Convenience

74
Part 2:
Planning
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economic recession, most youth-oriented retailers such as American Eagle Outfitters,
Quiksilver, and Aéropostale slashed prices to generate sales. But Abercrombie & Fitch
decided to hold firm to standard pricing in an attempt to maintain a differentiated
image for its products.
18
Similarly, other firms tried to provide strong differentiation on
the basis of outstanding customer service.
19
An organization implementing an
overall cost leadership strategy
attempts to gain a
competitive advantage by reducing its costs below the costs of competing firms. By
keeping costs low, the organization is able to sell its products at low prices and still
make a profit. Timex uses an overall cost leadership strategy. For decades, this firm
has specialized in manufacturing relatively simple, low-cost watches for the mass mar-
ket. The price of Timex watches, starting around $39 95, is low because of the com-
pany’s efficient high-volume manufacturing capacity. Poland Springs and Crystal
Geyser bottled waters are promoted on the basis of their low cost. Other firms that
implement overall cost leadership strategies are Hyundai, BIC, Old Navy, and Hershey.
When the 2008 economic recession hit, Hershey actually experienced a jump in sales—
during hard times, consumers started cutting back on high-end chocolate products
from Godiva but weren’t willing to forgo chocolate altogether.
20
Likewise, other low-
cost producers also benefited as consumers avoided higher-priced brand-name
products (i.e., those with a differentiation strategy) in favor of lower-priced goods.
For instance, both P&G and Colgate saw sales of products such as Tide, Pampers,
and Colgate toothpaste decline, whereas sales of lower-priced private-label products
jumped.
21
A firm pursuing a