are levers that managers can utilize to increase a customer's perception of value and willingness to pay for a product or service.
E.g. customer service, size, color, materials, performance, image, exclusivity, brand , reliability, speed, etc.
Sets found in the same folder Recommended textbook solutionsPrinciples of Economics
8th EditionN. Gregory Mankiw
1,335 solutions
Introductory Business Statistics
1st EditionAlexander Holmes, Barbara Illowsky, Susan Dean
2,174 solutions
Statistics for Business and Economics
13th EditionDavid R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams
1,692 solutions
Century 21 Accounting: General Journal
11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman
1,012 solutions
If a new entrant with new and relevant expertise enters the market, the low-cost leader's margins may erode due to loss in market share while it attempts to learn new capabilities. For example, Walmart faces challenges to its cost leadership. Dollar General stores, and other smaller low-cost retail chains, have drawn customers who prefer a smaller format than the big box of Walmart. The risk of replacement is particularly pertinent if a potent substitute emerges due to an innovation. Leveraging ecommerce, Amazon has become a potent substitute and thus a powerful threat to many brick-and-mortar retail outlets including Barnes & Noble, Best Buy, The Home Depot, and even Walmart. Powerful suppliers and buyers may be able to reduce margins so much that the low-cost leader could have difficulty covering the cost of capital and lose the potential for a competitive advantage.
The low-cost leader also needs to stay vigilant to keep its cost the lowest in the industry. Over time, competitors can beat the cost leader by implementing the same business strategy, but more effectively. Although keeping its cost the lowest in the industry is imperative, the cost leader must not forget that it needs to create an acceptable level of value. If continuously lowering costs leads to a value proposition that falls below an acceptable threshold, the low-cost leader's market share will evaporate. Finally, the low-cost leader faces significant difficulties when the focus of competition shifts from price to non-price attributes.
Recommended textbook solutions
Mathematics with Business Applications
6th EditionMcGraw-Hill Education
3,760 solutions
Intermediate Accounting
14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
1,471 solutions
Business Math
17th EditionMary Hansen
3,734 solutions
Fundamentals of Financial Management, Concise Edition
10th EditionEugene F. Brigham, Joel Houston
777 solutions
Recommended textbook solutionsBusiness Math
17th EditionMary Hansen
3,734 solutions
Mathematics with Business Applications
6th EditionMcGraw-Hill Education
3,760 solutions
Mathematics with Business Applications
6th EditionMcGraw-Hill Education
3,760 solutions
Marketing Essentials: The Deca Connection
1st EditionCarl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese
1,600 solutions