Final answer:
Companies that offer higher quality products at lower prices than competitors are using a Cost leadership strategy. This entails being the lowest cost producer whilst maintaining a certain quality level. Product differentiation and Focus or Niche strategies serve different market aspects and may not specifically target cost efficiency.
Step-by-step explanation:
Companies that offer a higher quality product at a lower price than their competitors are utilizing a Cost leadership strategy. This approach is about being the lowest cost producer or provider for a certain level of product quality. Applying this strategy allows a company to gain a competitive advantage by producing at the lowest cost, so they can offer products or services at a lower price than their competitors or with a higher profit margin.
Product differentiation, on the other hand, refers to any action firms do to make consumers think their products are different from their competitors'. It involves distinctive features such as the physical aspects of the product, the location from which it is sold, intangible aspects of the product, and perceptions of the product. Differentiation can command a premium price or create brand loyalty, but it is not focused primarily on the cost aspect.
A Focus strategy or Niche strategy usually entails concentrating on a narrow customer segment or market, offering specialized products or services. It can involve cost leadership or differentiation but within a narrow market scope. It is sometimes aligned with a firm's core competency, emphasizing a business's specialization in one or a few areas.