Introduction To Low Cost Strategy And Differentiation Strategy

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Chapter 5:-
1. Describe low-cost strategy. How does this relate to differentiation?
It is one kind of pricing strategy in which a company offers a very low price for its product or services compared to its competitors to fuel demand and increase its market share. This type of strategy is called as Cost Leadership strategy.
This type of strategy is usually followed by the company when they enter into ne market to gain the market share where they find it more potential.
Relationship between Low-cost strategy and Differentiation Strategy:
Both strategies are contradictory in nature. Where low cost focuses on less price and Differentiation focuses on the Quality of the product. Low cost is mostly used by smaller companies and also while …show more content…

· Easier communication, as marketing is done for specific segments of the market which are more likely to buy the service.
· This leads to cost cutting for marketing techniques as we don’t have to target whole market
· With application of marketing segmentation growth opportunities and market share also increases.
Approaches used to segment market
· Geographically: Customers are targeted according to the location preferences for example a gardener needs to focus on their local market where as internet business can target a broader customer which can be whole country.
· Demographic: This is done on the basis of Age, Gender, Occupation, Socio-economic groups for example cosmetic products needs to target to only female consumers and toys for smaller age group children.
· Behavioral: This is done with the help of tabulating previous data to determine the rate of usage, readiness to purchase and loyalty of the customer.
· Psychographic: Customers are divided according to their personality, lifestyles, attitudes and class for example if customers are more inclined to premium seats with isolated environment of a cinema hall.
The above techniques can lead to competitive advantage because they don’t have to waste time for marketing on customer base that is unrelated to their product or service which in turn will increase their market share and effectiveness of spreading information of their services to the

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