Ans 1:
Low-Cost Strategy:
It is one kind of pricing strategy in which a company offers a very low price for its product or services
compared to its competitors to fuel demand and increase its market share. This type
...
Ans 1:
Low-Cost Strategy:
It is one kind of pricing strategy in which a company offers a very low price for its product or services
compared to its competitors to fuel demand and increase its market share. This type of strategy is
called as Cost Leadership strategy.
This type of strategy is usually followed by the company when they enter a new market to gain the
market share where they find it more potential.
The relationship between low-cost strategy and differentiation strategy:
Both strategies are contradictory in nature. Where Low-cost focuses on less price and Differentiation
focuses on the quality of the product. Low cost is mostly used by smaller companies and while getting
into the new market segment. But in differentiation, it used mainly used by well-developed companies.
They focus only on the quality and customer specified products.
Ans 2:
Other types of strategy:
There are other types of strategies used by the companies. They are
1. Focus Strategy
2. Competitive or Value disciple strategy
3. Blue Ocean Strategy
Focus Strategy:
It uses either cost or differentiation strategy. This type of strategies is applied by the small companies for
those want to avoid competition with large enterprises.
Competitive or Value disciple strategy:
This kind of strategies is used create customer value by providing a competitive advantage. They are
product leadership, customer intimacy, and operational excellence.
Blue Ocean Strategy:
This strategy is not to beat the competitors instead to create a "blue ocean" of uncontested market
space.
Ans 3:
Market Segmentation: Market Segmentation is a strategy used for marketing which includes division of
the market as the whole into subsets of consumers, business or location that are believed to have
common needs, interests, and priorities and then designing the implementation of strategies on the
segments targeted.
The importance of market segment for business strategy:
Understanding and serving the needs of the customer in more efficient manner.
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Up-Selling of existing customers, i.e., when the consumer is used to the service and increases its
demand, they are more attracted the higher or supplementary services.
Easier communication, as marketing is done for specific segments of the market which are more
likely to buy the service.
This leads to cost cutting for marketing techniques as we don't have to target the whole market
With the application of marketing segmentation growth opportunities and market share also
increases.
Approaches used to segment market
Geographically: Customers are targeted per the location preferences, for example, a gardener needs
to focus on their local market where as internet business can target a broader customer which can
be the whole country.
Demographic: This is done by Age, Gender, Occupation, Socio-economic groups, for example,
cosmetic products need to target to only female consumers and toys for smaller age group children.
Behavioral: This is done with the help of tabulating previous data to determine the rate of usage,
readiness to purchase and loyalty of the customer.
Psychographic: Customers are divided per their personality, lifestyles, attitudes and class for example
if customers are more inclined to premium seats with the isolated environment of a cinema hall.
The above techniques can lead to competitive advantage because they don't have to waste time for
marketing on a customer base that is unrelated to their product or service which in turn will increase
their market share and effectiveness of spreading information of their services to the desired segment.
Chapter 6
Ans 1:
Consolidated Industry is a commercial structure where a relatively small number of companies control a
rather large market share of the overall output or sales for a product or product type. Consolidated
industry markets often have relatively high barriers to entry, differentiated product, well-established
brands and high-profit margins.
A fragmented industry is an industry in which no single enterprise has significant enough share of the
market to be able to influence the sector direction. In other words, these industries are those in which
competition is manageable or in which consumers benefits because they thrive on the contest between
the organization in the industry. Fragmented industries provide the comparative advantage. However,
they are fragmented due to the reasons like low barriers of entry i.e. costs to enter the market is minimal
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