Market for baby care, readymade garments for new born, toys and strollers meant for babies are there. M/s. Maa ki Pasand is desirous to introduce…

CA Intermediate · Financial Management and Strategic Management · PYQS · September 2024
Market for baby care, readymade garments for new born, toys and strollers meant for babies are there. M/s. Maa ki Pasand is desirous to introduce new products for existing customers and new customers as well. The market for such products is narrow. On one side there are customers who are price conscious and on the other side there are customers who are ready to pay premium charges for an upscale product. The company wants to charge low price, relative to other firms that compete within the target market for customers who are price sensitive and also wants to charge premium based on uniqueness for rest of its products. Which of the strategy is being considered by the company, out of strategies as suggested by Michael Porter at business level. Also outline the advantages and disadvantages using such strategy.

Suggested Answer and Working Notes:

The company, M/s. Maa ki Pasand, is adopting a focus strategy that incorporates both focused cost leadership and focused differentiation strategies. In the given case, M/s. Maa ki Pasand aims to target price-conscious customers by charging low prices relative to other firms within the narrow market of baby care products. This aligns with focused cost leadership, where the firm competes based on price within a targeted niche. For the segment of customers willing to pay more for premium, unique products, the company follows a focused differentiation strategy . It caters to this specific niche by offering high-end, differentiated products, which is a key feature of focused differentiation. Advantages of using a Focus Strategy: 1. Premium prices: For the differentiated segment, the company can charge higher prices for its upscale products. 2. Expertise in niche markets: M/s. Maa ki Pasand can develop expertise in both price-sensitive and premium segments, making it difficult for rivals to compete effectively. Disadvantages of Using a Focus Strategy: 1. Distinctive competencies required: The firm needs to have strong competencies in both cost control and product differentiation to succeed. Otherwise, it may struggle to pursue the focus strategy effectively. 2. High costs: Serving a narrow market can lead to higher costs due to limited demand, which could pose challenges in maintaining profitability, especially in the premium segment. 3. Disappearance in long run: In the long run, the niche goods can disappear or be taken over by large competitors by acquiring the same distinctive competencies. In conclusion, M/s. Maa ki Pasand is adopting a focus strategy by targeting specific customer niches with both cost leadership and differentiation. While this strategy offers opportunities for premium pricing and expertis, it also comes with challenges related to cost control and distinctive competencies.

Topics: Part-A: Financial Management, Part B: Strategic Management

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