Business Strategy Midterm (5)

a company's product can command a sufficiently higher price to more than cover the added costs of achieving the differentiation

most buyers use the product in the same ways, industry newcomers use introductory low prices to attract buyers and build a customer base, and buyers incur low costs in switching their purchases from one seller to another

The big appeal of a best-cost provider strategy is being able to offer buyers the industry's best-performing product at the best cost and best (lowest) price in the industry

Not cutting prices far enough below what rivals are charging to achieve dramatically large gains in sales volumes and market share

command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features) and/or gain buyers loyalty to its brand (because some buyers really like the differentiating features and bond with the company and its products

revamping the firm's value chain to eliminate or bypass some cost-producing activities and/or performing value chain activities more cost-effectively than rivals

the company has a competitively valuable collection of resource strengths, competencies, and capabilities and unless its strategy is predicated on leveraging use of these resources

Outsourcing all production-related activities

deals with the specifics of management's game plan for competing successfully -- specific initiatives that will be employed to strengthen the company's market position and achieve a particular kind of competitive advantage, what offensive and defensive moves management plans to use to counter the maneuvers of rivals, how management intends to respond to shifting market conditions, and what the company intends to do to please customers.

When the products of rivals are weakly differentiated and most competitors are resorting to clever advertising to try to set their product offerings apart

A best-value strategy

When buyers are not strongly brand loyal and have low costs in switching brands and when many buyers are looking for an upscale, multi-featured product at an attractively low price

The potential for buyer needs and uses of the product to become even more diverse

technological change is fast-paced and competition revolves around rapidly evolving product features.

either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or else by refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold, thereby boosting the firm's total profits and return on investment

serving buyers in the target market niche at a lower cost and lower price than rival competitors -- this requires performing value chain activities more cost effectively than rivals and/or finding innovative ways to bypass non-essential value chain activities.

lower overall costs than rivals -- buy not necessarily the absolutely lowest possible cost because a product offering that is too frills-free can undermine its attractiveness to buyers despite being cheaper priced.

using its resources and capabilities to incorporate attractive upscale attributes at a lower cost than those rivals with comparable upscale product offerings

are hard or expensive for rivals to duplicate -- east-to-copy differentiating features cannot product sustainable competitive advantage

Conserving on marketing costs by cutting back on advertising expenditures

search out cost-saving opportunities in every part of the value chain and pay particular attention to a set of factors known as cost drivers that have a strong effect on a company's costs and can be used as levers to lower costs

is a middle ground competitive approach aimed squarely at the sometimes great mass of value-conscious buyers looking for a good-to-very-good product or service at an economical price

charging a price comparable to other low-priced rivals, being content with the resulting sales volume and market share, and relying upon the low-cost edge over rivals to earn a bigger profit margin per unit sold, thereby boosting the firm's total profits and return on investment

Being greedy and trying to charge too high a price

A best-cost provider strategy aims at attracting buyers on the basis of having the industry's overall best-performing product at a price that is slightly below the industry's average price

buyers incur low costs in switching their purchases from one seller to another and the products of rival sellers are essentially identical and in abundant supply from a number of eager sellers

A superior customer service strategy

buyer needs and uses of the product are divers, few rival firms are following a similar differentiation approach, technological change is fast-paced, and competition revolves around rapidly evolving product features

whether a company's market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation

Trying to strongly differentiate the company's product from those of rivals rather than to be content with weak product differentiation

buyers don't value the brand's uniqueness and/or whenever a company's approach to differentiation is easily copied or matched by its rivals

Shifting to the use of technologies and/or information systems that bypass the need to perform certain value chain activities

Charging a sufficiently low price to gain strong customer loyalty to the company's brand

at least some unique and valuable resources/capabilities that are either (1) hard for rivals to duplicate or (2) hard for rivals to develop offsetting close substitute resources/capabilities

Most buyers use the product in the same ways, the product of rival sellers are essentially identical and readily available from many eager sellers, and price competition among rival sellers is vigorous

Moving the performance of most all value chain activities to low-wage countries