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Gary's Gas Essay

527 Words3 Pages

There are several areas where Gary’s Gas’ management may be underestimating what will happen within the company if the company changes from using a standardization strategy to a segmentation strategy for its customers. First, there are a lot of positives that come with using a standardization strategy which is when a general product or service is made available to all customers regardless of their location according to Hill, Jones, and Schilling (2014). Usually with standardization, there are several advantages such as customers can expect the same level of quality, and usually the company will build strong brand identity over time which gives the company a solid reputation. Positive customer comments usually attribute to boosts in sales. Next, a really powerful advantage of using standardization includes cost …show more content…

Often, companies using a standardization strategy will have established vendor relationships where for example component parts can be purchased in bulk which would reduce the cost-per-unit of products. In addition, other operating costs such as marketing and investments become lower over time under the standardization strategy. Segmentation strategy on the other hand is when a company offers different products and service plans for the entire market or for many market divisions according to Hill, Jones, and Schilling (2014).
Although, Gary’s Gas’ managers predict that changing from a standardization plan to a segmentation plan there will be no changes in production and personnel and the change will not affect the current cost structure of the company, it is proven by other organizations that when using a segmenting strategy, there will be changes to the cost structure of the company over time as reported by Hill, Jones, and Schilling (2014). Segmentation will increase costs because there will be shorter production times needed in order to

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