Besanko their price cuts they propose are an important

Besanko
(1955) also drew attention to the benefits of cost advantage.
According to his framework, while diversification-oriented companies
charge a higher price than competitors, the cost leader gets a lower
price than its competitors. ”A
firm with a cost advantage creates more value than its competitors by
offering products that have lower cost, with the same, or perhabs
lower, perceived benefit.”
(Besanko,
Dranove, Shanley, 2000, p.412)

The
company can achieve cost advantage through three approaches. First by
offering a product of the same benefits as the competition, second by
offering products with a lower benefits than the competition, this is
possible if the price difference is greater than the cost advantage
between the competitors and the company. Company makes up this by
well-trained staff and less expensive components. Last approache is
when a company offers a product that is significantly different from
the competition. This way company can define product definitions.
This can out- compete sold product, at the same time understand, that
the price corresponds to the quality. According to author, if the
company achieves a cost advantage, it can also reach a lower price of
product, than competitors. Author also identified two types of price
elasticity: High price elasticity of demand and low price elasticity
of demand. Low price elasticity of demand is characterized by a
small share of the market for high price declines and gaining
advantage through a higher profit margin. High price elasticity of
demand is characterized by a large market share of small price
reductions, due to a higher market share than competitors, and they
also share their strategies to gain share underprice competitors,
which is possible thanks to cost leadership.

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Loveholidays
is more identified with the high price elasticity of demand, because
their price cuts they propose are an important element in the market,
and they share their strategies to gain share underprice competitors.
The
perfect example of this is the close co-operation of Loveholidays and
HolidayPirates. Official information appeared on HolidayPirates
website, April 10, 2017. (HolidayPirates, 2017)

According
to the HolidayPirates portal, it will be able to offer loveholidays
deals and introduce their filtering technologies in the search and
reservation area. “We have watched the rapid growth of
HolidayPirates closely and we are delighted to announce this business
relationship with them,” commented Jonny Marsh, COO of
loveholidays. “The new partnership will help both of our businesses
grow incrementally. It’s exciting for us to be able to reach their
fun-loving and vast community and we are confident that sharing our
technology with them will help to broaden their offering.” As
HolidayPirates marketing chief Tony Rosa highlighted, the company is
delighted to work with forward-thinking ideas and constantly evolving
Loveholidays technologies.

Another
theory that can reflect to activities of Loveholidays was presented
by Dickson (1992). Presented by the author General Theory Of
Competitive Rationality is
focused on incessant innovations in life cycle. Companies have an
impact on the market and the market is influencing on companies.
Constantly changing heterogeneity supply affects in sudden changes in
competitiveness. According to author, rapid response to these changes
creates competitive advantage. Main objectives of this theory are
efficiency and effectiveness. Efficiency objective is based on the
reduction of the company’s average and marginal costs, which allows
them to lower prices, increase profits, and create more space for
decision-making. Making cost-effective innovations has many
advantages because they are easier to predict than other innovations.
In addition, costs are easier to control than, for example,
production. Also, cost innovations are more difficult to detect and
copy. Effectiveness objective focuses on the fact that the company
must be satisfied with product design, marketing plan and many other
important factors. These factors need to be continuously refined by
the company to remain effective in the changing competitive
environment.
The rapid and positive results of the introduction of the General
Theory of Competitive Rationality, have prompted the company
management to constantly seek ways to reduce costs, service prices
and increase profits. According to the author, modern information
systems lead to the attainment of these objectives. These systems are
designed to control costs range, ensuring rapid response.

This
theory reflects to Loveholidays’s actions, which are implements as
part of their strategy.

This
company has a great impact on the market and is focused on efficiency
and effectiveness.

Efficiency
as reduction of costs, the company achieves mainly thanks to the
latest technology, which in the presented theory is very important.
The latest technology used by the company serves to both, compare
prices on the market and to manage their online platform. This leads
to cost savings by the company and to maintaining the lowest prices
on the market. The effectiveness achieves by constant monitoring of
travel offers displayed on their internet platform. As a result, they
can check that the quality of the products they offer is high. Also,
they constantly developing their strategies by introducing new ideas
and introducing new business partnerships such as with Tourico
Holidays (TravelDailyNews International, 2017), HolidayPirates
(HolidayPirates,
2017) and many others.

How
did the company achieve a significant increase in sales?
Loveholidays
have achieved a significant increase in sales, largely because of
their fresh ideas and innovative approach to management. Also, the
constant improvement of their online platform is significant, making
travel search easy, customers can search for travel only by their
criteria. Company can also, because of this technology, offer its
offers at the lowest possible prices. Company perfectly matches to
existing market situation, so because of that, can meet the
expectations of customers. Moreover, significant is approach of
Loveholidays to customers. The company is very committed to
maintaining good relationships with customers, listening their
opinions and advice. An excellent example of this is collaboration of
Loveholidays with Tourico Holidays.
“Loveholidays
is the perfect example of how a growing travel business can be nimble
and resourceful to capitalize on shifts in the
marketplace,” said Emma
Weber,
the Director of Sales in the UK, Ireland, and Scandinavia for Tourico
Holidays. “They
recognized that UK travellers were seeking U.S. and Caribbean
vacations, so they quickly engaged with Tourico, and now they’re
delivering thousands of hotel options at prices you can’t find
anywhere else”
(TravelDailyNews
International, 2017).

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