Successful differentiation enables firms to set prices at the industry average and gain market share or ________.
A) lower prices over those of competitors and gain higher margins
B) raise prices over those of competitors and gain higher margins
C) set prices above industry average and gain a smaller market share
D) set prices below industry average and gain a larger market share

Question

Quizplus · Accepted Answer

Successful differentiation enables firms to create a unique value proposition for customers, which allows them to justify higher prices for their products or services. By raising prices higher than competitors, the firm can gain higher profit margins while still maintaining or increasing its market share. Therefore, option B is the correct answer.

Successful Differentiation Enables Firms to Set Prices at the Industry