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Essay / Research Paper Abstract
This 5 page paper examines why cost leadership is relevant and to what extent. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: RG13_SA01145cst.doc
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Unformatted sample text from the term paper:
of the marketing mix. Yet, pricing is something that is accomplished in conjunction with the particular market, the product, and the industry in which the product falls, in addition to
other factors. Pricing something low such as milk for example has its advantage. People will purchase the lower cost commodity. Yet, pricing a luxury item low on some level takes
away from its mystique. The key to pricing is not always to be a cost leader, but to price a product appropriately for the market and the timing of entry
into the market. First, it is important to define cost leadership. Porter (1998) explains cost leadership as follows: "In it, a firm sets out to become the low-cost produce
in its industry" (12). In other words, a firm decides that it can become more successful if it prices its wares below the going rate. There are many industries that
see price wars from soda to airline tickets to toys, but in some industries again, a low price may not be attractive. Someone with expendable income may be shopping for
clothing and reject a clothing line that is less expensive because they perceive it as being less valuable. E-books, for instance, are priced around the ten-dollar mark, but books that
are significantly lower are often perceived as being of a reduced value and people may not be as likely to buy them. It is somewhat important however for management
to achieve cost leadership in several product markets. While perceived value again is not necessarily aligned with a cost leadership strategy, in todays world, goods that are sold at a
fair or low price, and contain value, often are sold at a greater volume. Thus, in many circumstances, cost leadership is a good strategy. An example of a firm that
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