BUS 401 Chapter Notes - Chapter 3-4: Product Differentiation, Pricing Strategies, Fixed Cost
1 Oct 2017
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Most small businesses cannot compete on price alone. However, if they have a good product differentiation strategy it can potentially charge a higher price than its competition without losing customers. The right approach depends on the competitive situation that you face. Production differentiation strategies: find your target customers, identify their critical needs, attract profitable clients; alienate costly ones, avoid competition by offering unique services, balance the benefits of customization with the costs. Case 1: fit time for women (find your target customers, identify their critical needs) The area only has two other gyms, which are co-ed. Has tailored the services at the gym to appeal to female customers: > wooden doors to give female customers full privacy. > childcare: two staff available all times for 6 days a week. > provides other value-adding services such as: personal training, tanning beds, massage, nail salon, spray tan, sauna, and sell products. Placed low priority on making investments in fancy exercise equipment.
