Whether a broad differentiation strategy ends up enhancing company profitability depends mainly on whether
A) many buyers view the product's differentiating features as having value.
B) most buyers have similar needs and use the product in the same ways.
C) the extra price the product commands exceeds the added costs of achieving the differentiation.
D) buyer switching costs are low and customer loyalty to any one brand is low.
E) buyers are prone to shop the market for sellers having the best price.

Question

Quizplus · Accepted Answer

The success of a broad differentiation strategy relies on the ability of a company to command an extra price for the unique features of its product. If this extra price is higher than the added costs of achieving the differentiation, then the strategy can enhance company profitability. Option A is partially correct but not comprehensive as the value of product's differentiating features alone cannot determine the profitability of the company. Options B, D and E are all incorrect as they do not impact the profitability of a company following a broad differentiation strategy.

Whether a Broad Differentiation Strategy Ends Up Enhancing Company Profitability