When your pricing strategy is like Aldi’s – low price, always low price, but good reliable quality – you’ll be pigeon-holed as a “discounter”. There’s nothing wrong with this strategy, as long as you sell products in high volumes. Which is precisely what Aldi does – it’s the No1 in Germany apparently (though it would be nice to see this reflected in its outlets, to the foreign eye their stores look shabby and sometimes positively off-putting for a food store).
But what happens if you diversify or want to offer products that are not in keeping with the promotional pricing strategy?
Would you, knowing that Aldi is a discounter, want to stay in a hotel like this:
I stumbled across the hotel above on a website a number of years ago, but ignored it, thinking “that won’t work”. Years later I read in Focus online that an Aldi hotel is still very much going good and strong. Here’s a screenshot of the article:
Hmm. Even if it’s offering golf and “wellness”, I can imagine a number of consumers would pass on that offer. I’m not maintaining there’s anything wrong with the hotel, from what I can see it actually is very good quality. But under that brand?
Would you buy a luxury car on a par with Mercedes from Daihatsu? And this is the problem with low price strategies.
There ways of getting round this: invent a new brand. Best example of someone who pulled this off: below.
With its sister brand in the premium segment: