What is Cost Leadership? Definition of ... - The Economic Times

Definition: Cost leadership is a term used when a company projects itself as the cheapest manufacturer or provider of a particular product or commodity in a ... Nifty17,511.30-5.55IDBIBank53.955.3MiraeAssetEquitySavingsFundDirect-Growth16.84% InvestNowMiraeAssetHybridEquityFundDirect-Growth17.11% InvestNowMarketWatchSearch+HomeETPrimeMarketsNewsIndustryRISEPoliticsWealthMFTechJobsOpinionNRIPanacheETNOWMoreBusinessNews›Definitions› Marketing ›CostLeadershipCategoriesGlossaryEconomyEquityInsuranceBudgetMarketingMutualFundSpaceTechnologyTestingHumanResourceFinanceSecurityRealEstateCommoditySportsSoftwareDevelopmentAnalyticsEntertainmentHRTransportationAstronomyShippingMathematicsRetailEducationSuggestanewDefinitionProposeddefinitionswillbeconsideredforinclusionintheEconomictimes.comMarketingPREVDEFINITIONCopyTestingDefinition:Copy-testingisacomprehensiveapproachusedaspartofmarketingresearchtotesttheeffectivenessofanadvertisementbasedonresponsespriortoitbeingaired.Thisformofpre-testingwillbebeneficialforthecompanytounderstandwhetheranadvertisementcarriesastrong-enoughmessage. Description:Marketingactivitiesareexpensiveandcopy-testingcanhelpyoumakesurethatyourcampaigniseffective.Beforeanadvertisementislaunchedorairedthereareseriesoftestswhicharedonetogaugetheeffectivenessofthecampaign.Thesetestsarecarriedonevenafterthecampaignislaunchedtomeasuretheeffectiveness. Bothqualitativeandquantitativetechniquesareusedtomeasuretheeffectivenessoftheadvertisingcampaign.Theapproachsavesthecompanytimeandmoneyastheadwillbeerror-freeandincludeallthedesiredchanges. Themainpurposeofcopy-testingistofixadswhichmaynotconnectwiththeaudience.Ifconsumersarenotabletoconnectwiththead,theymightgetawrongmessage. Toovercomethischallenge,companiesoftenenrollmarketingresearchfirmstoconductthesestudies.Theadvertisementisshowntoasmallgroupofpeopletomeasuretheirresponse. Byconductingthisexperiment,theresponsescanbequantifiedtogivethecompanyamoremeaningfulfeedback.Here,analystscananalysereal-timeresponsefromtherespondentsafterwatchingtheadvertisement. Theanalysiscouldbedonearoundvariousthingssuchashowrespondentsfeltafterwatchingthead,theirfacialexpression.Awidersurvey,postthead,canprovidemoreinformationabouthowtheyfeltandtheirfeedback. Oftenchangesaremadewhenanadisshownindifferentdemographicstoconnectwiththeaudienceofthatparticulararea.Copytestingalsoevaluatesadondemographics. ReadMoreNEXTDEFINITIONCounterAdvertisingDefinition:Counteradvertisingisanadvertisementwhichrespondstoanotheradvertisement.Theyare,attimesparodyoftheoriginalad,butdeliveramessage.Counteradvertisingtakesanopposingpositionoracounter-view,andisgenerallymadeoutoncontroversialtopicssuchassmokingorhighsugarcontentinaerateddrinks. Description:Counteradvertisingusesthesametechniquewhichcaughtyourattentionthefirsttimewhenyousawtheoriginalad,buttweaksittodeliveradifferentmessagetotheaudience. Itisanadvertisingtechniquewhichwillcatchyoureyebecauseyouwillidentifywiththemessageinthead.Forexample,weallknowthesugarcontentaerateddrinksorsodashave. Withgrowinglifestylediseasesintheworld,mostpeoplehavebecomehealthconscious.And,becauseofthattheconsumptionofsodahascomedowndrastically.Consumersarelookingforadrink,butwithouttheaddedsugarcontent. Manycompanieshavecomeoutwith'healthflavouredwater'whichsupposedlycontainsminimumamountofsugarandisfilledwithessentialvitamins.Onthefaceofit,theadwouldbeappealing,notbecauseyouaredrinkingflavouredwater,butbecauseithaslessorminimalsugarcontent. Tocreatecounterads,oneshouldanalysewhytheoriginaladwaseffectiveandusesimpletechniquestosendacrossthemessage.Whenyouareplanningtocreateacounterad,thinkoftheonethingwhichyourememberaboutthead,wasitthegraphicorasoundorthemessage? Visualimagesareapowerfultoolincreatingcounterad,thisisbecausepeopleoftenforgetwhattheyhearorwhattheyread,butresearchshowsthattheyarelikelytorememberwhattheysee,foralongtime. ReadMoreDefinitionof'CostLeadership'Definition:Costleadershipisatermusedwhenacompanyprojectsitselfasthecheapestmanufacturerorproviderofaparticularproductorcommodityinacompetition.Itisdifficulttodeploythestrategybecausethemanagementmustconstantlyworkonreducingcostateveryleveltoremaincompetitive. Description:Costleadershipisapartofmarketingstrategy.Although,itishighlyeffectiveingainingmarketshareaswellasdrawingthecustomers'attention,itisdifficulttodeploy.Themanagementteamofthecompanyhastoconstantlyworktowardsreducingthecostofnotjustoneproduct,buttheentirerangeofproductsinthecompany'sportfolio.Costleadershipdoesnotmeanthatacompanyproducesgoodswhichareofinferiorqualityatcomparativelycheaprates.Thatstrategywillultimatelyleadtofailure.Todeploythisstrategy,acompanyhastoproducegoodswhichareofacceptablequalityandspecifictoasetofcustomersatapricewhichismuchlowerorcompetitivethanothercompaniesproducingthesameproduct.ThemostfamouscostleaderinIndiaisBigBazaar,followedbyVishalMegaMart. PREVDEFINITIONCopyTestingDefinition:Copy-testingisacomprehensiveapproachusedaspartofmarketingresearchtotesttheeffectivenessofanadvertisementbasedonresponsespriortoitbeingaired.Thisformofpre-testingwillbebeneficialforthecompanytounderstandwhetheranadvertisementcarriesastrong-enoughmessage. Description:Marketingactivitiesareexpensiveandcopy-testingcanhelpyoumakesurethatyourcampaigniseffective.Beforeanadvertisementislaunchedorairedthereareseriesoftestswhicharedonetogaugetheeffectivenessofthecampaign.Thesetestsarecarriedonevenafterthecampaignislaunchedtomeasuretheeffectiveness. Bothqualitativeandquantitativetechniquesareusedtomeasuretheeffectivenessoftheadvertisingcampaign.Theapproachsavesthecompanytimeandmoneyastheadwillbeerror-freeandincludeallthedesiredchanges. Themainpurposeofcopy-testingistofixadswhichmaynotconnectwiththeaudience.Ifconsumersarenotabletoconnectwiththead,theymightgetawrongmessage. Toovercomethischallenge,companiesoftenenrollmarketingresearchfirmstoconductthesestudies.Theadvertisementisshowntoasmallgroupofpeopletomeasuretheirresponse. Byconductingthisexperiment,theresponsescanbequantifiedtogivethecompanyamoremeaningfulfeedback.Here,analystscananalysereal-timeresponsefromtherespondentsafterwatchingtheadvertisement. Theanalysiscouldbedonearoundvariousthingssuchashowrespondentsfeltafterwatchingthead,theirfacialexpression.Awidersurvey,postthead,canprovidemoreinformationabouthowtheyfeltandtheirfeedback. Oftenchangesaremadewhenanadisshownindifferentdemographicstoconnectwiththeaudienceofthatparticulararea.Copytestingalsoevaluatesadondemographics. ReadMoreNEXTDEFINITIONCounterAdvertisingDefinition:Counteradvertisingisanadvertisementwhichrespondstoanotheradvertisement.Theyare,attimesparodyoftheoriginalad,butdeliveramessage.Counteradvertisingtakesanopposingpositionoracounter-view,andisgenerallymadeoutoncontroversialtopicssuchassmokingorhighsugarcontentinaerateddrinks. Description:Counteradvertisingusesthesametechniquewhichcaughtyourattentionthefirsttimewhenyousawtheoriginalad,buttweaksittodeliveradifferentmessagetotheaudience. Itisanadvertisingtechniquewhichwillcatchyoureyebecauseyouwillidentifywiththemessageinthead.Forexample,weallknowthesugarcontentaerateddrinksorsodashave. Withgrowinglifestylediseasesintheworld,mostpeoplehavebecomehealthconscious.And,becauseofthattheconsumptionofsodahascomedowndrastically.Consumersarelookingforadrink,butwithouttheaddedsugarcontent. Manycompanieshavecomeoutwith'healthflavouredwater'whichsupposedlycontainsminimumamountofsugarandisfilledwithessentialvitamins.Onthefaceofit,theadwouldbeappealing,notbecauseyouaredrinkingflavouredwater,butbecauseithaslessorminimalsugarcontent. Tocreatecounterads,oneshouldanalysewhytheoriginaladwaseffectiveandusesimpletechniquestosendacrossthemessage.Whenyouareplanningtocreateacounterad,thinkoftheonethingwhichyourememberaboutthead,wasitthegraphicorasoundorthemessage? Visualimagesareapowerfultoolincreatingcounterad,thisisbecausepeopleoftenforgetwhattheyhearorwhattheyread,butresearchshowsthattheyarelikelytorememberwhattheysee,foralongtime. ReadMore5ForcesAnalysisOfTheEnvironmentThefiveforcesmodelofanalysiswasdevelopedbyMichaelPortertoanalyzethecompetitiveenvironmentinwhichaproductorcompanyworks. Description:Therearefiveforcesthatactonanyproduct/brand/company: 1.Thethreatofentry:competitorscanenterfromanyindustry,channel,function,formormarketingactivity.Howbestcanthecompanytakecareofthethreatofnewentrants? 