A). Pricing strategy is sometimes taken as the part of the marketing strategy which can have a great impact on the profit of the company, which should be given equal status as the promotion and strategies of advertising. When there is difference in the price margin that is the price is high or low then it can dramatically change both of the sales volume and gross margins. There is a deep effect on the other expenses by reducing the cost of storage for an instance creation of discounts with the support of suppliers.
There are many other factors for the optimal pricing strategy where five forces should be considered and the other business decisions are also influenced such as suppliers, competitors, customers and availability of the substitute products. The positioning is perceived by the target audience which is also considered and the price of the premium item is very low and the customer would not believe that the quality is that high. Equally, if we put our selling price too high on value lines and the competitor low price item will be purchased by the customers. There are many pricing strategies which are worth considering as competitive pricing is considered as the benchmark for our own prices and the prices which are slightly below as compared to the competitors may depend on the positioning strategies. There is also another term which is known as Loss Leader that is an item which we sell at or below the cost in order to draw more and more customers which will also buy high profit item which is considered as good short term promotion. This pricing strategy will try to increase the demand in addition with the market share. (Bobette, 2010)
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B). The pricing strategy helps in lowering the cost or maintaining the cost or increment in the demand of the product. The learning effect will eventually help in lowering the average costs or increasing the profit or demand as there are many factors in the learning effects for instance labor productivity, management efficiency and learning effect can shift the shifting of cost curve to the downward side. Pricing strategy is basically the part of the marketing strategy which can help in reduction in the average costs and can better lower the defection rates of the customers. Material management is another technique through which we can reduce the cost through the opportunities and JIT that is Just in time which is used in holding costs by the components which arrive prior to the need in the production sector and finished goods are arrived just prior to the stock out. There is another familiar term supply chain management which manages the flow of the inputs to minimize holding of inventory and maximize the turnover of the inventory. A research and development sector is used to boost efficiency by making the products which are easy to manufacture which can reduce the number of parts and which requires the close coordination of the Research and development department and the production sector. There is a lowering in cost by the innovations in the cost by reducing the number of process setup times and flexible manufacturing and which is considered as an important source of competitive advantage.
A). There are two terms which are used in the competitive advantage one is the competitive advantage itself and other is Sustained competitive advantage. Competitive advantage is the profitability of the firm which is much greater than the average profitability within its industry instead sustained competitive advantage is the superior profitability and the growth in the profit over the number of years. Now if we talk about the factors then there are many factors which can affect the durability of the competitive advantage or the factors on which the competitive advantage is based on the barriers to limitation which is very difficult to copy the various competencies which are resources and capabilities which is considered as the first durability of the competitive advantage. There is capability in the competitors which is based on the strategic commitment and the absorptive capacity which is considered as the second factor in the competitive advantage. The Industry dynamism is the last and the third factor which is known for the rapid change ability. There are many competitors which are seeking various competencies which can give them an extra competitive edge. There are also many factors for the sustaining competitive advantage which are focus on the building blocks and overcoming the inertia which are the main factors in avoiding failure in the competitive advantage.
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B). There are mainly two types of resources which are involved in the tangible and intangible assets. The intangible assets are used to raise the barriers to the limitation and in the sustainment of the competitive advantage. The intangible assets are also considered as the non physical entities which are created by the managers or the other employees that are employee knowledge, intellectual property, brand names and experience which may also create limitations to the barriers. The employee knowledge is also considered as an important tool for the competition in the market and helps in building the sustainable competitive advantage for the firm within the industry. The brand name is also of mere importance as it helps in building the reputation of the company which can come out through the barriers which are being faced by the company.
The company reputation and the brand name is closely related if one of them gets disturbed it will spoil whole of the reputation. There are many barriers in the way of the competition within the market as there are many things which are faced by the firm to improve their efficiency. The intangible assets are merely different from the tangible assets instead that the tangible assets are the physical entities. So these were the limitations to the barriers and the sustainable competitive advantage.
The innovation is considered as the building blocks of the competitive advantage and counted in it. There are two terms involved in the innovation that is product and process which needs innovation in it to make the competitive advantage within the industry, if the firm needs to gain advantage in the competition. When we bring innovation in the products then there is competitiveness created inside the competitors so as to bring innovation in the process also brings the same changes. The innovation is also considered as the main building block of the competitive advantage and it also helps in lowering the average cost and in the differentiation. There are many other factors along with the superior innovation such as superior efficiency, superior customer responsiveness and superior quality which also plays an important role along with the innovation sector. There are many examples taken from the different companies to prove the competitive advantage through the innovation.