Compared to a differentiator, the company that follows a low-cost strategy:
A) distinguishes its products from those of rivals by offering something that they find hard to match.
B) absorbs cost increases by powerful suppliers while keeping to their lower pricing.
C) allows the company to charge a premium price for its good or service, should it choose to do so.
D) uses perceived superior value to generate growth in demand among customers.
E) creates entry barriers for rivals with greater brand loyalty to the specific products offered.

Question

Quizplus · Accepted Answer

A company that follows a low-cost strategy focuses on achieving operational efficiency, reducing costs, and providing a product or service at a lower price point. They absorb cost increases by powerful suppliers while keeping to their lower pricing, unlike a differentiator that offers unique features or benefits that competitors find hard to match, and may even charge a premium price. Option A and D are characteristics of companies that follow a differentiation strategy, whereas option E is about creating entry barriers for rivals, which is not related to the low-cost strategy.

Compared to a Differentiator, the Company That Follows a Low-Cost