What is Focused Cost Leadership


  Focused Cost or Differentiation Leadership (FCL, FDL)

a.       What is focused cost leadership? Briefly describe.

b.      What is focused differentiation leadership? Briefly describe.

c.       The bases of segmentation for markets are generally categorized as geographic, demographic, psychographic, and behavioural. Hint: See the table “Bases of Segmentation” at the end of this document. And, for a discussion of the bases of segmentation, watch this VoiceThread here (17:35). Give an example of how a company in the beer or non-alcoholic beverages industry (or another industry of interest to you) could use each base of segmentation to narrow the market and focus their strategy. See the example below for the cosmetics industry:

Industry:  Cosmetics

Base of segmentation Description of target chosen Description of the tailored offering
Geographic People living in urban (polluted) areas Skincare products that contain anti-oxidants to fight effects of pollution on the skin.
Demographic Upper-income millennial males Line of luxury (and expensive) skincare tailored for men’s specific needs.
Psychographic Active women who care about the environment, social issues, and animal welfare. Skincare products made in a carbon-neutral factory. Products contain organic, non-toxic ingredients. A percentage of profits is donated to women’s causes.
Behavioural For actors and performers but sold through makeup artist and theatrical makeup professionals. A line of cosmetics specifically formulated for the stage and for being in front of the camera. Available only through licensed makeup artists.

Table: Bases of Segmentation for Markets (for question 3)

Geographic Segmentation

  • Country
  • Region
  • City
  • Density (urban, suburban, rural)
  • Climate
Psychographic segmentation

  • Attitudes
  • Lifestyle (AIO)
  • Values
  • Personality
Demographic segmentation

  • Gender
  • Income
  • Age
  • Family, household size, life-cycle stage
  • Marital status
  • Occupation
  • Education
  • Ethnic origin
Behaviour segmentation

  • Benefits sought (quality, price, variety, atmosphere, convenience…)
  • Purchase occasions
  • User status
  • Loyalty status
  • Buy

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