Question

Name three examples of firms conducting a cost leadership strategy that use no advertising. Should they start advertising? Why or why not?

Answer 1

Answer:

Krispy Kreme Doughnuts

Costco

Sriracha

Explanation:

Cost leadership strategy is a strategy used by companies of gaining a competitive advantage by making their products cheap or cheaper than their competitors. These companies charge a lower price but make profit by selling large quantities of their products.

Many of the companies that do not advertise have done so purposefully and have made good sales despite the fact that they don't advertise. Even though they stand to make more profit and become even more well known or popular should they start to advertise, I think they should stick to not advertising.

Krispy Kreme, for example, has at some point reached a billion dollars in  sales and have been in business for more than 75 years already. They have purposefully used word-of-mouth combined with building customer relationships through personal and emotional connections to build their company without advertising.

Costco is another example of a company that has done extremely well without any advertising. They make 100 billion annually and have purposefully not advertised and instead use the money that could have been used to advertise to reinvest in their business and to improve their offerings such as their coupons.

Sriracha also does not advertise. They don't even have social media pages yet they sell up to 20 million bottles of their hot sauce per year. The CEO has been quoted as saying that he doesn't advertise because he doesn't know how to and that he prefers to concentrate on making a good product instead of advertising.

So while advertising is very important and many businesses can and have failed because of poor or no advertising, the companies that have been able to penetrate into the market without it should continue doing so because for many it is a part of their plan and they save a lot of money because advertising is very costly.

It might be a lot more difficult for new companies to be able to do the cost leadership strategy without any adverting nowadays because people have a lot more options than before and technology and social media are being used much more and will keep growing so they should consider some form of advertising if they want to have a fighting chance.

Answer 2

Answer:

Walmart, MacDonald's and Payless ShoeSource.

Explanation: Cost Leadership is a business strategy where a comoffers products and services with acceptable quality and features to customers at a very low price.

Yes they should advertise their products and services, actually some of them use advertising slogans like "why pay more when you can pay less" "Always low prices" and " save money" Used by Walmart.

Advertising which is usually a way to tell people about what you do and why you should do it with them or through them, tells people about changes in their prices and introduction of new products.

Again, it will amaze you to know the a lot of people don't know about these companies yet. It helps them to reach more people and this in turn increases their sales.