Business Strategies

Cost Leadership is achieved by an organization that is in a position to bring a product to market which offers the lowest price and ideally highest quality in a particular product or service segment. Many companies are using this strategy to gain market shares and compete with other competitors. Major objectives of the companies implementing cost leadership strategy are either gain market share or earn a higher profits than rivals.

Examples of Cost Leader companies : Nissan and Dell computers

Nissan - Nissan uses global deployment to lower it production costs, which makes its products less expensive than other car manufactures. Moreover, Nissan's promises competitive parts pricing is ensured through an elaborate Annual Parts Price Survey in collaboration with Principals. Therefore, customers are assured of the lowest cost of ownership.

Dell - Dell's mission statement has stated that the company is providing competitive price to its customers. Compare to other computer manufactures, Dell's computer is relatively lower than others. Most people will categorize Dell as the low price computer producer.

Differentiation involves creating a product that is perceived as unique. The unique features or benefits should provide superior value for the customer if this strategy is to be successful. Because customers see the product as unrivaled and unequaled, the price elasticity of demand tends to be reduced and customers tend to be more brand loyal. This can provide considerable insulation from competition.

Examples of Product/Service Differentiate companies: Dr. Pepper and Jenn-Air

Dr. Pepper - Dr. Pepper is a soda company that offers a regular soda, a diet soda, a decaffeinated soda, and a diet-decaffeinated soda all under the same brand name. Each type of soda is directed at a different segment of the soda market, and the full line of products available will help to establish the company's name in the soda category.

Jenn-Air - Jenn-Air differentiates by its features of different ranges. Jenn-Air appeals to customers as the "proud gourmet." The emphasis is design elegance and a contemporary aesthetic.