33:620:492 Lecture Notes - Lecture 5: Cost Leadership, Switching Barriers, Customer Service
30 Mar 2016
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Document Summary
Low cost posiion relaive to the irm"s peers. Relaionships throughout the value chain are managed to reduce cost: difereniaion. Create products / services that are unique and valued. Non-price atributes for which customer will pay a premium: focus strategy applied to a porion of an industry: Segmentaion of market by type of customer or demographics. Targeted geographic markets: atain advantage in porion of an industry through either: low cost leadership difereniaion. Achieving low cost leadership: focus on minimizing costs in all aciviies of a irm"s value chain, operaional tacics include: Use lower cost inputs without sacriicing quality. Capture economies of scale to reduce unit costs. Outsource low value aciviies: when low cost works best. Industry sales mostly to a few, large volume buyers: ways it fails. Low cost structure can be easily copied by compeitors. Product does not meet customers" minimum acceptable standard for quality. Aggressive price cuing does not generate suicient demand or proits.
