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i) Cost Leadership Strategy
A firm obtain above average return in an industry despite the presence of competition if it
can concentrate on overall cost leadership strategy. The strategy looks into lowering the
prices of the company’s products/services without compromising the quality of the same.
A low cost leader uses the cost advantage to charge low prices or to enjoy high profit
margins and can simply attack competitors on price to gain a higher market share. This
can be done by:
• Getting cheaper sources of raw materials
• Excelling in cost reduction and efficiencies
• Binding some unique capabilities and being capital rather than labour intensive
ii) Differentiation Strategy
This is industry production and marketing of unique products for the mass market. This
strategy is appropriate for an organization that sell similar products e.g. petrol, tyres,
sodas, hotel chains etc. The strategy depended on differentiation are designed to appeal to
those customers with a special sensitivity for a particular product attributes. The firm can
stress that attribute over and above other products quality in an attempt to bullet
customer’s loyalty for this loyalty the firm is able to charge a premium or high price.
Competition in such situation is always beaten in the market where customer notices a
difference in product that is largely identified or similar. Approaches to differentiation
include customer.
iii)Focus Strategy
This is a strategy of segmenting markets and appearing to only one or a few group of
consumers or industrial buyers. The logic behind this approach is that a firm that limit it
attention to only one or a few group of consumers can serve those markets between. In
most cases the firm focuses on isolate geographical area or unique demands of small or
medium size customers.
Titany answered the question on October 19, 2021 at 12:42
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