2EndorsementsEndorsementsareaformofadvertisingthatusesfamouspersonalitiesorcelebritieswhocommandahighdegreeofrecognition,trust,respectorawarenessamongstthepeople.Suchpeopleadvertiseforaproductlendingtheirnamesorimagestopromoteaproductorservice.Advertisersandclientshopesuchapproval,orendorsementbyacelebrity,willinfluencebuyersfavourably.Forexample,SachReferencePriceReferencepriceisalsoknownascompetitivepricing,becauseheretheproductissoldjustbelowthepriceofacompetitor’sproduct.Referencepriceisthecostatwhichamanufacturerorastoreownersellsaparticularproduct,givingaheftydiscountcomparedtoitspreviouslyadvertisedprice. Description:Referencepricing,insimpleterms,isknownasthatpricewhichuserscomparewithLossLeadersLossleadersarehighvolume,highprofilebrandsorproductsthataresoldbyretailerswiththeintentiontoattractcustomersintotheirpremises,withthehopethatthosecustomerswillendupbuyingothergoodsaswell,onceinside.Examplescouldbesteeplydiscountedelectronics,orconsumergoods,orgarments.Azeropercentloanforcarsisalossleaderexampleforthedealer. DescriAmbientAdvertisingAmbientAdvertisingisaboutplacingadsonunusualobjectsorinunusualplaceswhereyouwouldn’tusuallyexpecttohaveanadvertisement. Description:Ambientadvertisingevolvedasaconceptbecauseithasalastingimpactonthemindsofconsumerswhichmakesitmoreeffective.Ambientadvertisingisallaboutcreativity,andhoweffectivelytheadvertiserisabletocommunicatethemessageConspicuousConsumptionConspicuousconsumptionisthepracticeofpurchasinggoodsorservicestopubliclydisplaywealthratherthantocoverbasicneeds. Description:Theword'Conspicuous'heremeanslavishorwastefulspending.Thiskindofspendingisgenerallymadebypeoplewhohaveconsiderableamountofdisposableincometospendongoodsandserviceswhicharenotnecessary,butaremoreluxuriousinnature. MarketConcentrationMarketconcentrationisusedwhensmallerfirmsaccountforlargepercentageofthetotalmarket.Itmeasurestheextentofdominationofsalesbyoneormorefirmsinaparticularmarket.Themarketconcentrationratioismeasuredbytheconcentrationratio. Description:Themarketconcentrationratiomeasuresthecombinedmarketshareofallthetopfirmsintheindustry.‘MarketShare’isusCashCowsCashCowisoneofthefourcategoriesundertheBostonConsultingGroup'sgrowthmatrixthatrepresentsadivisionwhichhasabigmarketshareinalow-growthindustryorasector.Itisreferredtoanassetorabusiness,whichoncepaidoff,willcontinuegivingconsistentcashflowsthroughoutitslife. Description:ACashCowisametaphorusedforabusinessoraproduct,whichexhibitsStrategicBusinessUnitAstrategicbusinessunit,popularlyknownasSBU,isafully-functionalunitofabusinessthathasitsownvisionanddirection.Typically,astrategicbusinessunitoperatesasaseparateunit,butitisalsoanimportantpartofthecompany.Itreportstotheheadquartersaboutitsoperationalstatus. Description:AstrategicbusinessunitorSBUoperatesasanindependententity,butithaRebrandingRebrandingistheprocessofchangingthecorporateimageofanorganisation.Itisamarketstrategyofgivinganewname,symbol,orchangeindesignforanalready-establishedbrand.Theideabehindrebrandingistocreateadifferentidentityforabrand,fromitscompetitors,inthemarket. Description:Thereareseveralreasonsforacompanytogoforrebranding.OneprominentfactoristTrendingDefinitionsDebtfundsReporateMutualfundGrossdomesticproductDataminingAdvertisingProductMonopolyCryptographyDepreciationDiggGoogleBookmarksStumbleUponRedditNewsvineLiveBookmarksTechnoratiYahooBookmarksBlogmarksDel.icio.usApnaCircleMailthisDefinitionMySavedDefinitionsSigninSignupChooseyourreasonbelowandclickontheReportbutton.ThiswillalertourmoderatorstotakeactionNameReasonforreporting:FoullanguageSlanderousIncitinghatredagainstacertaincommunityOthersYourReasonhasbeenReportedtotheadmin.DiggGoogleBookmarksStumbleUponRedditNewsvineLiveBookmarksTechnoratiYahooBookmarksBlogmarksDel.icio.usApnaCircleMailthisDefinitionMySavedDefinitionsSigninSignupChooseyourreasonbelowandclickontheReportbutton.ThiswillalertourmoderatorstotakeactionNameReasonforreporting:FoullanguageSlanderousIncitinghatredagainstacertaincommunityOthersYourReasonhasbeenReportedtotheadmin.