Super Market News, TJ's had sales of $13.3 billion in 2017. While Whole Foods is still ahead with about $16 billion, the fact that TJ's competes without selling national brands and keeping prices low it's impressive. years, Trader Joe's has acquired something of a cult following of adventurous eaters. New products are constantly being added to shelves, others are being retired, while true favorites remain like Mandarin Chicken, Triple Ginger Cookies, and Cauliflower Dumplings, to name a few. These Trader Joe's-branded treasures aren't the only thing keeping customers coming back. The company has truly redefined the shopping experience through its elevated customer service and the cool, casual vibe of its brand. Trader Joe's and Market Orientation Trader Joe's marketing orientation can be observed through its integrated, customer-focused strategy that enables the company to provide value to shoppers, not only through its products but also throughstore culture it creates. Kotler and Armstrong (2016) describe successful companies as those with “a passion for understanding and meeting customer needs…that motivate everyone in the organization to help build lasting customer relationships based on creating of value” (p. 28). This is exactly what TJ has achieved through its customer focus and internal business structure. Customer focus According to Kohli and Jaworski (1990), customer focus is the main element in market-oriented strategy. The foundation of TJ's success is the special relationships it creates with its customers. These reports are the company's primary tool for gathering market intelligence. According to Matt Sloan, vice president of product marketing, TJ's does not use customer data, but "the company relies on its people to facilitate the kind of customer intimacy that allows it to have the products and deliver the experiences that customers desire” (Yohn, 2018 ). This strategy has worked very well over the years. TJ's engages with customers through its friendly, helpful and knowledgeable staff. They encourage customer feedback which can be submitted online, via comment boxes in each store or in person to a staff member. This allows Trader Joe's to customize each store's offerings to meet the particular needs of shoppers in that location. TJ's commitment to its customers is demonstrated by its return policy which states: “Our product guarantee: we tried it! We liked it! If not, bring it back for a full refund, no questions asked.” This not only allows TJ to receive feedback on the product, but also generates a sense of trust between the company and the customer. Narver and Slater (1990) describe customer orientation as “understanding your target buyers sufficiently to be able to continuously create superior value for them”. By creating an open and comfortable dialogue with their customers, TJ's is able to learn exactly what their customers value and respond to their needs efficiently. This face-to-face, customer-focused strategy has been so successful that TJ's does not use large marketing schemes. According to marketing manager Tara Miller, the company's largest marketing expense is the “demo station” where product samples are distributed to each store every day. On top of that, Trader Joe's produces a monthly flyer - "The Fearless Flyer" - that tells interesting stories and facts about new products. Interestingly, TJ's relies primarily on word of mouth from its customers to promote its products and brand. This signifies how strong and successful its customer-centric approach has been. StructureTrader Joe's high standard of customer service has been achieved through a company-wide effort that furthers its market-oriented philosophy. According to Kohli and Jaworski (1990), market orientation is successful when it is clearly communicated and adopted by all members of an organization. To complement its market orientation, TJ's seeks employees who uphold company values. All employees undergo training that includes “communication skills, teamwork, leadership and product knowledge”. This investment in employees is essential to TJ's high level of customer service. Kohli and Jaworski (1990) state that market orientation requires a coordinated effort and the more connected an organization is between departments, the greater the market orientation of that company. TJ's fosters a “togetherness” environment where employees shareresponsibility for all activities, from the warehouse to the cashier. They offer great pay and offer growth opportunities within the company. In fact, every supervisor was once a bagger. CEO Dan Bane is also known to continue working shifts at the stores. Trader Joe's customer-focused philosophy is ingrained in its employees at the grassroots level and stays with them as they progress within the company, allowing them to implement it every step of the way. Within Trader Joe's, market orientation appears to have created a beneficial ecosystem that has improved the organization's internal functions and, in turn, created a greater focus on responding to the needs of its customers. As Kohli and Jaworski (1990) suggest, “a market orientation appears to provide a unifying focus for the efforts and projects of individuals and departments within the organization, thus leading to superior performance.” Responding to Market UnderstandingChanging customer needs are essential to a market-oriented strategy (Kohli & Jaworski, 1990). Trader Joe's rather minimalist technique of gathering market information seems like it may put them at a disadvantage when it comes to responding to the market. However, over the years they have adapted the product mix to evolve along with customer preferences. For example, the growing trend of health-conscious shopping over the years has inspired TJ's