Question

Ariel owns a company that markets high-quality office supplies to businesses. She faces stiff competition from larger firms like Staples. Which of the following competitive strategies would probably work best for Ariel?
A. Develop a skimming pricing strategy.
B. Focus on nonprice competition by offering better service with customers and work on building good customer relationships.
C. Keep costs as low as possible by offering a no-frills approach with little or no extra services.
D. Utilize a high-low approach to pricing with a higher break-even point.

Answer 1

Answer:

The answer is B. Focus on nonprice competition by offering better service with customers and work on building good customer relationships.

Explanation:

Ariel faces stiff competition from larger firm so it is difficult to use market penetration pricing strategy because this larger firm will match up any decrease in price employed by Ariel. Ariel should employ good customer strategy. The customers' experience should be a top-notch.

A skimming price strategy is a strategy in which a high price is initially charged for his staples. This is advisable because charging a higher price than the market leader is synonymous to doom because Ariel will experience little or no sales.

For option C, the larger firm will match any low cost and the larger firm enjoys economies of scale too.