Under which condition would a cost leadership strategy be especially effective?
A) when there are many ways to differentiate the product or service and many buyers perceive these differences as having value
B) when buyer needs and uses are diverse
C) when few rival firms are following a similar approach
D) when technological change is fast paced and competition revolves around rapidly evolving product features
E) when the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers

Question

Quizplus · Accepted Answer

A cost leadership strategy is especially effective when the products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers. This makes it easier for the firm to undercut rivals and win price-sensitive customers. If there are many ways to differentiate the product or service, buyers may be willing to pay more for those differences, making a cost leadership approach less effective. Similarly, if buyer needs and uses are diverse, it may be harder to achieve cost savings through standardization and efficiency. In a rapidly changing technological environment, a focus on cost may not be sustainable if competitors are rapidly introducing new features that customers value. Finally, if many firms are already pursuing a cost leadership strategy, the market may become overly price competitive and erode profits for everyone.

Under Which Condition Would a Cost Leadership Strategy Be Especially