Business Studies – 3.1.2 Understanding market changes | e-Consult
3.1.2 Understanding market changes (1 questions)
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When facing increased competition, a business has several strategies to maintain or increase its market share. Here are three examples, along with their advantages and disadvantages:
| Strategy | Advantages | Disadvantages |
| Product Differentiation | Creates a unique selling proposition, allowing for premium pricing. Builds brand loyalty. Less susceptible to price wars. | Requires significant investment in research and development. Difficult to maintain differentiation over time. Competitors may copy features. |
| Improved Customer Service | Builds customer loyalty and positive word-of-mouth. Can justify slightly higher prices. Creates a competitive advantage that is difficult to replicate. | Can be expensive to implement (training, staffing). Difficult to measure the return on investment. May not be effective if product quality is poor. |
| Aggressive Marketing & Promotion | Increases brand awareness and market share. Can quickly gain market share from competitors. Provides a direct way to communicate value to customers. | Can be expensive. May lead to price wars. Requires careful targeting to be effective. Can be perceived as aggressive or misleading if not done ethically. |
(6 marks)