Cost Leadership Strategy  

If a business opts for a cost leadership strategy, it means they want to offer products at a lower market price. They are looking to gain their target market’s attention through their affordable prices first (and maybe even have room to offer discounts, promos, wholesale prices, and more.)  

For this strategy to prove successful, a business has to mass–produce so that prices can be driven as low as possible. The cost of production also has to be low so that the business can make a considerable profit. That is why cost leadership strategy is generally implemented by larger businesses that can afford to mass–produce. 

It is likely that household names (your favourite brand of kitchen supplies or furniture, for example) have implemented the cost leadership strategy either fully or partially. Since their products are widely needed and they can sustain a consistent demand across any market demographic, they are likely to sell massively and make a profit even with how low the prices of their products are.  

But because of how widespread the demand is, it is likely that several businesses offer similar products as well, and so price competition among these other businesses is tight.  

Cost Focus Strategy 

Cost focus strategy has a lot of similarities with cost leadership strategy. In both strategies, a company tries to drive prices as low as possible to attract buyers. However, in cost focus strategy, a company would zero in on a specific segment of their target market and offer that group of people the lowest possible prices.  

For example, in a city known for its family-friendly suburbs, companies that offer home living products would likely drive their prices low in that area so that they can develop a following over there. 

Cost focus strategy may also be applied to a specific product. If one product performs well, a business might take advantage of how popular it is becoming by driving that product’s price lower to gain customer loyalty as well as make other potential buyers interested.  

Businesses can employ a mix of both cost focus and cost leadership strategies. This all depends on their unique business situation, their resources, growth rate, and other important factors. 

Differentiation Leadership Strategy 

When a company endeavours for its product to stand out in the market, it is differentiation leadership strategy they are going for. They aim for their product to be unique such that it draws attention to consumers, and thus a consumer’s main intention for purchasing their product is that they are not able to find a specific feature in other similar products.  

Differentiation leadership strategy can be implemented when a business employs product designers, engineers, and other specialists to create a product that sets its own path in its niche. A great example of this is Apple, which not only built specific smartphones, laptops, and tablets but also built a whole ecosystem around it such that its operating system, the iOS, is unique and exclusively applicable only to its products.  

As a competitive strategy, the differentiation leadership strategy is ideal for startup companies – entrepreneurs who have a fresh solution to offer to a specific problem that people are facing today, as well as a new take on business models to implement that idea with.  

Additionally, branding and marketing are extremely important when implementing this strategy – not only should the product be unique, it should also be unique in the minds of consumers. Perspective is key in this case. 

Differentiation Focus Strategy 

Differentiation focus strategy is like a cost focus strategy in the sense that it singles out a specific segment of a market and focuses its attention there. The difference here is that in the differentiation focus strategy, a company will investigate the reasons why people are not buying products that their competitors are offering.  

What feature is missing in those products? A company will then build a product or refine their existing products to fill in that gap, and, therefore, win customers over, beating out its competitors.  

For example, a fashion company whose size range is too limited is missing out on the incredible opportunity to fulfil the needs of more customers. Thus, a smart competitor will produce products in a full range of sizes to accommodate all body types, or even open a special line or collection to launch this new change.  

Differentiation focus strategy does not have to be limited to refining a product. It can also be a service. If competitors are finding it too costly to offer a free replacement for their products, for example, a smart competitor will find a way to include that in their business model because not only will they attract new customers, but they will also be likely to capture the loyalty of that customer.  

Learn More by Consulting With CK Partners Today

The team over at CK Partners would love to go over your competitive strategy with you. Let us know how we can help you and your company meet your goals. Call us at +61 416 217 201 or email us at larry.cornell@ckpartners.com.