1.2.4 The competitive environment Flashcards
How does competition occur?
When separate businesses provide goods and services to the same group of customers
What is a competitive enviroment?
A market where there are many businesses selling similar goods and services
What do businesses need to do to stand out?
Differentiation
How do businesses compete?
Price
Quality
Location
Product range
Customer service
How does a business use price to compete?
Lower prices to attract customers
However if they don’t make enough extra sales profits may be lower. May also create a price war and if prices drop to much customers may associate it with bad quality
How does a business use quality to compete?
Offer better quality goods/services
Higher quality attracts customers that are willing to pay a higher price
However increases costs
How does a business use location to compete?
Location may be easier to access so more convenient
May have good transport links for suppliers and distribution
Online business may have a more user-friendly website
If not able to change location the business can focus on offering more to customers
How does a business use product range to compete?
More choice = meeting different customer needs
If specialised in certain products this will attract consumers that want a more dedicated service
How does a business use customer service to compete?
Offering good selling experience or excellent after-sales service
Good service = Repeat custom
Satisfied customers = Good word of mouth
However training staff can increase costs
