While concentrating on a specific demographic may develop a loyal pool of customers, the company is basing its fortunes on a small group of buyers. Depending on the market and competitive conditions hybrid strategy should be adjusted regarding the extent which each generic strategy cost leadership or differentiation should be given priority in practice.
Loprinzi: I think word of mouth had a lot do with it. Companies that are successful in achieving Cost Leadership usually have: Access to the capital needed to invest in technology that will bring costs down.
This strategy focuses on a buyer's perception of value.
This analysis looks at the competitive position of the business and the factors that will adversely affect its profitability. Innovation of products or processes may also enable a startup or small company to offer a cheaper product or service where incumbents' costs and prices have become too high.
An example is the success of low-cost budget airlines who, despite having fewer planes than the major airlines, were able to achieve market share growth by offering cheap, no-frills services at prices much cheaper than those of the larger incumbents.
New York Times.
This is achieved by offering high volumes of standardized productsoffering basic no-frills products and limiting customization and personalization of service. Firms that are successful with a cost leadership strategy usually have the following advantages: They have access to the capital needed to large investments in manufacturing facilities that lower the cost of production.
For example, GE uses finance function to make a difference. However, the company is depending on the spending habits of a small group of consumers for its profits. Firms may also choose to compete across a broad market or a focused market.