Nidhi’s brand of car decoration accessories was reputed but costly. Good product quality and top-notch after-sales services guaranteed her a good market share. They’d make minor strategic modifications to deal with shifting industry dynamics. After the pandemic occurred, many organizations shut shop but several others entered the market when sales began to improve. (thediscerningcat.com) People’s spending capabilities were affected and highly priced products sold less. By carefully studying cost leadership strategy examples, Nidhi realized that her products needed to be affordable. A popular focused cost leadership example showed how she could make existing customers happier and acquire more customers by offering cheaper but reliable products.
What Is Cost Leadership?
Cost Leadership Strategy Examples
What Is Cost Leadership?
Cost leadership strategy examples demonstrate that it refers to the strategy that an organization uses to project itself as the cheapest provider of a given product. It’s a marketing strategy highly effective in improving market share and capturing the attention of customers. Any cost leadership example will highlight the difficulties faced by the management to implement this strategy as costs have to be reduced at every level to remain competitive.
A cost focus strategy example will also reveal that organizations implementing this strategy need not offer cheaper products by compromising quality. In India, Big Bazaar can be considered a successful focused cost leadership example as it captured the market by offering quality products at cheaper rates compared to other organizations offering the same or similar products.
Although enticing customers might seem to be the main aim, a cost focus strategy example proves this strategy has several other benefits:
- It can make the supply chain more efficient.
- Lowering operational costs becomes easier using technology and automation.
- Selecting the best supplier fetches best prices that allow buying in bulk and maintaining good rapport.
- Process automation reduces production time and time-to-market.
- Automated processes reduce training time and employee errors.
A focused cost leadership example clarifies that it isn’t similar to price leadership as an organization may be a low-cost producer but still not offer the cheapest rates to the customers.
Cost Leadership Strategy Examples
A cost leadership example shows how businesses can increase efficiency and reduce costs at every level. To understand this better, let’s look at some cost leadership strategy examples:
Walmart
Walmart is a globally recognized focused cost leadership example. They gained a competitive advantage by selling branded items at low costs. They’re a cost leadership example that teaches us how to minimize spending, achieve low operational costs, cut outsourcing costs and even help vendors cut costs.
McDonald’s
This list would be incomplete without mentioning McDonald’s as a cost focus strategy example. They deployed this strategy to minimize delivery time, implement effective training methods and produce in-house ingredients. They lowered wages, costs of raw material and human resources through high-asset utilization. This cost focus strategy example also demonstrates a method of serving more clients through effective time management in the fast-food industry.
Amazon
The most popular focused cost leadership example in e-commerce is Amazon. The organization used Porter’s strategy concepts and studied many a cost leadership example to increase processing capabilities and warehouse storage. They used advanced technologies to minimize costs and increase operational efficiency by automating purchase and delivery processes. They’re an excellent focused cost leadership example for organizations looking to achieve a competitive edge using technology and a level of differentiation.
A cost leadership example will show how organizations can promote private-label brands that can cut out brokers and middlemen who add to supply costs. A cost focus strategy example highlights how a limited variety and higher volume of products can boost an organization’s profit by improving its buying power. Managers must learn to study cost leadership strategy examples to understand the benefits of this strategy and offer products that are cheap and draw huge profits.
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Explore Harappa Diaries to learn more about topics such as Benefits of Price Leadership Model, What are the Business-Level Strategies, How to take the Right Decisions, and Different Types Of Root Cause Analysis to classify problems and solve them efficiently.
