A Low-Cost Leader Can Translate Its Low-Cost Advantage Over Rivals

question 12

Multiple Choice

A low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

• A) cutting its price to levels significantly below the prices of rivals.
• B) either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold.
• C) going all out to use its cost advantage to capture a dominant share of the market.
• D) spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry-it can then use this reputation for low prices to build very strong customer loyalty, gain repeat sales year after year, and earn sustained profits over the long-term.
• E) outproducing rivals and thus having more units available to sell.

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Definitions:

Possible Solutions

Various options or strategies that could be implemented to solve a problem or address a situation.

Expanding

Growing or increasing in size, volume, or scope; extending or spreading out from a center or in all directions.

Creativity

The ability to produce original and unusual ideas, or to make something new or imaginative.

Novel Ideas

New, original, and innovative concepts or thoughts that have not been previously considered or explored.