A differentiation strategy works best when
A)technological change is fast-paced and competition revolves around rapidly evolving product features.
B)buyers' needs are homogeneous.
C)many rival firms are also pursuing a differentiation approach.
D)there are few other ways to make a product unique to buyers.
E)firms have ample excess cash to invest in R&D activities.

Question

Quizplus · Accepted Answer

A differentiation strategy is most effective when there is rapid technological change and competition revolves around product features. This is because the differentiation strategy relies on making a product unique and desirable to the customer through features, quality, design, and service. If the competition is also pursuing a differentiation strategy, it can limit the effectiveness of the strategy. However, if the technological change is fast-paced, there may be ample opportunities to differentiate the product from competitors. Homogeneous buyer needs, limited ways to make a product unique and ample excess cash to invest in R&D activities are not necessary conditions for a differentiation strategy to work best.

A Differentiation Strategy Works Best When