Give one example of a service firm that either uses a focus/differentiation stra

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Explanation / Answer

Focus/cost leadership strategy

This kind of strategy requires competing based on price to target a market

A clear example is the company Redbox that allow its customers to rent DVDs at a really low price $1 and these machines are usually located outside grocery stores or retail stores.

As you already know there are plenty of other ways to watch a movie today like Netflix for example but Redbox stays on business due to its low prices and accessibility to everyone. Netflix requires people to pay a subscription every month and there are potential customers who enjoy watching movies but don’t want to pay a monthly subscription, they just want to watch a specific movie that is high quality.

There is certainly high complexity to this business due to the fact that the company most have the rental stations on many places in order to get to customers, the company makes profit by volume. If Redbox only had 10 rental boxes in 1 city they wouldn’t have much profit because $1 per movie rental will not give them much margin. The complexity is to locate the rental boxes on several locations across the country and keep up to date with the new releases because people have higher demand for the latest movies.

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