to ensure that all of its private label items are free of trans fats, artificial flavors and artificial preservatives, as well as non-GMO. Additionally, although they don't consider themselves a health food store, TJ's offers a wide variety of organic options. Responding to market needs has allowed them to keep their current customers happy and also appeal to a broader market as they broaden their product offerings. Trader Joe's: The Trader Joe's brand is able to enhance its brand through its unique core product (i.e., its food) and through its augmented product (i.e., the shopping experience). Baines et al. (2017) state that “successful brands create strong, positive, and lasting impressions through their communications and associate psychological feelings and emotions, not just their functionality” (p. 374). Trader Joe's achieves this by treating its store like its own brand. It's not just about their products and it's not just about the shopping environment, but both. The Product Line Like most grocery stores, TJ's offers the basic products that people buy frequently and are available in most stores. Purchasing such goods requires little attention or habit, and the brand is less important. However, it's the way TJ creatively innovates their product lines that sets them apart from the competition. They offer all the staples, but also offer unique, never-before-seen versions of these products (for example, chili-lime tortillas versus plain corn tortillas or cookie butter versus peanut butter). These unique products help shoppers differentiate them from competitive options, thus strengthening Trader Joe's brand. Additionally, it appears that TJ's understands the concept of a product life cycle (PLC) which refers to a series of stages that a product goes through from development to its eventual realization. decline. As stated on TJ's website: “If an item doesn't carry its weight in our stores, it goes down the runway for something else” (Trader Joe's, 2018). Understanding the life cycle of their products is critical to TJ's success as the continuously innovative product mix has becomean integral part of their brand. Kowitt (2010) writes that “the genius of Trader Joe's is staying one step ahead of Americans' increasingly adventurous palates with exciting new products.” New product development involves a series of connected steps from idea generation to commercialization. At Trader Joe's, some ideas for new products come from customer input. However, TJ's is also committed to anticipating customer needs and offering customers products they didn't know they wanted. Baines et. al. (2017) state that with regards to product development, “the procedures adopted by an organization reflect its attitude to risk, its culture, strategy, product and market and, above all, its approach to relationships with customers” (p. 368) . The nature of Trader Joe's relationship with its customers determines product development. It allows TJ's to produce something new and potentially risky because they have faith in their loyal customers who trust the Trader Joe's brand. In developing its products, Trader Joe's enlists "product developers" who travel the world in search of traditional, tasty, and interesting foods that can be translated onto their shelves (Inside Trader Joe's, 2018). This has allowed Trader Joe's to develop an extremely diverse product mix that truly represents the flavors of the world, from China to India to Mexico and beyond. The company creatively packages items from different countries, countries or regions with names like Trader Giotto's (Italian food), Trader Ming's (Chinese food), and Trader Jose's (Mexican food). This packaging is not only a nod to the countries that inspired the food, but it is memorable and reinforces the brand. The Shopping Experience Just as important as the tangible products a company offers is the expanded product they offer as it can be the factor that separates them from a competitor. The shopping experience created by TJ's is its augmented product. Kowitt (2010) describes Trader Joe's as "an offbeat and fun discovery zone that transforms food shopping from a chore to a cultural experience." Walking into TJ's is like walking into an upscale farmers market, but the atmosphere remains simple and fun. All workers wear Hawaiian shirts, employees are referred to as “crew members,” store supervisors are “mates,” and managers are “captains” (Trader Joe's, 2018). There is no intercom system but rather a maritime bell that crew members use to communicate. Children run around trying to find the hidden stuffed animal for a chance to win a lollipop. Every signage and product description is created in chalk by a team of locally sourced artists. The employees are available to answer any questions but are not pushy salespeople. Baines et. al. (2017) state that “by developing positive emotional bonds with a brand, consumers can find reassurance through their purchases of the brand” (p. 376). Trader Joe's offers that special atmosphere that customers have come to associate with their brand and that encourages them to keep coming back. The future Trader Joe's calls itself "a national chain of neighborhood grocery stores." This juxtaposition is the biggest challenge: how do you grow while remaining small? Yes, their product mix is innovative and delicious, but the cornerstone of their success is rooted in customer experience. If they lose this allure, they will effectively put themselves on the same competitive level as general grocery stores and health food stores. To maintain their competitive advantage, they must maintain all the characteristics that have brought their brand to what it is today. Keep in mind: this is. |. 2018].
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