Subject: Strategic Marketing Management

1. Contraction/Expansion
and
Price Leadership
Group 3
Strategic Marketing Management
Prince Cielo Uehara

2. Contraction/Expansion
• Contraction is a phase of the business cycle in which
the economy as a whole is in decline.
• Expansion A business strategy in which growth is
obtained by increasing the number of stores in
which customers can buy a company's products and
services. Unlike relocation, business expansion
entails opening up new stores in different physical
locations while still maintaining the current business
locations.

3. • Netflix moved beyond US borders in September 2010
into Canada and into Latin American the following year.
It turned its sights to Europe in 2012, launching in the
UK and Ireland early that year and Denmark, Finland,
Norway, Sweden and the Netherlands in the latter part
of the year.
• The Organization for Economic Co-operation and
Development (OECD) said the expansion into these
countries represents an estimated 63 million broadband
households; there are 94 million broadband homes in
the US.
Netflix

4. N
E
T
F
L
I
X

5. • PHILIPPINE Seven Corp. (PSC) intends to open 185 more
7-Eleven convenience stores in Mindanao within two
years, with the new administration’s focus on developing
the countryside expected to support the planned
expansion.
• The local licensee of the 7-Eleven chain has already
opened 65 outlets in Mindanao since entering the
territory in the latter part of last year, its President and
Chief Executive Officer Victor C. Paterno told reporters
during a briefing in Quezon City on Thursday.
Seven Eleven

6. 7
E
L
E
V
E
N

7. • Red Ribbon is embarking on an ambitious expansion plans
with the recent launch of its new corporate logo and a
more aggressive marketing and promotion package.
• Choosing the Atrium of Megamall A as its re-launching
venue, Red Ribbon president Regina Navarette said the
company is expecting its sales to grow by 30 percent to
P2.7 billion this year.
• Navarette said Red Ribbon will add 20 more stores to its
Philippine network with a total of 180 stores by year-end.
• It is also adding more outlets in the US by opening six new
stores. "We will also be putting up stores in Queens, New
York and New Jersey because of big demand and growth
there," Navarette said.
Red Ribbon

8. R
E
D
R
I
B
B
O
N

9. Price Leadership
• Price leadership is when a firm that is the leader
in its sector determines the price of goods or
services.
• This approach can leave the leader's rivals with
little choice but to follow its lead and match
these prices if they are to hold onto their market
share.

10. • Wal-Mart Stores Inc. has been successful using its
strategy of everyday low prices to attract customers.
• The idea of everyday low prices is to offer products
at a cheaper rate than competitors on a consistent
basis, rather than relying on sales.
• Wal-Mart is able to achieve this due to its large scale
and efficient supply chain. They source products
from cheap domestic suppliers and from low-wage
foreign markets.
• This allows the company to sell their items at low
prices and to profit off thin margins at a high
volume.
Wal-Mart

11. W
A
L
M
A
R
T

12. • The restaurant industry is known for yielding low
margins that can make it difficult to compete with a
cost leadership marketing strategy.
• McDonald's has been extremely successful with this
strategy by offering basic fast-food meals at low
prices.
• They are able to keep prices low through a division of
labor that allows it to hire and train inexperienced
employees rather than trained cooks.
• It also relies on few managers who typically earn
higher wages. These staff savings allow the company
to offer its foods for bargain prices.
McDonald’s

13. M
C
D
O
N
A
L
D
S

14. • The airline industry has typically been an industry where
profits are hard to come by without charging high ticket
prices.
• Southwest Airlines challenged this concept by marketing
itself as a cost leader.
• Southwest attempts to offer the lowest prices possible by
being more efficient than traditional airlines.
• They minimize the time that their planes spend on the
tarmac in order to keep them flying and to keep profits
up.
• They also offer little in the way of additional thrills to
customers, but pass the cost savings on to them.
Southwest Airlines

15. S
O
U
T
H
W
E
S
T