Exam 5: The Five Generic Competitive Strategies: Which One to Employ

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A low-cost provider strategy is attracti...

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A) Delivering value to customers via competencies and competitive capabilities that rivals don't have or can't afford to match
B) Incorporating features that raise product performance
C) Incorporating product attributes and user features that lower the buyer's overall costs of using the company's product
D) Appealing to buyers who are sophisticated and shop hard for the best, stand-out differentiating attributes
E) Incorporating features that enhance buyer satisfaction in intangible or non-economic ways

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A) there are many ways to differentiate the product or service and many buyers perceive these differences as having value.
B) most buyers have the same needs and use the product in the same ways.
C) buyers are susceptible to clever advertising.
D) barriers to entry are high and suppliers have a low degree of bargaining power.
E) price competition is especially vigorous.

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A) buyers are not very brand-conscious.
B) most rivals are trying to be best-cost providers.
C) there are many ways to achieve product differentiation that have value to buyers.
D) buyers are large and have significant power to bargain down prices and buyers use the product in much the same ways.
E) most rivals are pursuing focused low-cost or focused differentiation strategies.

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A) appeal to the high end part of the market and concentrate on providing a top-of-the-line product to consumers.
B) incorporate a greater number of differentiating features into its product/service than rivals.
C) lower buyer switching costs.
D) outspend rivals on advertising and promotion in order to inform and convince buyers of the value of its differentiating attributes.
E) be unique in ways that are valuable and appealing to a wide range of buyers.

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A) A low-cost leadership strategy
B) A broad differentiation strategy
C) A best-cost provider strategy
D) A focused low-cost provider strategy
E) There is no such thing as a "best" competitive strategy; a company's "best" strategy is always one that is customized to fit both industry and competitive conditions and the company's own resources and competitive capabilities.

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A) the chance that niche customers will bargain more aggressively for good deals than customers in the overall marketplace.
B) the potential for the preferences and needs of niche members to shift over time towards many of the same product attributes and capabilities desired by buyers in the mainstream portion of the market.
C) the potential for the segment to be highly vulnerable to economic cycles.
D) the potential for segment growth to race beyond the production or service capabilities of incumbent firms.
E) All of these.

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B

A) study buyer needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for.
B) incorporate more differentiating features into its product/service than rivals.
C) concentrate its differentiating efforts on marketing and advertising (where almost all differentiating features are created) .
D) have a widely known and highly respected brand name image.
E) provide a top-of-the-line product and sell it at premium prices.

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A) avoid having to compete on the basis of simply a low price.
B) charge a price premium for its product.
C) increase unit sales.
D) gain buyer loyalty to its brand.
E) All of these.

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A) cutting its price to levels significantly below the prices of rivals.
B) either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold.
C) going all out to use its cost advantage to capture a dominant share of the market.
D) spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry-it can then use this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long-term.
E) outproducing rivals and thus having more units available to sell.

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A) of the diversity of buyer needs and preferences.
B) buyers seldom will pay for value they don't perceive, no matter how real the value of the differentiating extras may be.
C) buyer satisfaction can be enhanced by clever ads that signal value that relates to the buyer.
D) differentiation is all about smoke and mirrors.
E) there are no other ways to differentiate a commodity product.

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A) underprice rival brands with comparable features.
B) tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features.
C) out-advertise rivals and make frequent use of discount coupons.
D) emphasize selling direct to end-users and promoting personalized customer service.
E) communicate the product's ability to serve the customer's every need.

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A) be the industry's best-cost provider.
B) set the industry ceiling on price.
C) avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low.
D) command a premium price for its product, and/or increase unit sales, and/or gain buyer loyalty to its brand.
E) take sales and market share away from rivals by undercutting them on price.

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A) buyer brand loyalty is low.
B) buyer needs and uses of the product are diverse.
C) new and improved products are introduced only infrequently.
D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their products on most of the same features and attributes.
E) price competition is vigorous.

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B