Identify a true statement about product differentiation.
A)When the perceived value of a product increases in the mind of the customer, it also increases the customer's willingness to pay a higher price.
B)Companies that invest resources to create unique features in their products often charge a lower price.
C)It exists only when the products of two different companies are different in terms of technical features.
D)It is a strategy whereby companies attempt to gain advantage by producing similar products in bulk to reduce costs.

Question

Quizplus · Accepted Answer

When a company differentiates its product from competitors, it creates a perceived value in the mind of the customer, which can lead to an increased willingness to pay a higher price. The statement B is incorrect because companies that invest in unique features often charge a higher price to differentiate from competitors. The statement C is incorrect because product differentiation can also occur based on non-technical features such as branding, packaging, and customer service. The statement D is incorrect because bulk production to reduce costs is a different strategy known as economies of scale.

Identify a True Statement About Product Differentiation