CH 5 - 8 Flashcards
What are 5 things that a company wants?
1.please customers 2.get more customers 3.beat competition/Rivals 4.Have a competitive advantage 5.respond to changes in the market
What is Low Cost, Broad Buyers
Buyer conscious-comparable quality (less frills) at a lower price. ex. DSW, Dell its functional but not the best -Things Are really cheap for people.
What kind of buyers are these?
budget concious
What happens if there are absolutely NO FRILLS?
Risk - not everyone wants a just functional product
How does the company make money if the product is low cost?
a lot of customers buying a lot even a little profit from each customer adds up price cutting not that much cost/unit less than competition
How does the company lower the cost/unit while making the product? (Answer: EITHER Remove more cost-effective steps – AND/OR eliminate or bypass steps) . So, which steps? We invest ____ to save on_____?
_short term_ to save on _long term_. (don’t lease buy)
To drop the distributor, we sell directly to the consumer and we save _____% of cost.
30-50%
To drop the supplier, we coordinate to have _______parts and are near the company.
pre-assembled
What is Low Cost, Focused Buyers?
Concentrating on a narrow buyer segment and out competing rivals on costs, thus being in position to win buyer favor by means of a lower-priced production offering.
What is market niche?
small amount of buyers ex. hertz car rental ppl walking off plane
What is Broad Differentiation, Broad Buyers?
seeking to differentiate the companys product offering from rivals with attributes that will appeal to a broad spectrum f buyers
What are Buyers willing to pay more for - Examples?
willing to pay more for fashion, select features, one stop shopping, prestige, reliability, high tech, full range of service.
How do you know what a buyer is willing to pay more for (*hint – 2 ways)?
study what buyers consider important and value (willing to pay more for) (different from competitor so not easily copied)
How do you make more money (*hint 4 ways)?
don’t add on too much extra cost to differentiate (making bottle cap so expensive) have customer loyalty charge more so its more expensive to and ppl spend more have more customers
How do you make the product?
you want a unique product, good performance, customer service or additional services, custom order variety, innovation, continuous quality improvement, increase marketing, high quality input,improve skill, knowledge, experienced team
How do you keep cost down?
(persuade customer) lower costs for buyer in other ways - energy efficiency, fuel efficient, less maintenance, more reliability tangible special features intangible special features (image status, prestige, upscale fashion, superior craftsmanship, finer things in life) signal value- packaging, and brochure, presentations, luxury in store, staff is professional
When does it work best? (Answer: lot of possibilities, many ways to differentiate, few rivals)
1.lot of possibility window of opportunity many ways to differentiate (retail apparel age groups)\ 2.few rivals with similar differentiation (less direct competition)
When does Differentiation Fail?
it will fail if competition copies quickly, unenthusiastically received by buyers, too timid for a change, if you overspend on frills, over spend on frills. add too many irrelevant frills so the consumer just goes back to basics (old ppl just want a flip phone not the iphone)
What is Differentiated, Focused?
concentrating on a narrow buyer segment and out competing rivals with a product offering that meets the specific tastes and requirements of niche members better than the product offerings of rivals
What does it depend on? (Answer: buyer segment, ability to stand apart)
buyer segment looking for special product attributes or seller capabilities Ability to stand apart - upscale ex ferrari market to only 20,000 people/ ex. trader joes entertainment (raspberry salsa) Target niche is large enough to be profitable or will grow industry leaders are not fighting for that niche so not direct competition with them Customer goodwill and loyalty are buffers
What size of company is best?
Especially good when small or medium company
How is Marriot a risk?
it is a camelion they have different types on marriots. the holiday in or high end or busness guy its able to compete in different markets.
What is Best Cost? What kind of buyers are these and what do they want?
hybrid (upscale product at a low cost) you want a special feature but at the best price
Does it work best in a depression, growth, recession?
Recession