Loveholidays’sstrategy is focused on offering lower prices to its customers. Thisis due to the information contained on their website, among otherthings, the technologies that lead to finding the lowest prices(About Us — Loveholiday).
In the strategic report of the chiefexecutive, he emphasizes that the ”company is focused on theexploitation of intellectual property created through the design anddevelopment of new technologies that are used to manage an onlinetravel platform” (We Love Holidays Ltd, 2016). Loveholidays have”Price Match Guarantee” which guarantees the lowest price. Companyfollows daily millions of prices to offer on its site the lowest. Ifthe customer will find the same offer at the lower priceon different site, Loveholidays returns the difference.Byguaranteeing the lowest price that the company promises, it hasachieved very high growth.
On Fast Track 100, Loveholidays, currentlyoccupies 2 positions, showing annual sales of 183.90% in 3 years(Fast Track 100). In Annual Report and Financial Statement for theyear ended 31 October 2016, executive director showed that ”Turnoverof company increased by £8.7m (60%) during the year, due to strongsales on the online travel platform” (We Love Holidays Ltd,2016).Keeping the Loveholidays opinion portal offering the lowestprice, which encouraging customers to purchase, continuous upgradingtechnology to reduce prices, and returning the difference in price,when customers will find the same offer at a lower price. Thesefactors indicate that Loveholidays strategy is focus on lowcosts and low prices for customers.
Thestrategy adopted by Loveholidays can be identified in this proposedby Porter (1980). Porter (1980) described, competitive strategy,quite broadly, as a combination of goals to which the company isgoing, and the means by which it seeks to reach them. (Porter, 1980). According to Porter Generic Strategies, company can distinguish costadvantage, advantage by differentiation and focus advantage(Porter, 1980). So, can conclude that Loveholidays is guided by costadvantage strategy.Cost advantage of an enterprise may be due to external factors thatmay be related to the location of the business in the environment(e.
g. access to cheaper resources), internal factors, mainly relatedto resource allocation and time factor, and experience increasesperformance and specialization of the company. Moreover, it usuallyleads to the adoption by the company of a price competition strategy,i.e.
that the company offers its goods or services at prices lowerthan its competitors. In other words,costleadership strategy is based on the occupation of a position in themarket, which will reduce costs enabled.Lower costs mean lower prices, and lower prices, where qualityremains at the same level, is a competitive advantage. The use ofsuch strategies is only possible if the company is reasonably wellmanaged and has a sufficiently good market position, it means, thatmarket share is high enough to be able to benefit from economies ofscale or reduce the costs of promotional activities.