Question

Sometimes we choose to buy a product from a firm pursuing a cost leadership strategy, sometimes from one pursuing a differentiation strategy. Is that so? Why?

Talk about one or more products you have purchased whose manufacturer(s) followed a cost leadership strategy and one or more products you have purchased whose manufacturer(s) followed a differentiation strategy. For each product reflect about why the manufacturer’s strategy was successful in capturing you as a purchaser. Do you understand some things about the seller’s approach that you didn’t before? How will your new knowledge impact your future buying decisions? Make sure to use your posts to demonstrate your understanding of the unit’s material by using its vocabulary and applying its theories to your experience.

Answer 1

Below answer is briefed to make it clear and understandable.

Cost leadership strategy can be defined as a strategy which mainly focuses on producing standardized products at low per unit cost so as to capture the revenue share of the industry. Where as differentiation strategy aims at producing products or services that are unique and different from rest of the market.

With this example you'll be able to understand it better:
Oneplus is an smartphone manufacturing company which mainly aims at producing smartphones with better features and quality at lower price than other brands such as Apple and Samsung flagship phones. The recent product of Oneplus is Oneplus 6T, it offers better features than many other brands and better quality than many other brands and the main thing is price. It prices reasonably when compared to the smartphone giants Apple and Samsung. By this we can conclude that Oneplus uses cost leadership strategy.

Where as Apple uses differentiating strategy. iPhones are know for their software mainly (iOS). Apple designs iPhone in way that no product will b ever designed. It is entirely different from the market. It offers great features but not the best. It comes with great quality but not the best. It started with differentiation and it is still following it. Apple has large customer base who are very loyal. There is a Pareto 80/20 rule. Where 20% of the overall customers are sufficient to generate 80% of the profits to a company. Same is with the Apple Inc.

One can buy a Oneplus device basing on it's price, quality and design. But a person who buy's iPhone will be a previous customer or a person who wants to try something different. It is as simple as that.

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