Mgmt 490: Ch. 5 – Flashcards

(1) whether a company's market target is broad or narrow (2) whether the company is pursuing a competitive advantage linked to lower cost or differentiation

1. Low-cost provider strategy 2. Broad differentiation strategy 3. Focused low-cost strategy 4. Focused differentiation strategy 5. Best-cost provider strategy

Striving to achieve lower overall costs than rivals on comparable products that attract a broad spectrum of buyers.

Seeking to differentiate the company's product offering from rivals' with superior attributes that will appeal to a broad spectrum of buyers.

Concentrating on a narrow buyer segment (or marker niche) and outcompeting rivals on costs, thus being able to serve niche members at a lower price.

Concentrating on a narrow buyer segment (or marker niche) and outcompeting rivals with a product offering that meets the specific tastes and requirements of niche members better than the product offerings of rivals.

Giving customers more value for their money by satisfying buyers' expectations on key quality/features/performance/service attributes while beating their price expectations. This option is a hybrid strategy that blends elements of differentiation and low-cost strategies; the aim is to have the lowest (best) costs and prices among sellers offering products with comparable differentiating attributes.

1. Perform value chain activities more cost-effectively than rivals 2. Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities

A factor that had a strong influence on a company's costs.

A factor that can have a strong differentiating effect.

1. Capturing all available economies of scale 2. Taking advantage of experience and learning-curve effects 3. Operating facilities at full capacity 4. Improving supply chain efficiency 5. Using lower cost inputs without sacrificing quality 6. Using company bargaining power to gain concessions 7. Using communication systems and IT 8. Employing advanced production tech and process designs to improve overall efficiency 9. Using cost advantages of outsourcing or vertical integration 10. Employee incentive systems and company culture

1. Selling directly to consumers and bypassing the activities and cost of distributors by creating its own direct sales force or conducting sales operations at the company's website 2. Streamlining operations by eliminating low value-added or unnecessary work steps and activities. 3. Reducing materials handling and shipping costs by having suppliers locate their warehouses close to the company's own facilities.

1. Price competition among rival sellers is vigorous 2. The products of rival sellers are essentially identical and readily available from many eager sellers 3. There are few ways to achieve product differentiation in ways that have value to buyers 4. Most buyers use the product in the same ways 5. Buyer switching costs are low 6. Majority of industry sales are made to a few, large volume buyers 7. Industry newcomers use introductory low prices to attract buyers and build customer base

1. Overly aggressive price cutting that leads to lower, rather than higher, profitability 2. Relying on an approach to reduce costs that can be easily copied by rivals 3. Becoming too fixated on cost reduction that quality attributes are sacrificed

1. Command a premium price for its product 2. Increase unit sales 3. Gain buyer loyalty to its brand

Differentiation enhances profitability whenever a company's product can command sufficiently higher price or produce sufficiently bigger unit sales to more than cover the added costs of achieving the differentiation.

1. Striving to create product features, design, and performance 2. Improving customer service or adding additional services 3. Pursuing production R&D activities 4. Striving for innovation and technological advances 5. Pursuing continuous quality improvement 6. Increasing emphasis on marketing and brand-building activities 7. Seeking out high-quality inputs 8. Emphasizing HRM activities that improve the skills, expertise, and knowledge of company personnel.

1. Coordinating with channel allies to enhance customer perceptions of value 2. Coordinating with suppliers to better address customer needs

1. Buyer needs and uses of the product are diverse 2. There are many ways to differentiate the product or service that have value to buyers 3. Few rival firms are following a similar differentiation approach 4. Technological change is fast-paced and competition revolves around rapidly evolving product features

1. Differentiated product or service attributes are easily and quickly copied by competitors 2. Differentiation attempt produces an unenthusiastic response from buyers 3. Overspending on efforts to differentiate product offerings, thus eroding profitability

A company must have the resources and capabilities to incorporate attractive or upscale attributes into its product offering at a lower cost than rivals.

The target market for a best cost provider is value-conscious buyers who are looking for appealing extras and functionality at a comparatively low price.