Q1: What three industries in which a cost leadership strategy would be difficult to implement?
These three industries that would find it difficult to implement a cost leadership strategy include film, automotive, and aircraft manufacturing industries. These industries are essentially extremely high-minimum cost industries that even cost-cutting programs do not easily translate into low-prices available to mass consumers. Oftentimes, these industries rarely practice cost leadership strategies.
Q2: What is your favorite cost leadership restaurant?
McDonald’s
Q3: Name three examples of firms conducting a cost leadership strategy that use no advertising. Should they start advertising?
Q3.1: The three firms that conduct a cost leadership strategy that use no advertising are: Kola Real (Mexico); Save-A-Lot (United States), and Sharp Shopper (United States) (Parnell, 2014). Kola Real originated in Peru in 1988, and launched in Mexico three years later. In its first 10 years, it acquired 17 percent of the cola market battling head to head against giant Coca-Cola (more than 70 percent in market share) and next second leader PepsiCo (21 percent in market share). It achieved this feat through home-production of cola concentrates, hiring of third parties for deliveries, and relying on word-of-mouth promotion. Save-A-Lot avoids directly competing against giant mass-marketers such as Wal-Mart. Instead, it takes over markets in urban areas that giant relaters rejected due to low-income demographics. It mostly stocks its own high-turnover brands and relies on word-of-mouth promotion. Sharp Shopper is a discount store that sells surplus food items. It targets low-income customers. Its popularity by word-of-mouth attracts many middle-income workers to its stores.
Q3.2: Starting an advertising campaign depends upon the market, particularly its characteristics (e.g. relatively poor consumers), the company operates in. If cheap forms of advertising campaign (e.g. word-of-mouth) remains very effective in gaining customers, utilizing highly expensive forms of advertising (e.g. print, broadcast) may not be necessary. Products that are less differentiated from expensively advertising competitors may not need advertising. Cost leadership will be enough to win markets.
Q1: What are two industries in which a differentiation strategy would be difficult to implement?
Most, if not all, commodity-based industries could hardly implement differentiation strategy because the nature of the commodity products is that they rarely lend itself to differentiation. These two industries include oil and mining (Market Research, 2014).
Q2: What is an example of a differentiated business in the state of Maryland?
Eagle Coffee Company, Inc. (2014) differentiates itself through branding (Eagle Coffee brand).
Q3: Name three ways businesses that provide entertainment that might better differentiate their services? How?
Three differentiation strategies include branding, positioning, and promotion (White & Woods, 1997; Justis & Vincent, 2001). Branding allows the business to be easily recalled by consumers. McDonalds and Coca-Cola successfully used for their products. Positioning involves offering the business in a perspective that is different from, and essentially more valuable than, that of the competitors’ offering. It attracts by creating a unique and positive identity. Promotion breaks down preliminary barriers between the business and the customers, exposing the customers to the products or services.
References
Commodities market research reports & industry analysis. Market Research.com Retrieved
(On 19 October 2014) from: http://www.marketresearch.com/Food-Beverage-c84/Agriculture-c163/Commodities-c455/
Justis, R.T. & Vincent, W.S. (2001). Achieving wealth through franchising. Avon, MA:
Adams Media.
Our coffee. Eagle Coffee.com Retrieved (On 19 October 2014) from:
http://www.eaglecoffee.com/shop/catalog/category/view/id/3
Parnell, J.A. (2014). Strategic management: Practice and theory. Thousand Oaks, CA: Sage
Publications; 664
White, S. & Woods, J. (1997). Do-It-Yourself Advertising. Avon, MA:
Adams Media.
