What are some of the advantages and disadvantages of competing on price alone?
The advantages of competing on price alone include that, first, it makes distributors friendlier to the products of the company. Competition based on pricing encourages the distributors to create a good relationship with the company’s products because they are priced at the choice they can handle. The company may put the price above or below the equilibrium point depending on the price of their competitors in the market thus influencing many customers. This will lead to a company increasing its sales because the pricing policy will enable the company to make a selection from different pricing strategies. Competition-based pricing signals the kind of buyers to purchase the products even if they get or do not get the premium quality that they pay for from their products.
Secondly, customers’ needs are satisfied through provision of unique benefits. This will in turn create more customers who will purchase more products hence the company may increase its sales. In case the company is selling high quality products, they will be considered through a testimonial from other customers. Even though its quality or customer service care is good, the company may need to create a perceived value by differentiating its products. This will logically create more value other than price alone thus satisfying customers (Kardes, Cronley, Kellaris & Posavac, 2004).
The disadvantages of competing on price alone include that, first, it is a risk venture. Competing on prices may lead to losses resulting from lowering the price of the products. Lower profits narrow the profit margins hence the company may be forced to operate at a higher cost. This may eventually lead to a closure of the company, or the company borrowing money to meet its operational costs. Competition achieved from lowering product prices is a risk factor because the company may not increase on their profits. This is because the company may be forced to keep reducing the price once their competitors also lower their own prices hence affecting the business adversely (Hausler, 2011).
In addition, there will be a reduction of wages and benefits. This will affect the current employees financially and some workers may become less productive and loyal. Employees may become less industrious because of reduced wages hence affecting the output negatively. For instance if the company was producing high quality products in large quantities, it will be forced to reduce its production rate and sometimes compromise on the overall quality of products. This will consequently lead to reduction of products in the market hence the company may end up losing its potential customers.
What conditions are necessary for successfully competing on a low cost strategy?
The conditions that are necessary for successfully competing on a low cost strategy include, first, establishing product pricing strategy. Companies should thus adjust their prices in response to their competitors before setting the price. This is beneficial because they will compete on a low cost and the customers will frequently be ready to purchase products at a higher price. This is because customers may want to avoid associated risks of switching from one product made by the company to another. Thus, the company may continue to compete with their entrants but on low cost thus avoiding making losses (Potter, 2004).
Nevertheless, the company may implement a different pricing strategy that will enable them to compete meanwhile maintaining their market shares and profits. The company may hide their actual prices from that of the competitors through setting complex prices. This strategy makes it hard for the customers to compare the market price. This is advantageous to companies that want to compete on a low cost with entrants that have lower prices for their products. Examples of companies that use this strategy are telephone companies that charge both fixed and per-minute price charges on every call made.
Another strategy is through carrying out market research. The company may carry out market research especially on the most powerful low-cost competitors in the industry in which it operates. This is essential because it will enable the company to make assessments on the implications that may arise when competing with emerging low-cost industries in the market. Market research will enable the company to set effectively the price in the market that will not affect the operational costs (Potter, 2004). Consequently, it will enable the company to set the price below or above the equilibrium point that will not cause any negative effect to their business and their customers.
Think about a company whose website you use frequently (Golf Channel). Does their website support their goals?
The Golf Channel website (http://www.thegolfchannel.com/) does indeed support the company’s goals through marketing their services that they provide in the golf domain. The website has developed golf and affiliate projects very well through providing clear market communications on a wide range of activities on its site. Their website has become a great tool for supporting golf as it reaches large audiences globally within a short period. This has contributed to The Golf Channel getting more customers because of the provision of good services provided through its distribution avenues. On the other hand, a push strategy emphasized on advertisements made on the website has led to its success in the business world.
In addition, another supportive element demonstrated is through advertisements on the unique and brand services offered in the sport of golf. Advertisements are circulated through mass channels and the messages passed across on the website are helpful in promoting and improving business. The Golf Channel relies on SMT technology to deliver its information and to enable it successfully address many customers globally. The golf travel guidelines and other services that are provided are done through advertisements in this and other collaborative channels. These channels provide contact information in case the customer wants further help, whereby he or she can contact The Golf Channel hence helping to achieve the goals of the company.
Is it easy to navigate?
It is easy to navigate because the channel provides numerous and comprehensive information about the best places to get various golf products, services and events worldwide. It provides accessible services especially with unique golf and travel trademarks. Access to golf travel areas provides a foundation to an individual in which he or she can build out an online travel business. The website presents widespread travel areas where customers can find the information easily and services that enables them to book their golf vacation.
Is contact information clearly displayed?
It is easy contact The Golf Channel because their contacts are displayed in every advertisement made on their channel. The network covers many things including business and sports advertisements, champion tour tournaments and the PGA tour and in every page, the contact information is displayed. This information will have a global reach thereby accessibility has to be a key consideration. The Golf Channel also presents news and talk shows and entertainment programs. The website also has a marketing mix system with other websites that present golf news and other features about the sport. These collaborative channels have contact information linked off The Golf Channel that is clearly displayed.
Hausler, D. (2011). Marketing Communication. Retrieved on May 16, 2011 from
Higgins, D., Burrows, C. and Klores, D. (February 04, 2010). Golf Channel Tees up Dedicated
Online Travel Platform with Launch of New Travel Golf Brand. WorldGolf. Retrieved on 16 May 2011 from http://www.worldgolf.com/newswire/browse/61879-GOLF-CHANNEL-tees-dedicated-online-travel-platform-launch-new-TravelGolf-brand
Kardes, F. P., Cronley, M. L., Kellaris, J. J., & Posavac, S. S. (2004, January 01). The Role of
Selective Information Processing in Price-Quality Inference. The Journal of Consumer Research, 31, 2, 368.
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