What is a cost leadership strategy?
A cost leadership strategy is based on a marketing strategy in which price is the main strategic tool and where the business objective is market share leadership. In order for this strategy to be successful, your business will need to become the lowest-cost producer in its industry. That means managing costs in marketing and non-marketing functions such as production, supply, etc. Prof. Porter states that a cost leadership strategy is appropriate where a business has a high relative market share and has been able to reduce costs because of economies of scale. He states, ‘Cost leadership requires aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, and cost minimisation in areas like service, sales force, advertising and so on.’ What is a differential strategy? The differential strategy calls for differentiating a product or service from the competitor’s products or services. The differentiation may
