What defines a low-cost strategy?

A low-cost strategy is defined by its focus on achieving operational efficiency to gain a competitive advantage in the marketplace. Companies implementing this strategy aim to produce their goods or services at the lowest possible cost while maintaining acceptable quality. By minimizing expenses through efficient production processes, economies of scale, and cost-cutting measures, they can offer lower prices to attract price-sensitive customers.

While product innovation, marketing activities, and high-end product development can create value and may be vital for certain business models, they do not align with the primary objective of a low-cost strategy. Instead, this approach is centered around delivering the same value as competitors at a more attractive price point, thereby capturing a larger market share through affordability.