Question

Business-Level Strategies

1.    What is differentiation? How can a firm be successful by pursuing a differentiation strategy? What are some of the risks associated with a differentiation strategy?

2.    What is a cost leadership strategy? How might a firm pursue it? What are some of the risks associated with this strategy?

    3.    Explain Best Cost, Focus Strategy, Offensive and Defensive tactics.

4.    Explain how strategy changes during the four stages of a product’s industry life cycle?

Answer 1

Answer 1=Differentiation can be stated as making the products or services different from that of the competitors. The differentiation strategy can be used by the organizations in order to have competitive advantages with the different product or service traits that are considered as valuable by the customers if the company can achieve these attributes better than the competitors. In fact, the differentiation can be used by using any element of the product or service.

The main risks that are involved with the differentiation strategy are that these features can be copied by the competitors and any change in the taste and preferences of the customers. Apart from this, a greater extent of differentiation can be accomplished by the organization of the competing firms uses the focus strategy

Answer 2= The cost leadership strategy is one in which the firm offers the products or services at a relatively lower than the competing products or companies but still the average industry price is maintained. The main disadvantage of this strategy is that some of the competitors can also lower their price by compromising their profit margin and thus the effectiveness of this stagey may be lost. This can also result in a price war and this can hamper the profitability and R&D investment.

Answer 3= The focus of the best cost strategy is on offering the customers better value for the money by highlighting both the lower price and higher value differentiation.

A focus strategy can be seen as the marketing strategy in which an organization tries to focus all of the resources on either entering or expanding its market in a narrow industry segment.

An offensive strategy is the utilization of various marketing elements that are directed to the market leader to capture its market share. On the other hand, the defensive strategy is the different methods that are used by the companies to secure and prevent the slipping of existing market share to the competitors.

Answer 4= During the introduction phase the focus of the strategy remains on spreading awareness about the products and instigate the customers to have the trial of the product.

In the growth phase, the company tries to modify its products to differentiate itself from the competitor and extensive marketing campaigns are run.

In the maturity phase, more sales promotion activities, product modification is done to boost sales.

At the decline phase, the focus of the strategy is to earn as much as return from the product and some of the products are taken out of the market and a lot of sales promotion activities are run

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