Originally, the price strategy is very successful in Denmark and Germany, because in this countries who buy in a discounter store thinks that the products offered there are the everyday essentials and they think that there are lowest prices and high quality.
On the other hand, in UK low prices are associated with poor quality, that is why people prefers spent a little bit more money buying in stores where they think that the product quality is better. If Netto's marketing strategy is only focused in low price there is the danger of loosing market share because customers do not trust in it and its products, because are mainly not known brands, or are Netto's brand.
Furthermore, other danger that Netto has to face is that the other sort of retailers from the other categories will adopt a low prices strategy , reasonable quality and good customer service.
One example is Tesco. Lastly it is increasing its market share because is offering low prices in many products, even in well-know brands. That is possible because is reducing dramatically its costs but maintaining a wide range of products (up to 25.000 references) without reducing de quality of its products. Furthermore, is offering a wide range of customer services.
Meanwhile, Netto is maintaining its strategy of not offering new extra services to their customers in order to give a restraint image.
In fact, there is the danger that the customer could see more improving in the competition of Netto and as a result, the customer will have less loyalty in buying there.
In addition, to keep the competitiveness through the price It need to have a massive buying power, and if it is possible, more than the competition. But that is very difficult because the competition has also a great...