Product differentiation by incumbents act as an entry barrier because
A) new entrants cannot differentiate their products.
B) incumbents will take legal action if new entrants do not differentiate their products.
C) it helps a firm to derive greater economies of scale.
D) new entrants will have to spend heavily to overcome existing customer loyalties.

Question

Quizplus · Accepted Answer

When existing competitors have strong brand identification and customer loyalty, differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing customer loyalties.

Product Differentiation by Incumbents Act as an Entry Barrier Because