Cost-plus pricing is a pricing strategy in which the sales price of a product or service is based on the production costs to which a fixed margin is added. This method ensures that all costs are covered and a profit is made. It is easy to apply, but may not take into account market conditions and the competitive landscape.
The network effect occurs when the value of a product or service increases with the number of users. A typical example is social networks such as Facebook or platforms such as eBay, where each new user increases the value for all other users. Network effects can give companies a significant competitive advantage as they promote exponential growth and strong customer loyalty.
The product life cycle describes the various phases that a product goes through in the market - from market launch to growth, maturity and saturation through to decline. Each phase brings with it different challenges and strategies, for example in terms of marketing, pricing or further development. Analysing the life cycle helps companies to manage products in a targeted manner and introduce innovations in good time.
Customer experience (CX) describes the entire experience that customers have with a company across all contact points - from the first interaction to after-sales service. A positive CX is created through consistent communication, user-friendly processes and emotional loyalty. The aim is to increase customer satisfaction and build long-term relationships.
Economies of scale refer to the cost advantages that a company achieves when it increases its production volume. Increasing production capacity reduces unit costs, as fixed costs can be spread over more units. This enables companies to work more efficiently and offer more competitive prices. Economies of scale can be achieved in production as well as in procurement, logistics and many other areas.
OKR (Objectives and Key Results) is a goal-setting framework that helps companies to define clear, measurable goals and track progress effectively. It was originally developed by Intel and later popularised by companies such as Google. OKRs consist of two main components: the Objectives, which are clearly and inspiringly formulated, and the Key Results, which are measurable outcomes that reflect the success of the objective. OKRs promote a transparent and goal-orientated way of working.
In an economic context, a moat refers to a sustainable competitive advantage that protects a company from the competition in the long term. The term was popularised in particular by investor Warren Buffett. Just as a real moat protects a fortress, an economic moat secures a company's business model from attacks by competitors. Examples of such advantages are strong brands, patents, network effects or particularly cost-efficient structures.
The Blue Ocean Strategy describes a strategic approach in which companies create new, previously untapped markets instead of competing in saturated markets ("red oceans"). The aim is to create a unique offering through innovation and differentiation that makes the competition irrelevant. Successful blue ocean strategies rely on creative thinking, customer focus and questioning existing industry logic.
The Red Ocean Strategy describes competitive strategies in existing, often highly competitive markets. Companies attempt to gain market share through price competition, efficiency improvements and incremental product enhancements. As demand is limited and many suppliers offer similar services, this results in intense cut-throat competition - metaphorically speaking, a "blood-red ocean". This contrasts with the Blue Ocean Strategy, in which new, untapped markets are created in order to avoid competition.