2. Hulk buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Hulk wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Hulk T-shirt. Hulk presents the following data for its first two years of operations, 2018 and 2019.

| | | 2018 | 2019 |
| --- | --- | --- | --- |
| 1 | Number of T-shirts purchased | 225,500 | 257,000 |
| 2 | Number of T-shirts discarded | 20,500 | 24,000 |
| 3 | Number of T-shirts sold (row 1 — row 2) | 205,000 | 233,000 |
| 4 | Average selling price | $ 32.00 | $ 33.00 |
| 5 | Average cost per T-shirt | $ 17.00 | $ 15.00 |
| 6 | Administrative capacity (number of customers) | 4,700 | 4,450 |
| 7 | Administrative costs | $ 1,739,000 | $ 1,691,000 |
| 8 | Administrative cost per customer (row 7 + row 6) | $ 370 | $ 380 |

Administrative costs depend on the number of customers Hulk has created capacity to support, not on the actual number of customers served. Hulk had 4,300 customers in 2018 and 4,200 customers in 2019.

Required:

(1)Is Hulk's strategy one of product differentiation or cost leadership? Explain briefly. \((4\%)\)