When an organization uses differentiation it uses the goods and services of the company to satisfy the needs of its customers with competitive advantages. This allows the companies to lower their price and focus on the values that generate a comparative of higher price and a better margin. It benefits of differentiation require producers to segment markets in order to target goods and services at specific levels of the organization and generate a higher then average price. Organizations that uses differentiation strategy have to face the
Penetration pricing uses low initial prices to gain market share and slowly increases the price to its normal level. Economy pricing offers basic products that have the lowest customer price possible. Skimming is a price strategy in which companies set high initial product prices that decrease to match lower prices from new competitors. Bundle pricing is a strategy where companies include several different products under one price. This allows a business to provide more products to consumers at a slightly lower price.
There are two main profit maximization methods used, and they are Marginal Cost-Marginal Revenue Method and Total Cost-Total Revenue Method. Profit maximization is a good thing for a company, but can be a bad thing for consumers if the company starts to use cheaper products or decides to raise prices. This is what some firms in the leisure industry will aim to do, for instance, Cinemas will hope to achieve the highest level of profits. Although most firms in the leisure industry aim to maximise profit, some firms have other main objectives, such as to maximise growth. Growth maximisation is where the firm’s main goal is to increase the size of the firm as much as possible.
Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012). The three standards to be chosen would be inventory turnover, store profitability and employee satisfaction. As I noted prior, the key to Costco’s success has been its ability to acquire popular goods and sell them quickly at minimal operative cost. A measure of inventory would be able to evaluate any significant trends in goods. If the inventory were to rise significantly for any particular item, it would indicate either the item is not popular, viewed as too expensive, or may be held up, off-site warehouses (depots) However, the turnover of goods is maximized by a seven day, 69 hour work, which includes weekends.
Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business. IT IS Indicator of short-term debt-paying ability. \ Quick Ratio | = | Current Assets - Inventory | | Current Liabilities | |
When a consumer is purchasing a product they want to make sure they obtain maximum value for the money they spend and obtain a product that they perceive is greater than any other product in the market. Consumers look for something that sets a product apart from the rest wether that is providing a product at a lower price or by providing a higher quality product, ultimately a consumer will purchase the product with the greater perceived competitive advantage. Bunning’s warehouse is a company that gains its competitive advantage over the competition by offering the consumers products at lower prices than their competitors. Bunnings makes the promise of low prices through their slogan “Lowest prices are just the beginning.” The company does not just make an empty promise on providing the lowest prices but is able to back it up by saying “If you happen to find a cheaper price on a stocked item we will beat it by 10%.” (Bunnings Warehouse, Year Unknown) By creating and delivering the promise of lowest prices, Bunnings is able to position itself in the customers mind as providing superior value and as such has been able to gain majority share hold of the market through differentiating themselves from the competing companies through a competitive advantage. (Armstrong, Adam, Denize and Kotler, 2012) It is made clear through the example of
Technology can create efficiencies in the business process that allows for lower cost and a competitive edge. Also applying on line ordering, research, order tracking, and banking services on line will allow our corporation to rise above companies with less technology. Technology such as email systems, hardware, internet, and telephone systems are all integral pieces in running any business successfully. Conclusion The entire McBride Financial Service marketing plan when implemented will host rewards of increased business to the corporation. Once the marketing plan is launched the market research will define the market best suited to target.
A monopolistic Competition market has many sellers and provides good substitutes but differentiates their products from other companies. The nature of competition in a monopolistic market focuses on marketing, special features and pricing (Colander, 2010). Kudler Fine Foods has only a few competitors in the market that offers the same products and service to its customers. This market structure has negative and positive effects. A positive effect of Kudler Fine Foods in a monopolistic market structure is that they lead in the market and can increase competition between companies and make massive profits by setting higher prices (Colander, 2010).
Model Components and Profit Generation. * Rapid Inventory Turnover-when combined with the operating efficiencies achieved by volume purchasing, efficient distribution, and reduced handling of facilities enabled Costco to operate profitably at significantly lower gross margins than traditional wholesalers, mass merchandisers, super markets, and super centers. * High Sales Volume-Allowed Costco to sell and receive cash for inventory before it had to pay many of its merchandise vendors, even when vendor payments were made in time to take advantage of early payment discounts. This allowed Costco to finance a big percentage of its merchandise inventory through the payment terms provided by vendors rather than by having to maintain a sizeable working capital to facilitate timely payment of suppliers. 2.
With regard to selling products at bargain prices, BBQfun could raise its market volume because the lower price would be an incentive to encourage customers’ purchasing. Concerning about the first marketing opportunity (selling product at bargain prices), the product quality could affect the implementation of this opportunity or even rule out it. It is - Cutting cost of products lowers the product quality: this situation could happen if BBQfun only focuses on cutting cost of products and lacks attention to product quality. In order to make this marketing opportunity feasible, BBQfun needs to lower cost of products but ensures the product