The Smart Car - Case Study Essay

With a wide variety of vehicles and manufacturers due to low switching costs, the bargaining power of customers is very high in the automobile industry. Also foreign brands are selling vehicles in the Indian markets, adding to the bargaining power of customers in this industry. Thus the value created by the firm lies in adding differentiating features by innovating and increasing the customer’s willingness to pay while reducing the supplier’s opportunity cost.

The three main competitive strategies are cost leadership, differentiation, and price strategy. Cost leadership focuses on acquiring raw material of the highest quality at the lowest price. In return this company can lower production cost with the goal of being the company with the lowest production cost in the industry. Differentiation strategies allow companies to make their products stand out from the others. Differentiation can be actual or perceived. Actual differentiation occurs when the company creates products that are not available elsewhere. Perceived differentiation takes a lot of marketing and advertisement to convince the consumer that this company’s product is superior. Price strategy includes a variety of strategies that cause a particular product to be marketed at the lowest price possible. Price strategy includes skimming where companies set a high initial price only to turn around and lower it. Bundle pricing occurs when several products are offered for one price. Promotional pricing allows other incentives to buy such as buy one get one half off. Using the pricing strategies causes many consumers to actually purchase more believing that they are receiving a “deal” while the company is still profiting. Competitive strategies are always used by companies and are often used together. Companies that understand how to combine competitive strategies fare much

Competitive advantage exists when a firm has strategy, product or an attribute that makes the firm capable of delivering similar benefit to that of competitors at a cheaper cost. Having competitive advantage is not enough the company should be capable of sustaining that particular competitive advantage for a longer period of time.

Thompson, Peteraf, Gamble, and Strickland (2012) found that competitive strategy depend on whether a company’s target market is narrow or broad, and whether a company is seeking competitive advantage through low-cost or product differentiation. These two factors reveal five generic competitive strategies. The five strategies are Overall Low-Cost Provider Strategy, Focused Low-Cost Strategy, Broad Differentiation Strategy, Focused Differentiation Strategy, and Best Cost

There are many strategies discussed by Jobber and Chadwick (2013) to obtain such competitive advantage, either on broad or narrow or broad scope dimensions, or by different competitive base of differentiation or cost.

There are two different types of competitive advantage: low cost and differentiation. We will develop them in this part I.

In recent discussions of growing technology, a controversial issue has been whether we are ready for the advancements of driverless vehicles. On the one hand, some argue that these advancements have already proven that we are ready. On the other hand, however, others argue that we need to have more experience with the technology before we can be ready. In sum, then, the issue is are we ready or not for driver-less cars. While others think that driverless vehicles can’t be trusted yet without a commission to help lawmakers with regulating the vehicles and government officials that know more about this technology to better watch over it, I believe that we are ready for this new evolving automobile because driverless vehicles already has too much potential beginning with its self-automated breaking system and warnings.

“There are 2 types of Competitive Advantage. Firms with lower relative cost than rivals have a Cost Advantage. Firms that are able to charge higher prices (have a higher WTP) than their competitors have a Differentiation Advantage. Firms that have both, low cost and high WTP, have Dual Advantage”( Proenca,Jose).

Building on its success in the European market over the past few years, Mercedes-Benz Canada has launched the Smart Car in Canada! Following a few modifications to meet Canadian safety and emission standards, Mercedes-Benz is currently selling the Smart in Ontario as a trial before a full North American launch the following year. The Smart is unique - almost revolutionary in the auto market. The people at Mercedes believe that the market for the Smart is untapped with virtually no direct competition in North America. Mercedes desires to be the first to market before the competition launches a competing niche vehicle in the competitive North American Market. However, GM,

A Competitive Advantage is a peculiarity for an organization between it's competitors . It's achieved either by lowering prices or by greatening the value of the product or by offering luxury service and benefits to cope with high prices .

Competitive advantage is that a company has better ability in earning profit and profit growth compared to its competitors for the same group of customers in one industry.

Only one firm in any sector or industry can have this advantage (Porter, 1985). The alternate source of competitive advantage is differentiation, this is where the firm "provides something unique that is valuable to buyers beyond simply offering a low price” (Porter, 1985; p120). The firm needs to show that it is different in some way, this may be a product or service characteristics, or may be an intangible aspect such as a firm image or brand (Porter, 1985). The brand is a useful tool that can support the differentiation, by creating the image or association that the consumers will link with the differentiation (Kotler and Keller, 2008). There are many examples; from premium quality brand such as Cartier, to high tech firms such as Apple and mass market brands such as Coca-Cola, in each case the brand has been developed to be associated with specific values and characteristics that help to identify the firm and why it is different (Kotler and Keller, 2008).

Competitive advantage(CA) is an advantage competitors gain by providing or offering customers or consumers greater value for their money through product and service differentiation or through lower prices. Maintaining competitive advantage is crucial to many businesses or organizations' success in order to survive in the market. Competitive advantage is characterized by superior performance which could be an attribute to outperform the competitors whether current or potential; or gaining a higher market share in a particular industry thereby ensuring market leadership; or ultimately, maximization of profit.(JOBBER 2010)

Competitive strategy is the moves and methods that the firm has taken and is taking to appeal buyers, improve its market position, and to endure competitive pressures. The strategy is about what a firm’s capability to try to knock off competitors and attain competitive advantage, which can be offensive or defensive. There are three approaches to competitive strategy, which are low-cost leadership strategy where struggling to be the overall low-cost manufacturer in the in industry. Moreover, pursuing to distinguish one’s product offering from competitors (differentiation strategy), and the last one is focus or niche strategy where aiming on thin portion of the market rather than the whole market (Porter, 1998).

I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the five basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the five to