Strategies to fight low cost companies
Strategies to fight low-cost companies
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Companies’ business strategies can be divided into two big parts- Product differentiation and Cost leading. To survive in the competition-intensified market, companies always concern about their strategies for the future. Many new entrants are armed with low-cost and low-price strategy and incumbents have to deal with this situation. As number of newly-entering firms is increasing, cost war gets fierce. This article is asking whether following low-cost strategy works for existing companies or not.
The author said that there are some characteristics for companies who are earning money with low-cost strategy. The examples for those characteristics are focusing on single or limited number of segments, building a low-cost business model with super-efficient operations and so on. The writer gives a case of Aldi, the German supermarket chain. I have bought some stuff at Aldi when I was in UK, and I thought that Aldi built a low-cost strategy successfully. When I buy something to eat, I observed that the price of London and Birmingham are slightly different. However, Aldi doesn’t sell things at local price but at constant price regardless of the region. Also, they have many checkout counters, so the queues were relatively short.
Although there are several ongoing price wars in the market, incumbents should diagnose their positions objectively, so that they can find countermeasure for the situation. Like the author said, customers are being cynical to the brand name, so this is being advantageous for low-cost companies. Existing companies should not jump into this price war in haste. It is better for them to watch-and-wait at first, and then set up the strategies. If the companies conclude that they cannot survive with the low-cost strategy, they will try product differentiation tactics for survival. Differentiation makes incumbents or market leader coexist with the low-cost start-ups. Differentiation can be fulfilled in
Name here
Companies’ business strategies can be divided into two big parts- Product differentiation and Cost leading. To survive in the competition-intensified market, companies always concern about their strategies for the future. Many new entrants are armed with low-cost and low-price strategy and incumbents have to deal with this situation. As number of newly-entering firms is increasing, cost war gets fierce. This article is asking whether following low-cost strategy works for existing companies or not.
The author said that there are some characteristics for companies who are earning money with low-cost strategy. The examples for those characteristics are focusing on single or limited number of segments, building a low-cost business model with super-efficient operations and so on. The writer gives a case of Aldi, the German supermarket chain. I have bought some stuff at Aldi when I was in UK, and I thought that Aldi built a low-cost strategy successfully. When I buy something to eat, I observed that the price of London and Birmingham are slightly different. However, Aldi doesn’t sell things at local price but at constant price regardless of the region. Also, they have many checkout counters, so the queues were relatively short.
Although there are several ongoing price wars in the market, incumbents should diagnose their positions objectively, so that they can find countermeasure for the situation. Like the author said, customers are being cynical to the brand name, so this is being advantageous for low-cost companies. Existing companies should not jump into this price war in haste. It is better for them to watch-and-wait at first, and then set up the strategies. If the companies conclude that they cannot survive with the low-cost strategy, they will try product differentiation tactics for survival. Differentiation makes incumbents or market leader coexist with the low-cost start-ups. Differentiation can be fulfilled in