Nonprice Barriers to Entry

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Submitted by to the category Business and Industry on 11/03/2010 06:57 PM

Non-Price Barriers to Entry

Businesses are faced with many obstacles that affect entry into a market. These obstacles are called barriers to entry. Barriers to entry are the source of a firm’s pricing power; the ability of a firm to raise prices without losing all its customers (McConnell, 2009). In the next five years, Larson Inc. could experience several non-price barriers, including the health of the economy, advertising, and reputation. Larson must overcome these barriers if they want to be competitive and profitable.

        The aim for Larson is to become one of the largest battery suppliers in the market.

Their challenge is to appeal to customers by appearing to have the best value. This is especially important in today's economy. Currently, the health of the economy is poor. Consumers are spending less and saving more. In addition, confidence in the consumer market is low, so consumers are becoming more informed. The high rate of unemployment is also an economic factor influencing the economic health of the market. Their batteries need to be reasonably priced because that is that the market is going to be looking for.

Advertising is going to be a vital and necessary part of Larson's plan if they want to be successful in expanding the market share and establishing brand recognition. This will help promote their products and develop consumer loyalty. Being visible to the target audience is crucial to establishing a successful brand. By increasing the advertising budget, Larson can become a household name. Larson could also offer discounts and coupons as part of their advertising strategy, which will help entice consumers whose spending is low because of the economy.

Larson Inc. could overcome their barriers to entry if they understand the impact of the economy on consumer spending and target their consumers through advertising. Consumers are saving money in this economy, and need to be aware of the value of a product compared to...

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