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Difference between Cost Leadership and Dif...

Difference between Cost Leadership and Differentiation Strategies

Difference between Cost Leadership and Differentiation Strategies

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Chiranjibi Chapagain 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.

Difference between Cost Leadership and Differentiation Strategies

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