Added Value And Competitive Advantage Flashcards
Definition of added value
The value if the finished good is greater than the cost
The product is more desirable to consumers
Why is added value important (5)
Helps business survive
Helps business gain sales and be successful
Allows business to differentiate the product compared to its competitors
Able to establish a USP
Able to charge higher and make more profit
How do you add value
Introduce new or improved products
Reduce the cost of bought items through more efficient use of all inputs
Advantages of added value(4)
Able to charade higher price
Enhance image of product
Make product more distinctive
Enable business to target its chosen market more easily
Disadvantages of added value
Mightn’t increase price of product
May restrict sales and therefore sales revenue
May not be able to charge higher price due to competition
The elasticity may make any required price increase difficult to be accepted within the market
What is competitive advantage
To have a advantage over you competitors
What are the 2 types of competitive advantage
Cost and differentiation advantage
What is cost advantage
A businesses ability to produce goods and services at a lower cost than its competitors with out reducing quality value
What are some factors that help reducing cost
Using economies of scale
Using social media for marketing
Investing in up to date technology sourcing cheaper suppliers
What are the advantages of cost advantage
Increase in sales
U can charge the same as competitors but still make more profit
Business can gain from economies of scale
Be more popular
What are some disadvantages of cost advantage
Customers may doubt quality of product at such low price
Customers may go to big brands
Hard to make product with price so low
Increased competition so price wars can occur
