A competitive strategy predicated on low-cost leadership tends to work best when:
A) there are widely varying needs and preferences among the various buyers of the product or service.
B) there are many market segments and market niches,such that it is feasible for a low-cost leader to dominate the niche where buyers want a budget-priced product.
C) price competition among rivals is especially vigorous and the offerings of rival firms are essentially identical,standardized,commodity-like products.
D) buyers prefer that the products/services of competing sellers have widely varying attributes and prices.
E) buyers have high switching costs and there is considerable diversity in how buyers use the product.

Question

Quizplus · Accepted Answer

A low-cost leadership strategy works best in a highly competitive environment where price competition is vigorous and the products of rival firms are similar and standardized. In such a market, the low-cost leader can gain a significant competitive advantage by offering the lowest prices, which can attract price-sensitive customers away from rivals. This strategy may not work well when there are widely varying needs and preferences among buyers, as these customers may be willing to pay more for additional features and benefits. Similarly, this strategy may not be effective when customers have high switching costs or when diverse usage patterns make it difficult to offer a standardized product at a consistently low price.

A Competitive Strategy Predicated on Low-Cost Leadership Tends to Work