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A cost leadership strategy is based on a marketing strategy in which price is the main strategic tool and where the business objective is market share leadership.
In order for this strategy to be successful, your business will need to become the lowest-cost producer in its industry. That means managing costs in marketing and non-marketing functions such as production, supply, etc.
The differential strategy calls for differentiating a product or service from the competitor's products or services. The differentiation may be in the product form, the brand image, features, technology, customer service, pricing or distribution channels.
At the heart of a successful differential strategy is the development of a customer franchise, based on brand loyalty. The differentiator can increase margins and avoid the need to compete in the low cost section of the market. This often implies a lower market share and is a strategy that could be pursued when the low cost leadership position is occupied by a strong competitor.
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