A low-cost leader can translate its low-cost advantage over its rivals into superior profit performance by
A)cutting its price to levels significantly below the prices of its rivals.
B)using its low-cost edge to underprice competitors and attract price-sensitive buyers in large enough numbers to increase total profits or refraining from price cutting and using the low-cost advantage 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 the fact that it charges the lowest prices in the industry.
E)outproducing its rivals and thus having more units available to sell.

Question

Quizplus · Accepted Answer

A low-cost leader can use its low-cost advantage to either underprice competitors and attract price-sensitive buyers in large enough numbers to increase total profits or refrain from price cutting and use the low-cost advantage to earn a higher profit margin on each unit sold. The key is to leverage the low-cost advantage in a way that generates superior profit performance. The other options (A, C, D, E) do not necessarily lead to superior profit performance on their own.

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