Low Cost or Differentiation

Topics: Sales, Customer service, Marketing Pages: 2 (373 words) Published: March 22, 2013
1. Using scenario planning, analyze the pros and cons of each alternative. Alternative of low cost
* New traffic for budget conscious customers
* More sales volume
* More needed space to hold product
* Less product available because selling product faster
* More labor required for replenishment of inventory and store front * More disgruntled employees from sheer volume of customers * High employee turnover from stress

Alternative of differentiation
* Highlights company strengths and niches
* Attract target customers
* Higher revenue per transaction
* Lower cost because specialized inventory needs less space Cons
* Alienate customers that can’t afford higher cost of product * Higher market risk because business is less diversified

Alternative of using both low cost and differentiation
* More customer volume
* More diversified customer base
* More opportunities through greater sales options
* Need more space
* Labor will feel more drained due to employees needing to have more product knowledge on a higher volume of product * Low cost diminishes the prestige and experience of the high cost * Low cost stigma diminished by expensive product

2. Think about the various clothing retailers in your local malls and city, and analyze the choices they have made about how to compete with one another along the low-cost and differentiation dimensions. Low cost

Macy’s has gone to lower price points and over time lost prestige in the market. Macy’s has attempted to go for more volume but because of the recession was always empty whenever I walked into the store. They stopped lower cost because they didn’t want to lose appearance of the go to fashion locale, instead they were being viewed as the cheaper last season stop. Macy’s is now trying to stop the decline in their reputation but are still stuck in the middle, like the example in the book. Differentiation

Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Low Cost and Differentiation Strategies Essay
  • Low Cost Essay
  • Differentiation vs. Low Cost Provider Essay
  • Case Study
  • The High Cost of Low Expectations Essay
  • Future of Low-Cost Airlines Essay
  • Low cost Carrier Essay
  • Essay about Low Cost Strategy

Become a StudyMode Member

Sign Up - It's Free