critical note 2

critical note 2 - and potentially alienate them. Take...

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Porter has concluded that there are two basic generic strategies differentiation and price leadership. Though it seems logical that this would be a business strategy it is illogical strategy. Firstly, it is hard to maintain a cost leadership it requires incredible amount of core competencies. You have to stay on top of everything in the industry to maintain such a strategy. Thus, in the ultra competitive markets of today I believe this is not an extremely effective strategy. Second, following this strategy can lead to price wars that could end up bankrupting your company if you are not well equipped to fight another company or companies. Additionally, price though an important factor when choosing a product is often times to consumers a part of perceived quality. The majority of consumers believe that the more expensive a product is the better it is; thus, following such a strategy would completely undermine consumers’ perceptions
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Unformatted text preview: and potentially alienate them. Take Mercedes for an example they are currently introducing a Hybrid. They put a price tag of $100,000 on this product. Mercedes is already a luxury brand and its customers and potential market are extremely fussy. Thus, implementing such a strategy will clearly undermine your customer base. While theoretically, it sounds good to be a price leader it is hard to implement and sustaining it is even more difficult. Additionally, there can only be one price leader and usually it will be an early entrant into the market since they have been there and know the dynamics they can easily cut costs in several places. However, for the majority of businesses it is simply not a plausible course of action. Ewing, Jack. The German Hybrids are Coming Business Week Vol. 60 Issue 41. October 6, 2008....
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