Having a focused-cost strategy means that the goods and services are aimed at a special type of consumer whose offerings cost less than competitors. A focused-differentiation strategy is aimed at a special section of the market that caters to the customers’ tastes and what the customers are looking for better than the competition. The best-cost provider gives customers “more value with average to above-average quality compared to the quality of the competition’s product (Thompson, 2012). The low-cost provider strategy aims at a spacious section of the market at right angles to the competitors and charges an overall less cost than competitors. The quality of the goods are acceptable to consumers and there are few frills.
The higher wages paid by the employer have to be made up somewhere. In a free market, if an employer is producing a commodity, he will inevitably try to use the fewest possible dollars to make the highest quality products. This means that he will hire the best workers he can, for the lowest wages he can. This enables him to hire more workers, thus creating jobs and decreasing unemployment. It also ensures that he can put a high quality product on the market at a relatively low price.
Discount Customers- Discount customers are also frequent visitors but they are only a part of business when offered with discounts on regular products and brands or they buy only low cost products. More is the discount the more they tend towards buying. These customers are mostly related to small industries or the industries that focus on low or marginal investments on products. Focus on these types of customers is also important as they also promote distinguished part of profit into business. Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy.
It seems that Costco and Sam’s Club are more similar with a strategy to have great products at the lowest prices, similar to most other companies in general. BJ’s offered those products at low prices but also tried to incorporate more products, some smaller sizes and a little more focus on the customer by giving them the convenience of aisle markers, self-checkouts, and express lanes. I feel that in terms of the bottom
Blue Nile’s supply chain efficiency allows them to have lower operating costs. Blue Nile bypasses the wholesalers and brokers, which gives them a great opportunity to obtain a more cost-efficient product. Blue Nile and their suppliers also have multiyear agreements whereby Blue Nile only purchases diamonds and gems when a customer places an order. The low operating cost allows Blue Nile to offer their customers discounted prices at about 20% to 35% less than the traditionally established stores. 2.
List three things you tend to buy on sale. How are the product categoreis on these two lists different for you? Three brands that I am loyal to include Hue, Charmin paper products, and the Simple brands. The three brands listed above would be items that I do trend for purchase in bulk when they are on sale because of the quality of their products. Although my items are the same there is a difference in these categories Consumer loyalty is the fact that the consumer chooses to purchase items like tissue from your brand whereas things that a person who buys something on sale maybe something that others the consumer may not be able to afford if the item is not on sale.
In this particular case we can observe how low labor cost contributes to obtain low import tariffs therefore leads to cheaper products. Walmart’s success in Mexico was definitely possible because of the NAFTA implementation. Question 2 NAFTA benefits every company that is willing to operate abroad. This agreement solved some difficulties but Wal-Mart`s inherent competitive strategy was effective in the Mexican Market. As we all know Wal-Mart`s strategy to win against its competitors is its offered prices.
1. What are IKEA’s competitive priorities? a. Cost and Price “Make the Product or Deliver the Service Cheap” – IKEA is a low-cost producer. Purchasers of Ikea, for example, use their contacts with suppliers all over the world via Ikea Trading Offices, in finding those who can make their products at the best quality for the right place and the right time.
Performance Review The generic strategies, cost leadership, differentiation, and focus are applied at the business unit level. The cost leadership strategy calls for low cost producing in the industry with a level of quality. The company will sell their product at average industry prices for higher profits or below the average industry price for higher market shares. The differentiation strategy develops a product that is unique and valued by its customers and perceived as different. Its value is added by is uniqueness and allows for a premium price.
Aesthetically they keep cost down by not going overboard with interior design and comparatively have low labor costs. The strongest competitive force is the rivalry among sellers, buyers and suppliers. The possibility of these large wholesale companies being affected by potential new entrants is quite low. Because we are talking about significant amounts of quantities, the wholesale club industry will not be impacted by other industries offering substitute products. I think Supermarkets have a minimal competitive impact because they try to reach a different target market, even though Supermarkets and the wholesale club industry both carry similar products.