The book is divided into four parts. The first looks at the mass consumer shift away from the premium and medium ranges towards own labels; but this section will show how, in spite of the trend towards the low-cost, a great many consumers remain brand-focused, still buying the lower-priced products or services offered by a brand, on the mainstream market. The second part looks at how strategies for reinventing the business model have been adapted, at first being applied only by the low-cost companies, but now open to application by any company. Innovations that contribute to cost cutting are connected to production (internationalisation and offshoring, outsourcing, rethinking the supplier relationship and the role of logistics, integrating the supply chain and reducing stock), to the profit formula (fixed capital level, the break-even point, profit level, modifying cost structures and risk management), and to processes (basic product compared to full-price version, dynamic pricing, the Internet and discount channels and outlets). The third part looks at how the increase in price sensitivity and the implementation of low prices have affected brand management. Part four consists of five international company case studies; IKEA, ING DIRECT, Mercadona, Privalia and Google and the worldwide travel market, breaking down the factors of their success. Will the second decade of the 21st Century see the end of the low-cost phenomenon? It will certainly not be easy for European consumers to stop demanding the low prices that they have become so used to over the previous ten years. But excessive efforts by so many companies to bring prices down could sound the death knell for low, low prices, as they will simply become unsustainable in many sectors, with costs forcing them up. Obviously, there will always be customers who want lower prices, and somebody will have to meet the demand, but emphasis on selling at the lowest price possible may turn out to be very costly.

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Valls Giménez, Josep F.

Beyond the low cost business: Rethinking the business model

01/2013
The book is divided into four parts. The first looks at the mass consumer shift away from the premium and medium ranges towards own labels; but this section will show how, in spite of the trend towards the low-cost, a great many consumers remain brand-focused, still buying the lower-priced products or services offered by a brand, on the mainstream market. The second part looks at how strategies for reinventing the business model have been adapted, at first being applied only by the low-cost companies, but now open to application by any company. Innovations that contribute to cost cutting are connected to production (internationalisation and offshoring, outsourcing, rethinking the supplier relationship and the role of logistics, integrating the supply chain and reducing stock), to the profit formula (fixed capital level, the break-even point, profit level, modifying cost structures and risk management), and to processes (basic product compared to full-price version, dynamic pricing, the Internet and discount channels and outlets). The third part looks at how the increase in price sensitivity and the implementation of low prices have affected brand management. Part four consists of five international company case studies; IKEA, ING DIRECT, Mercadona, Privalia and Google and the worldwide travel market, breaking down the factors of their success. Will the second decade of the 21st Century see the end of the low-cost phenomenon? It will certainly not be easy for European consumers to stop demanding the low prices that they have become so used to over the previous ten years. But excessive efforts by so many companies to bring prices down could sound the death knell for low, low prices, as they will simply become unsustainable in many sectors, with costs forcing them up. Obviously, there will always be customers who want lower prices, and somebody will have to meet the demand, but emphasis on selling at the lowest price possible may turn out to be very costly.
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Beyond the low cost business: Rethinking the business model
Valls Giménez, Josep F.
London (U.K.): Palgrave MacMillan, 01/2013
240 p.
Management & strategy

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