A focused low-cost strategy can lead to attractive competitive advantage when:
A) buyers are looking for the best value at the best price.
B) buyers are looking for a budget-priced product.
C) buyers are price sensitive and are attracted to brands with low switching costs.
D) demand in the target market niche is growing rapidly and a company can achieve a big enough volume to fully capture all the available scale economies.
E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

Question

Quizplus · Accepted Answer

A focused low-cost strategy can lead to competitive advantage when a firm limits its customer base to a well-defined buyer segment, lowering costs significantly. By targeting a specific niche, the company can better meet the needs of its customers and achieve economies of scale that allow for lower costs. This strategy is particularly effective when demand in the target market niche is stable or growing, providing the opportunity to fully capture all available scale economies. Options A, B, and C do not fully capture the conditions required for a focused low-cost strategy to create a competitive advantage.

A Focused Low-Cost Strategy Can Lead to Attractive Competitive Advantage