An important advantage of this strategy is the increased demand for our product or service, in line with the free market, which can lead to a significant increase in profits. However, on the other hand, this concept carries the risk of incurring high costs to upgrade equipment and introduce innovations that reduce the price of the product. Similarly, cutting marketing expenses can reduce potential customers' awareness of low prices. These risks mean that only large and stable companies can afford to pursue a cost leadership strategy.
Differentiation
Also known as differentiation strategy or quality leadership, the differentiation strategy consists of differentiating our product from others on the market in terms of quality or uniqueness. This measure increases the demand for the good offered and even allows the company to increase its price without risking losing customers. The desired effect can also be achieved through effective marketing applied to the good or service in question.
This type of price leadership strategy is very beneficial for the environment, as the market offers us the best possible quality and differentiated products. In recent years, many companies have also tried to apply this strategy with regard to the naturalness of the products or the quality of the service. In this way, companies gain many regular and recurring customers, creating a kind of bond and a network of long-lasting relationships with them.