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) most buyers accept the customer value proposition as unique and the product can command a higher price or produce sufficiently bigger unit sales to cover 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

A broad differentiation strategy can only enhance company profitability if buyers perceive the product's differentiating features as valuable and are willing to pay a higher price for it. If the value proposition is unique and the product can command a higher price or produce sufficiently bigger unit sales to cover the added costs of achieving the differentiation, then the strategy can be profitable. However, if buyer switching costs are low, customer loyalty is low, or buyers are prone to shop the market for sellers having the best price, it may be difficult to maintain the differentiation and achieve profitability.

Whether a Broad Differentiation Strategy Ends Up Enhancing Company Profitability