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Difference between Cost Leadership and Diffe…

Difference between Cost Leadership and Differentiation Strategies

Difference between Cost Leadership and Differentiation Strategies

Chiranjibi Mar. 08, 2018

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus.

Cost leadership emphasizes producing standardized products at a very low per-unit cost for consumers who are price-sensitive.

A differentiated marketing strategy is when a company creates campaigns that appeal to at least two market segments or target groups. For example, a store can promote a sale that appeals to people in at least two cities or locations, or a company can market a product that appeals to women in at least two age groups.

Different strategies offer different degrees of differentiation. A differentiation strategy should be pursued only after a careful study of buyers’ needs and preferences to determine the feasibility of incorporating one or more differentiating features into a unique product. A successful differentiation strategy allows a firm to charge a higher price for its product and to gain customer loyalty.