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This case study entitled "Pricing Strategy at Officenet Staples" discusses the development of Officenet (ON). It evaluates the company's strategy in relation to its target market, its competitors, and how they implement their pricing strategy.
Andres Terech; Javier Jorge Silva; Maria Barale
Harvard Business Review (NA0194-PDF-ENG)
May 01, 2012
Case questions answered:
- How did Officenet Staples (ON) start? Assess its mission, values, and culture. Did it have any competitive advantages? What was ON’s positioning strategy, i.e. growth vs. profits? How had its positioning strategy changed or not over the years?
- Describe ON’s market. Who were its competitors? How were prices set in the office supply industry?
- What were the different customers’ buying behaviors for office supplies and their price sensitivity? How would you segment ON’s customers?
- What were the pros and cons of the way ON set regular prices? How did ON’s sales force management affect its pricing strategy?
- What were the different pricing policies that ON could implement? What were the pros and cons associated with each alternative? Which alternative would you recommend to Leo and why?
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Case answers for Pricing Strategy at Officenet Staples
Q1. How did Officenet Staples (ON) start? Assess its mission, values, and culture. Did it have any competitive advantages? What was ON’s positioning strategy, i.e. growth vs. profits? How had its positioning strategy changed or not over the years?
Officenet Staples started after Andrés Freire and Santiago Bilinkis, after graduating in economics in 1996 they started to pursue their dream of making their own company.
ON’s overriding goal was to provide a unique value proposition to quickly become Argentina’s leading office supply vendor.
Culture & Values
Officenet Staples’ organizational culture has three major pillars:
Human capital: This includes training and development of both staff and suppliers, attention to customer needs for better results.
Process management: this refers to their approach to technology and efficiency for the betterment in carrying out their practices and processes.
Management style: it focuses on common goals of management and employees where they have a free flow of information top to bottom enabling the employees and management to achieve goals. They have decision making power at the lower level of the organization which enables employees to feel empowered.
- Catalog sales (catalog having 10,000 items)
- 14000 Sqmtr. warehouse.
- Advanced IT system which kept track of sales, distribution, and previous prices.
- Prompt delivery services.
Instead of opening a traditional shop like many of the competitors, Officenet Staples went for the catalog sales where they used a catalog to showcase their product; it made ON to become the first single-source supplier for office products in Argentina.
Apart from traditional stationery items they also had cookies, cleaning products, hand towels, chairs, and bookcases. Each item included in the catalog featured an engaging picture and detailed information on price, size, available formats, and technical specifications.
Yes, ON did change their positioning strategy.
With continuous success, Officenet Staples planned to change their positioning strategy and expanded in the Brazilian market by changing and expanding ON saw a rise in profit which was previously $ 21.42 million in 1999, it became $51.5 million in 2003 of both Argentina and Brazil with its Brazilian operations accounting for roughly 77 percent.
Q2. Describe ON’s market. Who were its competitors? How were prices set in the office supply industry?
Officenet Staples market falls in the category of…
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