Porter Cost Leadership
Porter's cost leadership is one of the three generic competitive strategies described by Michael Porter (also known for Porter's five forces model). Thus, in addition to the other two competitive strategies (differentiation and focus), there is cost leadership. As the name suggests, this is a strategy that looks primarily at price. "How can we make our product or service as cheap as possible in order to market it as cheaply as possible?" is the central question here.
Cost leadership as Porter's competitive strategy involves a number of steps. First, a focus optimizing business processes. This ensures a low cost price (broken down into fixed and variable costs). Then this low cost price translates to either higher margins for the producer and thus more profit or lower prices for the consumer, accompanied by higher sales.
