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FACTORS & TRENDS THAT INFLUENCE STRATEGY DEVELOPMENT
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Factors and Trends that Influence Strategy Development
Recessionary times are indicative of reduced disposable income and tightened profits for
businesses and firms in all industries. Retrenchment strategies, which are the most popular
during recessionary times, allow firms to reduce costs in a number of ways (Lowth, Prowle, and
Zhang, 2010). However, these strategies can limit the number of assets available for liquidation
and restrict the company’s ability to grow once the recession is over. Investment strategies allow
firms to gain assets at a potentially lower cost from other firms disposing of goods. However,
these strategies require expenditure up front, which may be difficult if profits are low.
Meanwhile, ambidextrous strategies place more power in the hands of employees, which could
mean employees start working harder to earn more, but could also mean it will be difficult for
the firm to make any necessary changes (Daft, and Lane, 2010).
Key factors for establishing product differentiation in the new post-recession consumer
environment include pricing and purpose. Pricing is going to be essential, as consumers must be
able to justify the price and will likely select the product that is most cost competitive. Likewise,
firms will need to ensure their products meet the new demands of consumers post-recession and
that their products are more useful in comparison to competitors (“The great consumer,” 2012).
A luxury good is a good that is demand more by consumers as their income increases, but
is not a necessity of life. Examples are found in all groups of goods including automobiles,
clothing, accessories, and jewelry, such as Lexus, Armani, Gucci, and Rolex. In the recession
and post-recession environments luxury goods are likely to be hit hard, and the premium pricing
of the past may be drastically hinder sales and profits. However, to maintain the “luxury” label
premium pricing is encouraged. Therefore, marketers should focus upon premium pricing
FACTORS & TRENDS THAT INFLUENCE STRATEGY DEVELOPMENT
relative to other goods in the market.
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Societal attitudes towards companies and products affect the way marketers think of the
customer value change. It is important that marketing plans adjust accordingly as there are
changing in the societal attitudes. For instance, Tide laundry detergent used to simply be sold on
the name brand. However, given the premium pricing over other detergents in the market, Tide
has altered their marketing to focus upon greater functionality and cleanliness over cheaper
alternatives. The changing societal attitudes towards premium pricing forced the company to
adjust their marketing efforts in an attempt to maintain their current market base. This stands as
evidence as to how important societal attitudes are in marketing and success of a brand, product,
or organization.
FACTORS & TRENDS THAT INFLUENCE STRATEGY DEVELOPMENT
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