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Cost Leadership and Product Differentiation. Competitive Advantage - Definition
A competitive advantage is an advantage over competitors ...
... but strong growth and profitability by following the cost-leadership strategy. A
differentiation strategy calls for the development of a product or service ...
... But combinations like cost leadership with product differentiation are hard (but
not impossible) to implement due to the potential for conflict between cost ...
... Is your organization’s strategy focused primarily on cost leadership or
product differentiation? At this stage in the contract ...
... By clearly defining their strategic 3Cs and utilising their strengths such as cost
leadership and product differentiation together, Compoint Australia ...
Submitted by deepavinodhan on May 10, 2008
Category: Business
Words: 546 | Pages: 3
Views: 411
Popularity Rank: 20,790
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Competitive Advantage - Definition
A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Competitive Strategies
Following on from his work analysing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The four strategies relate to the extent to which the scope of a businesses' activities are narrow versus broad and the extent to which a business seeks to differentiate its products.
The four strategies are summarised in the figure below:
The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry.
Strategy - Differentiation
This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products.
Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen
Strategy - Cost Leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. Many (perhaps all) market segments in the industry are supplied with the emphasis placed minimising costs. If the achieved selling price can at least equal (or near)the average for the market,...
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