They have done so by consistently outperforming other “industry giants” like Walmart and Target by providing high-quality products to customers at lower prices. They maximized the return on a number of factors such as pricing, store layout and design, store locations, advertising and marketing philosophies and more. According to Jim Sinegal, in the end, it boils down to just treating people right and providing a consistently good quality product at an affordable price. Because of their ability to make the best use of these key factors, they have built themselves into a successful company with a global
Furthermore, it eases of switching between different airlines companies. Therefore, for airlines they need to keep customers in the fold by providing air miles system to gain customers' attention and retain them. Threat of a Substitute Products or Services The threat of alternatives is comparatively low. However the how the service is used in different parts of the world is the driver of substitutes in the
Following are the strategies that the company followed to remain a market leader in the industry; • Mass Production at Low Cost The company ensured that it produces in large quantity so as to gain benefit of economies of scale and reduce costs. It allowed the company to save cost and reduce unit costs which was very useful in a competitive market as it allows the management the flexibility over price without affecting gross profit margin. • Extensive Advertising It was company policy to do extreme advertising as they regarded marketing as essential factor in success. The company was able to start innovative marketing campaign at the beginning of its creation where it targeted the customer needs. With use of its marketing campaigns, the company was able to secure enough customer loyalty that the customers were not trying new products even though these were of better quality.
They need enforced distinctive cost-saving methods in their production, operations, and selling that have allowed them to draw in the foremost affluent customers in discount selling. The central focus of their business model turned around high sales volumes and fast inventory turnover by giving fee-paying members beautifully low
Costco looks to buy from local suppliers in order to cut down on distribution costs and appeal to the local tastes. This also benefits the local economy by supporting local businesses which in turn benefits Costco. Another reason why Costco globalizes is to stay ahead of its competitors, which prevents them from being a threat in the future. By expanding its market reach far and wide, Costco is safer from shifts in the market related to prices and products. It has many inflows of profit from all of its stores that it can rely on.
They concentrate on a smaller selection of choices for one kind of product but make up for the fact with competitive prices and quality. Over there many years of being in service, they have developed a loyal customer base. Costco’s continued ability to provide quality products at a lower price continue to keep and recruit new customers (Kissinger, 2017). Costco is also known to treat their employee’s well, offering them wages that exceed its competitors. On top of that they provide their employees with a great benefits.
Quality vacationers: These customers treat the travel as a part of their holiday experience and therefore they fly with carriers that provide extremely superior services. Frugal flyers: These types of customers tend to seek out the lowest-cost carriers for economic reasons, but still expect their flight experience to be a good
easyJet uses cost advantage as well as network positions in strong markets to deliver low fares and operational efficiency on point-to-point routes, with their people making the difference by offering friendly service for their customers. Southwest Airlines
Those benefits can build a good relationship with the customer because they like to pay less and get many benefits to purchase products and services. Furthermore, customers may find lower prices or higher discounts with a small number of firms in the oligopolistic market. The others will also cut prices to prevent losing their market share when a business started to cut down its price. Firms might have to sacrifice some profits in order to keep customers or reduce the rivals while lower prices to benefit consumers. For example, customers can find discounted air fares which allow them to enjoy the best flight deals with Air Asia.
Where an airport has significant market power incentive-based regulation is the only price regulation that will deliver efficiency gains. Airports usually have high credit ratings and can bear risk more easily than airlines. Regulation should be designed to facilitate this. Standards Poor passenger experience with check-in and security processes is another factor leading to a commoditization of the airline product and a low customer willingness to pay. Standards being introduced and proposed by the fast travel and checkpoint of the future programs and others could play an important role in improving passenger experience and willingness to