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some companies focus on low-cost segments for a single product. for instance, thai airlines, british airways, and lufthansa all fly only on boeing 767-300ers. this is a very competitive niche because boeing doesnt produce a standard 767, so airlines that want to fly on one must buy new planes. such a strategy is appropriate only if a company can easily switch from one plane to another, if customers find its new planes more desirable, and if they are willing to pay a premium for the new planes. if a company falls into this category, it has to go about things differently. first, the company must think carefully about its strategy.
successful price warriors stay ahead of bigger rivals by using several tactics: they focus on just one or a few consumer segments; they deliver the basic product or provide one benefit better than rivals do; and they back everyday low prices with superefficient operations to keep costs down. thats how aldi, the essen-headquartered retailer that owns trader joes in the u.s., has thrived in the brutally competitive german market. aldis advantages start with the size of its product range. a typical aldi outlet is a relatively small, 15,000-square-foot store that carries only about 700 products95% of which are store brandscompared with the 25,000-plus products that traditional supermarkets carry. the chain sells more of each product than rivals do, which enables it to negotiate lower prices and better quality with suppliers. in fact, many of aldis private-label products have bested branded products in competitions and taste tests. the small number of products also keeps the companys supply chain agile. another efficiency stems from the fact that aldi sets up outlets on side streets in downtown areas and in suburbs, where real estate is relatively inexpensive. since it uses small spaces, the companys start-up costs are low, which enables it to blanket markets: aldi now owns 4,100 stores in germany and 7,500 worldwide.
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