In what situation can a company have both differentiation and a low cost position quizlet?

Lowering of cost can help the company to increase the sales and gaining a market share ultimately increases the profitability of the company. Thereby the company can give a tough competition to its competitors as it is having a competitive advantage of the low cost and differentiation of products.

A product can be differentiated in its quality, reliability, superior functions and features and better sales services and support to the customers. This will differentiate the product as well the company from its competitors.

Therefore, with the help of lowering of cost and differentiation of products a company can plan for innovation of new products and process that are helpful in gaining competitive advantage over other competitors and helps in gaining more profits. The competitors cannot match with the company strategy which is following the lowering cost and differentiation strategy. Hence, the company can gain competitive advantage through this strategy.

Example: A Rolex watch will be differentiated from other brands like Timex and a titan by superior design, quality of material and reliability.

1. Uniqueness that is not valuable - must bundle correctly so customer perceives valuable

2. Too much differentiation - firms may strive for quality or service that is higher than customers desire thus they become vulnerable to competitors that provide an appropriate level of quality at a lower price.

3. Too high a price premium - customers may desire the product, but they are repelled by the price premium

4. Differentiation that is easily imitated

5. Dilution of brand identification through product-line extensions - firms may erode their quality brand image by adding products or services with lower prices and less quality

6. Perceptions of differentiation that vary between buyers and sellers - companies must realize that although they may perceive their products and services as differentiated, their customers may view them as commodities.

• Seeking out high-quality inputs

• Striving for innovation and technological advances

• Creating superior products features, design, and performance

• Investing in production-related R&D activities

• Pursing continuous quality improvement

• Emphasizing human resource management activities that improve the skills, expertise, and knowledge of company personnel

• Increasing emphasis on marketing and brand-building activities

• Improving customer service or adding additional services