Term 6 Week 3 Discussions
Unit 3 DB: Competitive Advantage (BUS411 Business Policy Seminar)
This week, we have analyzed the importance of having a competitive advantage in business. A competitive advantage distinguishes a company from its competitors. It also is the recognition that a company either delivers quality products at a lower cost than the competition or offers support and services at a greater value than the competition.
To gain a competitive advantage, a company must often respond to customer demands quickly. Companies that can satisfy customer demands for rapid response build brand loyalty, differentiate their products, and can charge higher prices for products.
For your discussion this week, please answer the following questions:
Week 3 Discussion Forum (MKT6250 Healthcare Marketing)
Week 3 Discussion Forum
Bellsouth Mobility (BM) ran a pricing trial in order to estimate the elasticity of demand for its services. The manager selected 4 states that were representative of its entire service area and increased prices by 5% to subscribers in those areas. One month later, the number of its customers enrolled in BM’s plans declined 4% in those states, while enrollments in states where prices were not increased remained flat. Based on this information, the manager estimated the own price elasticity of demand and based on her findings immediately increased prices in all markets by 5% in an attempt to boost the company’s revenues. One year later, the manager was confused because BM’s revenues were down 10%. Apparently, the price increase led to a reduction in the company’s revenues.
Did the manager make a mistake? Explain.
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