Question

Compare and contrast the two ways that companies create unique value for its customers.

Please do the following:

A. Describe each strategy and how a company financially outperforms its competitors (or wins) by using that strategy.

B. Describe one source of the advantage for each strategy.

C. Provide an example of one company that uses one of the strategies, and a separate company that pursues the other strategy.

Answer 1

There are mainly two strategies which can be used by the firms to create value for its customers and these are enlisted below:-

By the product feature

By pricing strategy

Answer a:- When the company follows the product features in order to create values for its customers, the main focus remains on providing the latest technology and performance parameters in the product which are not present in the rival products. This provides an opportunity to the company to attract those customers who are looking something new and thus by focusing on new technology and product features, the company can enjoy the financial advantage and upper hand by winning improved market share.

On the other hand, by offering the product at the lower cost than the competitors, the company may attract price-sensitive customers towards itself and thus enjoying the financial upper hand by having improved market share.

Answer b:- in case of product features, the source of advantage is the latest technology and innovative features while in case of pricing strategy, the source of advantage is economies of scale or cheaper resources

Answer c:- Apple iPhone can be seen as the example of the company which focuses on the product feature while Wal-Mart can be seen as the example of the company which focuses on a pricing strategy to attract the customers.