As the strategic manager of CutRite Scissors, you are tasked with producing a strategy for introducing a new line of premium scissors. Your competitor produces a line of similar scissors at a cost of $1 and sells them for $12. Because your company has inferior production capabilities, your scissors will cost $3 each to produce. However, your handle is proven to be more comfortable than your competitors'. Assuming you are guaranteed to sell the same number of units as your competitor, which of the following strategies is most likely to achieve a competitive advantage?
A) Reduce the quality of materials used in CutRite scissors to bring unit costs down to $1, then sell the scissors for $12.
B) Continue to produce CutRite scissors for $3 but set the price at $10.
C) Offer a buy-one-get-one-free sale on CutRite scissors.
D) Market CutRite scissors as a higher-quality alternative and sell them for $15.

Question

Quizplus · Accepted Answer

By emphasizing the quality and comfort of CutRite scissors, you differentiate the product and create superior value for customers. Although your scissors are more expensive to make at $3 each, the increased perceived value of your product allows you to sell them for $15, making the difference between value creation and cost greater than your competitor's. The greater the difference between value creation and cost, the greater the firm's economic contribution and the more likely it will gain competitive advantage.

As the Strategic Manager of CutRite Scissors, You Are Tasked