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The two main strategies you can adopt as a business are that you focus either on costs or on differentiation. Low cost strategy allows businesses to position themselves in the market as the low cost provider offering products and services at the lowest price point to their customers. If a company adopts a focused low €‘cost strategy , it competes against the market cost leader only in those segments where it has no cost disadvantage, such as small niches or complex products that do not lend themselves to economies of scale. These firms enter the market with a different product offering more benefits to their target customers at a lower price. Low-Cost Focus. A low-cost strategy requires organizations to: -focus its attention on customers from a particular geographic area. The differentiation strategy for the business is to focus on creating an intimate, long-lasting, profitable relationship. This is a very challenging approach for many companies, because niche markets with limited overall buying power can inhibit your ability to … A focused low-cost strategy can lead to attractive competitive advantage when. The target market of a best-cost provider is. A focused low-cost business strategy is very similar to a focused strategy – one that focuses on a small niche of customers but with one small difference, you guessed it – it’s lower cost! A focused low-cost strategy is often a common choice for firms entering the market. It’s all about focusing on the supply chain and cross-functional teams that work together in order to maximize profits while reducing cost. When you focus on costs, then you try to become a low-cost provider. However, this doesn’t mean that established firms cannot or do not follow the focused low-cost strategy. value-conscious buyers. A focus strategy can be pursued using either a differentiation or a low €‘cost approach. For example, if two companies make essentially identical products that sell at the same price in the market place, the one with the lower costs has the advantage of a higher level of profit per sale. Competitive Edge: Customer Retention and Loyalty. As with a focused low-cost strategy, narrow markets are defined in different ways in different settings. If your business doesn’t appeal to a larger market, then it’s best to focus on a niche. Focused Low-cost Strategy helps you protect your business from competitors, maximizes your profits and eliminates the need for expensive machines and expensive product development. a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment. This generic strategy calls for being the low cost producer in an industry for a given level of quality. Focused differentiation is the second of two focus strategies. Focused low cost strategy narrows down the strategic alternatives further by focusing on a specific market segment or a specific specialized customer requirements. ... Focus Strategy. Focused Low-Cost Strategy: The focused low-cost strategy seeks to offer low prices to a particular segment of the marketplace rather than trying to capture the entire marketplace. The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. Product Leadership. This is arguably the hardest value discipline in which to excel. A company that has a narrow market and an advantage of a low-cost business model may opt for the cost focus strategy. A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market (Table 5.7 “Focused Differentiation”). In a low cost strategy, the true winner is the company with the actual lowest cost in the market place. 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