INTRODUCTION ASOS. com is the UK’s leading online fashion retailer established in 2000. It targeted 16-32 years old fashion conscious customers. It offers own-label, branded and designer fashion goods. Its up-to-date fashions are available to buy through the internet. ASOS. com uses the product life cycle to make sure products always meet customer needs. asos. c Q3: what is meant by horizontal integration and vertical integration? HORIZONTAL INTEGRATION * The acquisition of additional business activities at the same level of the value chain. This occurs when a company takes over, or merges with a direct competitor. * This can be achieved by internal expansion or external expansion. ADVANTAGES * Economies of scale- achieved by selling more of the same product, for example, by geographic expansion. * Economies of scope- achieved by sharing common to different products. * Increased market power. * Reduction in the costs of international trade by operating factories in foreign markets. * Reduction in competition. * Fulfilling customer expectations’ EXAMPLES * A media company’s ownership of Radio, Television, Newspapers, Magazines, Books. Pharmaceutical companies frequently combine forces to share research and development expenses to bring new products to market. According to research by Henderson and Cockburn in 1996, firms involved in drug discovery realize economies of scope by sustaining diverse portfolios of research projects that capture both internal and external knowledge spillovers * The formation of Brook Bond Lipton India ltd. Through the merger of Lipton India and Brook Bond. * The merger of Bank of Mathura with ICICI (Industrial Credit and Investment Corporation of India) Bank. VERTICAL INTEGRATION it acquires a business at a different stage in the chain of production. * It may acquire businesses that were previously its suppliers or its customers. * Backward vertical integration means, merger with the input supplier. * Forward vertical integration means, merger with the output distribution chain. ADVANTAGES * A secure source of raw material or distribution channel * Protection and control over assets and services required to produce and deliver valuable products and services. * Access to n ew business opportunities and new forms of technologies DISADVATAGES Higher monetory and organizational costs EXAMPLES * Shell and BP in oil industry often adopt a vertically integrated structure. This means they use the supply chain from crude oil exploration to the refined product sale at their own gas stations. Q1:In what ways a company benefits from growth? Key points Product Lifecycle The product life cycle shows the stages a product goes through over time with regard to its sales. In the fashion industry, product life cycles can be short because trends and tastes change quickly. An ASOS. com own-brand dress may follow this cycle: Introduction. The dress is put on the website and advertised. For instance, links to new products are put on the home page. * Rapid growth. The product tends to promote itself as people see the item in magazines and newspapers. ASOS. com must ensure it has enough stock to meet demand. * Maturity. ASOS. com reminds people of the product through features on its website or in its magazine. * Saturation. ASOS. com may cut prices to clear stock and allow new products to take over. * Decline. People become tired of the item. Trends move on. Product lifecycle can helps ASOS. com to: * predict revenue and work out the profitability of products * plan when products are to be added to the website or withdrawn * support products through the whole life cycle. It can plan pricing strategies to earn the most revenue at every stage. Extention strategies * ASOS com can seeks to beet rivals and increase its market share. * By using Boston Matrix ASOS. com can assess the value of the individual products and manage them. * ASOS. om should manage the Dogs by getting rid of them or cutting costs. * It must convert Question Marks and Stars into Cash Cows. * It can do this through promotion. Promotions * Promotion helps ASOS. com to inform potential customers of its products with the view to making a sale. * It can use a Customer Relationship Management system to help work out the buying patterns of its customers. * By working out what customers buy and when, it can target promotions at key sectors of the market. * ASOS. com can measures how well promotion works through Key Performance Indicators.
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