SECTION III. ESSAY (80) You are the CEO of Company A, a profitable market share
ID: 345820 • Letter: S
Question
SECTION III. ESSAY (80) You are the CEO of Company A, a profitable market share leader employing a best-cost provider strategy However, you are now facing significant competition from Company Y (broad differentiation), and Company Z (low-cost provider) Over the next 12 months, you cannot change your generic strategy. At the same time, you cannot wait a year to deal with the growing threats from Company Y and Company Z. (A) Discuss the challenges facing Company A that stem from having to compete against both Company Y and Company Z. (B) Identify at least three strategic options that will enable you to strengthen your competitive position with Company Y and/or Company Z At least 1 must deal with Company Y, and at least 1 must deal with Company Z. You must explain how each option is consistent with your best-cost provider strategy and how each option will enable you to maintain or increase profitability and/or market share.Explanation / Answer
A. Company A will face difficult times from Company Y which has adopted broad differentiation strategy by offering unique product attributes that customers want and look in the market which is superior from Company A. It will result in the shift of customers from Company A to Y. Customer retention is the first marketing policy, it is very difficult to gain customer loyalty and once customers left interest in your product it will take huge time and efforts to regain their trust. Thus, most difficult challenge Company A facing from Y is customer loss because of more unique and new products offered by Y.
Company Z using low cost strategy will compete in prices focusing on market penetration and price being the most important factor behind purchase decision, it will put company A in a serious problem of chances of losing market. Thus, it is very important for long run for company A to make changes in its strategy and compete with both Y and Z, otherwise it will go into losses after sometime.
B. Company A being the best cost provider company, have achieved this position by offering quality products at genuine cost. Thus, a differentiated plus cost effective strategy should be adopted by company A to show its customers that its products range are different and unique from its competitors and provide best cost price for them. Company A should motivate its customers with the feeling of product attachment and loyalty which they are offering to them for many years which cannot be competed by anyone. In this way, Company putting forward its loyalty tag can save its market share and profitability from Y.
Company Z offering at low prices will ultimately leave customers with a dilemma about the product quality which can be taken as a target strategy to maintain A’s position in the market. Marketing should be done like that- “WE CANNOT COMPROMISE IN QUALITY, BEST QUALITY-AFFORDABLE PRICES (NOT CHEAP PRICES)”. Such kind of advertising will put a positive mark on customer regarding quality and genuine price which can prove an important step to maintain company A’s market and profitability.
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