Happy Foods and General Grains both produce similar puffed rice breakfast cereals. For both companies, the cost of producing a box of cereal is 45 cents, and it is not possible for either company to lower their production costs any further. How can one company achieve a competitive advantage over the other?
A) Increase total perceived consumer benefits through differentiation.
B) Raise prices above the current reservation price.
C) Lower prices to the break-even price.
D) Increase the number of stock market shares available to investors.

Question

Quizplus · Accepted Answer

When costs are the same, the only option to increase the amount of economic value created and achieve a competitive advantage is to increase the maximum willingness to pay, or total perceived consumer benefits, through differentiation.

Happy Foods and General Grains Both Produce Similar Puffed Rice