The Effect of Cost Leadership Strategy on Market Share: A Study of Supermarkets in Gombe State
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Background of the Study
Cost leadership is one of the most widely adopted competitive strategies in the retail sector, where firms aim to become the lowest-cost producer in their industry. Supermarkets in Gombe State, like many others in Nigeria, face stiff competition and fluctuating consumer preferences, making the adoption of cost leadership strategies crucial for sustaining market share (Eze & Okoye, 2023). By focusing on reducing operational costs and offering competitive pricing, supermarkets hope to attract a larger customer base, thereby increasing their market share.
Previous studies have shown that cost leadership can be an effective strategy for increasing market share, especially in price-sensitive markets (Adebayo & Olanrewaju, 2024). In Gombe State, where consumers are highly price-conscious due to economic constraints, supermarkets that implement cost leadership strategies successfully can gain a competitive edge. However, the effectiveness of this strategy in gaining market share in such a competitive environment is not well-established, thus requiring further investigation.
Statement of the Problem
While cost leadership is a widely used strategy in the retail industry, the impact of this approach on market share in supermarkets in Gombe State has not been sufficiently explored. Some supermarkets have adopted cost leadership strategies with varying degrees of success, but the actual effects on market share remain unclear. Understanding the factors that contribute to the success or failure of cost leadership strategies in this context is essential for guiding future strategic decisions (Aliyu & Gana, 2023).
Objectives of the Study
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To evaluate the impact of cost leadership strategy on market share in supermarkets in Gombe State.
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To identify the factors influencing the success of cost leadership strategies in supermarkets.
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To assess how cost leadership affects customer preferences and purchasing behavior in supermarkets.
Research Questions
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What is the effect of cost leadership strategy on market share in supermarkets in Gombe State?
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What factors contribute to the success of cost leadership strategies in supermarkets?
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How does cost leadership influence customer preferences and purchasing decisions?
Research Hypotheses
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Cost leadership strategies do not significantly affect market share in supermarkets in Gombe State.
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Factors such as pricing, operational efficiency, and product range do not significantly influence the success of cost leadership strategies.
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Cost leadership strategy does not significantly affect customer purchasing behavior and preferences.
Scope and Limitations of the Study
This study will focus on supermarkets in Gombe State, specifically examining the relationship between cost leadership strategy and market share. Limitations include the challenge of distinguishing the effects of cost leadership from other competitive strategies such as differentiation and focus strategies.
Definitions of Terms
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Cost Leadership Strategy: A competitive strategy where a firm aims to be the lowest-cost producer in its industry.
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Market Share: The portion of total sales in the market controlled by a particular firm.
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Supermarkets: Retail establishments that offer a wide variety of food and household products, typically organized into departments.
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