SGMT 3000 Chapter Notes - Chapter 5: Demand Characteristics, Blue Ocean Strategy, The Takeaway

• School: York University
• Department: Strategic Management
• Course: SGMT 3000
• Professor: T B A

Document Summary

Advantages of differentiation: company can charge a premium price; company can grow overall demand and capture market share. Cost structure effects: often raises costs due to firm"s need to support the differentiated position in all aspects of their trade (customer experience, quality of employees, etc. ); differentiation can decrease costs when it increases primary demand substantially (economies of scale) Differentiation: distinguishing the company from its competitors by offering something they find difficult to match; many different factors upon which to differentiate (reliability, design, function, service, etc. ) Economies of scale: company with significant demand for its products has the purchasing power to bargain down the price it pays for inputs; widens profit margins. Options for pricing: where differentiation raises costs, managers can choose to increase prices further to cover the extra expenses; successful differentiators can also hold prices constant or increase slightly, then boost profitability through the attainment of scale economies.