Question

In an essay of 200 words discuss possible drawbacks and possible benefits of applying cost leadership and differentiation strategies along different brands of the same corporation.

Answer 1

Cost leadership refers to a marketing strategy where products are sold to the ultimate consumers at a lower price by a company in comparison to its competitors by way of cutting down of production costs. The benefits of this strategy include an enhanced market-size for a company's product, which eventually results in more profit-margin. It also helps in reducing competition by posing difficulties for the new entrants in the industry, thus facilitating business sustainability for the company in the long run. However, there are some disadvantages too like it also leads to offering of low quality products in the market. This strategy is useful only when the company is able to achieve a very high volume of sales in order to maintain its overall profitability. It also does not consider the changing tastes and preferences of the consumers because the primary focus is to produce a product or render a service by just reducing its cost without considering the needs and requirements of the ultimate consumers.