Question

Explain the terms below with examples:
(i) Cost Leadership Strategy
(ii) Differentiation Strategy

please help answer this question in essay form . pleas give example with answer. please do not copy from internet use your own wodrs to answer t q so much

Answer 1

(i) Cost Leadership Strategy:

Strategy used by businesses to create a low cost of operation within their niche. The use of this strategy is primarily to gain an advantage over competitors by reducing operation costs below that of others in the same industry.

Example: A company like Payless is a good example of this strategy. They try to limit the number of employees in their shops and allow customers to serve themselves in an effort to cut operational costs. These cost cutting measures allow them to offer brands that are of a certain quality at an affordable price. Their slogan suggests that customers can get the same quality goods at a lessor price than their competitors.

(ii) Differentiation Strategy:

Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service.

Example:

Unbreakable Solutions Co. is a company that manufactures screen protectors for smart phones. Since the business started the founders were committed to provide the market with an unbreakable screen protector. Currently, competitors only offer transparent and shade screen protectors.

But customers are always complaining about their smart phones screens being broken when they fall down and Unbreakable Solutions is trying to differentiate itself from its competitors by providing a unique solution to this particular issue. They are aiming at the screen protector’s market but by using a different approach they are setting themselves apart by offering an enhanced solution to the current needs.

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