I need a 150-word reply to each of the following two forum posts made by my classmates (300-words total) (the original forum question[1] is at the bottom):
Reply #1
Good evening class,
The way a firm can become a low cost price leader is a very simple. All they have to do is lower their prices lower then their competitors prices on a specific product or product line. Now with that being said, a firm can do that all day and it is a widely used tactic among many firms but the way it may effect a firm is all up to the revenue a firm is brining in. This also leads to the question of if said firm can afford the cost of cutting price to become the price leader in a market. If the firm runs the numbers and can afford to do this there are many benefits to the firm and the consumer. This allows for more competition in a market which lowers prices and the competitors to see that there is competition from others. All of this goes back into the economic market of any kind. The products can range from almost anything, refrigerators, gas, electronics, etc. That is how believe a firm can become a low cost price leader in a market.
Reply #2
How would a low-cost price leader enforce its leadership through implied threats to a rival? How does a firm become a low-cost price leader? Discuss the specific type of market structure that implied threat strategy can be adapted.
As a consumer, one is always searching for the best deal. Certain stores are considered to offer their products at a lower price. This reputation creates more revenue for the retailer. There are different approaches that a low-cost leader could implement to keep its leadership. It could use advertisement to draw consumers to buy products at a discounted price. It could also offer a wide variety of products that create a desired convenience for the consumer. With multiple products available, retailers can offer a variety of these products at a discounted cost. This low-cost company has researched demands that affect the sale of desired products. It has also secured a significant amount of the desired product. This could draw more revenue and secure its role as a leader against its rival. These approaches describe oligopoly strategies. These actions will cause a reaction from the competitor. One way a firm could become a low-cost leader is by offering a desirable unique product at a continued low price. For example, a famous basketball star offers his shoes through a common retailer. Not only did it offer products at a low cost, this product increased sales. One could consider whether he or she gets a better deal from a product specific store (monopolistic) or from a retail store that offers not comparable products, but other common household products.
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[1] Original Forum Question::
How would a low-cost price leader enforce its leadership through implied threats to a rival? How does a firm become a “low cost” price leader? Discuss the specific type of market structure that implied threat strategy can be adapted.
