Question

Compare and contrast a low-cost generic strategy with a differentiation generic strategy. Use examples from the airlines or manufacturing industries to highlight the trade-off that need to be made in order to achieve a sustainable advantage.

Answer 1

Low cost strategy is also called as low price strategy which followed by company which has less competitive advantage. With using this strategy, company decides low price for its commodity to occupying market share and to control demand for its product. Example Wal-Mart

Differentiation followed by a company which produces unique products and targets different segments in the market. It generally followed by company which produces unique product in the market. Example Apple company

Low cost strategy vs differentiation strategy

With using low cost strategy company can produce low price products by minimising costs and save the customers from high prices

Differentiation strategy useful to differentiate its product and consumers are ready to pay high prices or reasonable prices

Low cost strategy used by company which has complex operations

Differentiation strategy used by company which has innovative and creative ideas

Low cost strategy and differentiation strategy

Both are useful to improve profits

These two are useful to attract customers by giving more value to them