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.
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 keeping its costs low while still meeting customer needs. This allows the company to offer lower prices than its competitors, which can help it attract price-sensitive customers. In order to maintain profitability, the company must absorb cost increases from suppliers rather than passing them on to customers in the form of higher prices. By doing so, the company can continue to offer its products at a lower cost than rivals.

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