Santé Au Naturel is a Montreal-based natural health store. Despite its successful launch, the company's best-selling products soon became mainstream. As large retailers entered the market, customer loyalty waned and resulted in a decline in sales revenue. In 2017, the company's owner was contemplating current opportunities that it could explore to reflect an effective differentiation of products that could grow sales revenues and keep the company's advantage in the market.
Robert Mackalski and Marc Ducusin
Harvard Business Review (W17786-PDF-ENG)
December 21, 2017
Case questions answered:
- Is Santé au Naturel following a differentiation strategy? If so, what is the basis for their differentiation?
- What are the main strategic challenges facing the company? How should the company respond to these challenges?
- Given their current positioning, what are the main opportunities that exist for them? Which opportunities should they pursue?
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Sante Au Naturel: Healthy to the Core Case Answers
1.) Is Santé au Naturel following a differentiation strategy? If so, what is the basis for their differentiation?
Santé au Naturel follows a differentiation strategy comparable to the other fast-moving consumer goods stores in Montreal (blue ocean strategy, as no similar stores existed in 2013 in Montreal) (Chan, 2015).
As per the Differentiation Map framework, operating capabilities and proprietary assets are the basis of their differentiation strategy (Zook, 2011).
More specifically:
Development and innovation: The company specializes in healthy foods, high-quality vitamins/supplements, and natural medicinal in order to gain a competitive advantage and therefore attract new customers and record high-profit margins.
The company is offering unique products (technology development), high-quality natural materials (inbound logistics), and free and fast delivery (outbound logistics) if orders meet the requirements regarding total basket value and order time (tangible assets) (Wernerfelt, 1984).
Brand: The company’s differentiation strategy also refers to brand positioning. In-store customers’ experience is perceived as friendly, and the providing services as highly professional and personalized.
Santé au Naturel has a first-mover advantage in the health industry and has built a strong brand equity (intangible assets) (Stalk, 1992).
Customer Relationships: The differentiation strategy of Santé au Naturel also includes personalized marketing campaigns. They leverage data from a unique customer loyalty program in order to gain insights regarding seasonal patterns and customers’ preferences and therefore conduct direct and personalized marketing campaigns. As a reward, they are offering in-store discounts to their loyal customers.
Deep-diving into the value chain (Porter, 1985), there seems to be an attribute where the company scores significantly above the rest of fast-moving consumer goods stores and therefore differentiates. Their top management prioritizes personalized customer management that is also being upgraded via customer support by naturopaths (service) (Mackalski, 2017).
Figure 1: Elements of Differentiation Map
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