A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by
A)underpricing rivals and attracting quality-sensitive buyers in great enough numbers.
B)maintaining the present price and using the lower-cost edge to earn a higher profit margin on each unit sold.
C)going all out to use its cost advantage to capture a dominant share of the market.
D)spending heavily on advertising to promote its cost advantage to build strong customer loyalty.
E)outproducing rivals and thus having more available units for sale.

Question

Quizplus · Accepted Answer

A low-cost leader can maintain its price advantage while earning a higher profit margin on each unit sold by keeping its prices the same as its competitors and using its lower cost structure to earn a higher profit margin on each unit sold. This allows the firm to increase its overall profitability without risking losing customers through underpricing or spending heavily on advertising.

A Low-Cost Leader Can Translate Its Low-Cost Advantage Over Rivals