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Differentiation and Cost Leadership Strategy.

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1. How can differentiation and cost leadership strategic options be employed to create and sustain a competitive advantage in a business?

2. What could be the differentiation and cost leadership options in pricing, features, and the clientele base for a social networking application?

3. What are the pros and cons of the differentiation and cost leadership options?

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How can differentiation and cost leadership strategic options be employed to create and sustain a competitive advantage in a business?

Differentiation Strategy

Companies generally use a differentiation strategy or a cost leadership strategy separately from one another. That is to say, they will use one or the other. When a company uses the differentiation strategy, all available resources and capabilities are used to produce a product that is superior in value to other products on the market of the same type, yet unique enough to attract attention. Another way to employ a differentiation strategy is to create different products in the same category to gain market share. A good example of this strategy comes from Keurig. Keurig has introduced coffee to the world for home use in a unique way. They have several different machines that all do basically the same thing, brew coffee. They have several brands of coffee, all are coffee, but each is different in a unique way that adds value to the customer and in turn the company.

The Cost Leadership Strategy

This strategy creates value by utilizing resources and capabilities to create a product that costs less than its closest competitor. This strategy relies ...

Solution Summary

This 791 word solution outlines cost differentiation strategy, as well as, Cost Leadership Strategy. It provides a look at the Pros and Cons related to both strategies, and contains one reference to tie the concepts of the material together.

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