Question

A focused low-cost strategy can lead to attractive competitive advantage when:

A. buyers are looking for the best value at the best price.
B. buyers are looking for a budget-priced product.
C. buyers are price sensitive and are attracted to brands with low switching costs.
D. a market is emerging and demand in the target market niche is growing rapidly and is served by industry-wide competitors
E. a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment.

Answer 1

A focused low-cost strategy can lead to attractive competitive advantage when a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment. This allows the firm to offer the best value at the best price and gain a larger market share in a growing niche market.

Step-by-step explanation:

A focused low-cost strategy can lead to attractive competitive advantage when a firm can lower costs significantly by limiting its customer base to a well-defined buyer segment. This means that the firm can target a specific group of buyers and tailor their products or services to meet their needs, allowing them to offer the best value at the best price.

Buyers who are price sensitive and are attracted to brands with low switching costs are more likely to be interested in budget-priced products, making this option less applicable.

In addition, a market is emerging and demand in the target market niche is growing rapidly and is served by industry-wide competitors. This means that there is a potential for the firm to gain a larger market share and establish itself as a leader in the industry.

Examples of industries where a focused low-cost strategy can be effective include niche markets like luxury sports cars, eco-friendly products, or organic food products.