Assignment No.1
MGT 613
"Competitive Advantage" is defined by the APICS Dictionary as: "The advantage a company has over its rivals in attracting customers and defending against competitors. Sources of the advantage include characteristics such as a manufacturing technique, brand name, human skill set, etc. that a competitor cannot duplicate without substantial cost and risk."
Michael Porter outlines four generic areas that a competitive advantage may come from.
Differentiation and cost leadership strategies seek competitive advantage in wide market or industry ranges. Differentiation strategies and cost focus strategies are used n a narrow market or industry. The Differentiation strategy of a business is a predetermined set of actions designed to produce and deliver goods or services to Customers who perceive the company's offering as different not just different, but different in a way that is important to the customer.
This means meeting your customer's unique needs with nonstandard products in a way that gives your company a competitive advantage. With hyper-competition in a global market, being unique and having a strong business differentiation strategy are important. Any company
has two basic ways to complete:
Either with low prices or with a strong differentiation strategy that allows higher prices. Because of the global market there will always be someone who can sell your product or service for less. Differentiation therefore becomes necessary for business survival.
Differentiation strategy involves addressing the point of pain or performance gap felt by buyers in a market. A wise business owner will meet the criteria and then position the company uniquely to meet the needs of buyers. These products are often "top of the line" and to reflect
increased cost to the company, Prices are usually at a premium. Higher prices are necessary to cover higher production costs and extra, value- added features for the customer. A company employing a differentiation strategy gives customers a clear reason to choose them.
The first element of the strategy is the idea that makes your business different. The next challenge is explaining why you can deliver what you promise. Many companies find it helpful to include testimonials and credentials. The third step, awareness, must be considered in all
marketing campaigns. When you have the ability to view your business and competition from an objective viewpoint, the differentiation necessary to separate yourself and your product or service becomes clear. First, determine precisely what your current positioning and how you could improve. Then determine your exact advantage. How can you improve your difference and separate yourself further from the competition? How can you better convey that difference? A strong business differentiation strategy is fundamental to a successful business.
Distribution channels moves products and services from business to consumers and to other businesses. Also known as marketing channels, channels of distribution consist of a set of interdependent organizations such as wholesalers, retailers and sales agents involved in making
a product or service available for use or consumption. Distribution channels are just one component of the overall concept of distribution networks, which are the real, tangible syatems of interconnected sources and destinations through which products pass on their way to final
consumers.
BENEFITS OF INTERMEDIARIES
In selling directly from the manufacturer to the consumer was always the most efficient methodology for doing business, the need for channels of distribution would be obviated. Intermediaries, however provide several benefits to both manufactures and consumers:
Improve efficiency, a better assortment of products reutilization of transactions and easier searching for goods as well as customers. The improved efficiency that results from adding intermediaries in the channels of distribution can easily be grasped with the help of a few
examples. Take five manufactures sells directly to each retailer, there are 100
contacts lines one line from each manufacturer to each retailer. The complexity of this distribution arrangement cab be reduced by adding wholesalers as intermediaries between manufacturer and retailers. If a single wholesaler serves as intermediary, the number of contacts is reduced from 100 to 25: Five contact lines between the manufacturers and the wholesaler, and 20 contact lines between the wholesaler and retailers. Reducing the number of necessary contacts brings more efficiency into the distribution system by eliminating duplicate efforts in ordering, processing, shipping etc. In terms of efficiency there is an
effect of diminishing returns as more intermediaries are added to the channels of distribution. If in the example above , there were three wholesalers instead of only one, the number of essential contacts increases to 75:15 contacts between five manufacturers and three wholesalers, plus 60 contacts between the wholesalers and 20 retailers. Of course this example assumes that each retailer would order from each wholesaler and that each manufacturer would supply each wholesaler. In fact geographic and other constraints typically eliminate some lines of contact making the channels of distribution more efficient.
We can identify the following common and widespread ways in which organizations can compete against other organizations.
1. Price: In our day to day routine observations, we often see that a lower price would attract more customers provided the product or service fulfils its intended use. Lower price helps an organization to increase its customer base.
2. Quality is an important dimension by which superior raw materials as well as high Skillman ship would ensure that product manufactured or service developed is offered to the customer with something extra. That something extra is nothing else but Quality. Quality is always offered free of cost, we will discuss this when we study in details Quality Management and Total Quality Management.
3. Product Differentiation refers to special features that make the product or service look more suitable to the customers like an automobile manufacturer decides to provide GPS system to selected customer at an additional price etc.
4. Flexibility is the ability to respond to changes. It may refer to changes in target sales, product feature like adding GPS device to all automobiles
5. Time refers to the period required to provide a product or service to a customer from the moment the order is booked to the delivery, also time required to rectify a shortcoming or mistake
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2nd woh jiss ko tum ney har dukh me pukaara hoo (Mother)
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