Business Sayings

Psychology of pricing high

Unique making process, Customizing, Controlling the supply, Upper middle class and rich, Influencer marketing to reach similar people, Limited editions

Habits of a wealthy market

• Price x

• Value > Example LOUIS VUITTON

Brand value, Quality value Design value, Finish value, Customized value, Feel the good value

Attractive value, Attention value, High skill value,

Start narrow and then expand

Started from luggage • Other bags • Other designs • Other prints • Other products

Backward integration > ROLEX case Stud Forward integration > LOUIS VUITTON

Vertical integration refers to an expansion strategy where one company takes control over one or more stages in the production or distribution of a product. Both of these strategies are undertaken by a company in order to consolidate its position among competitors.

• Vertical integration is an expansion strategy where businesses acquire additional levels of the supply chain. The acquisition could be raw materials, production, distribution, retail, etc. It is a decision to have it done in-house instead of outsourcing.

Ex. Rolex Made one million watches only per year and got one Year to Make one Watch.

#1 – Forward Integration

When a company has an in-house manufacturing unit, it can merge or acquire distribution centers or retail outlets. Thus, the company moves ahead in the supply chain, i.e., from raw material to retail.

#2 – Backward Integration

This strategy is undertaken by companies with in-house units built for the final stages of the supply chain—retail. Such firms can engage in the initial stages—production and procurement of raw material

#3 – Balanced Integration

Such firms generally use a combination of Forward Integration and Backward Integration strategies. This is applicable to businesses engaged in the mid-supply chain function. They expand their operations upward and downward. For example, Hershey relies on cocoa bean suppliers and distributors like Walmart and Target. Hershey can acquire both cocoa bean suppliers and distributors—balanced integration.