Flashcards in Exam 2 Deck (117)
The business's overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage, and the different positioning strategies that can be used in different industry settings.
Enable a company to:
-Gain a competitive advantage in commodity markets
-Undercut rivals on price
-Gain market share
-Maintain or increase profitability
Distinguish oneself from rivals by offering something that they find hard to match
How is product differentiation achieved?
Superior reliability, functions, features, better design, branding, after sales service, support
-Shows all the positions a company can adopt with regard to differentiation and low cost.
-Has a convex shape because of diminishing returns.
Occurs when innovations push out the efficiency frontier in an industry, enabling greater value to be offered through superior differentiation at a lower cost than was though possible.
Decisions of a company to group customers based on important differences in their needs to gain a competitive advantage.
Producing a standardized product for the average customer, ignoring different segments.
Producing different offerings for different segments, serving many segments or the entire market.
Serving a limited number of segments or just one segment.
Gives a company a specific form of competitive position and advantage in relation to its rivals which results in above-average profitability.
Generic business-level strategy
Lowering costs in order to lower prices and still make a profit.
Broad low-cost strategy
When a company differentiates its product in some way.
Broad differentiation strategy
Targeting a certain segment or niche and trying to be the low-cost player in that niche.
Focus low-cost strategy
Targeting a certain segment or niche, and customizes its offering to the needs of that particular segment through the addition of features and functions.
Focus differentiation strategy
Wide open market space where a company can chart its own course.
An industry composed of a large number of small and medium-sized companies
Reasons for fragmentation
1. Lack of economies of scale
2. Low entry barriers
3. Brand loyalty in the industry is primarily local.
A company that offers more value to their customers at a lower cost.
Obtaining the advantages of cost leadership by establishing a network of linked merchandising outlets interconnected by information technology that functions as one large company.
Strategy in which the franchisor grants the franchisee the right to use the franchisor's name, reputation, and business model in return for a franchise fee and often a percentage of the profits.
Merging with or acquiring competitors and combing them into a single large enterprise.
Customer demand for the product of an embryonic industry is initially limited for 5 reasons.
1. Limited performance and poor quality of the first products
2. Customer unfamiliarity with the product
3. Poorly developed distribution channels
4. Lack of complementary products
5. High production costs because of small volumes of production
The industry enters what stage when a mass market starts to develop for its products?
One in which large numbers of customers enter the market. This occurs when product value increases or production cost decreases.
First to purchase and experiment with a product based on new technology.
Understand that the technology may have important future applications.
Practical and understand the value of new technology.
Purchase a new technology only when it is obvious that it has great utility and is here to stay.