A competitive strategy of striving to be the low-cost provider is particularly attractive when
A) buyers are not very brand-conscious.
B) most rivals are trying to be best-cost providers.
C) there are many ways to achieve product differentiation that have value to buyers.
D) buyers are large and have significant power to bargain down prices and buyers use the product in much the same ways.
E) most rivals are pursuing focused low-cost or focused differentiation strategies.

Question

Quizplus · Accepted Answer

When buyers are large and have significant power to bargain down prices and use the product in much the same ways, a low-cost provider strategy becomes attractive to maintain price competitiveness. However, when there are many ways to achieve product differentiation that have value to buyers, a differentiation strategy may be more appropriate. Similarly, a low-cost strategy may not be effective when most rivals are already pursuing the same strategy or when rivals are pursuing focused low-cost or differentiation strategies. And if buyers are brand-conscious, they may be willing to pay a premium for a product with a strong brand identity despite its higher cost.

A Competitive Strategy of Striving to Be the Low-Cost Provider