Question

FunText is a company that owns an app used for text messaging. It recently offered a six month membership extension to its existing customers without any additional charges. Which competitive strategy is FunText trying to implement in this scenario

Answer 1

Answer: Differentiation Strategy

Explanation:

Companies devise strategies in other to drive business and sales revenue.

Types of strategies employed by companies to drive sales include:

1. cost leadership strategies

2. Differentiation strategies

3. Cost focus

4. Differentiation focus

In the scenario above, funtext company implemented the differentiation strategy. in differentiation strategy, a firm tries to distinguish itself from others, they have sales teams that can explain why their products are better than the competitors product. therefore such companies have a reputation for creating innovative products just like in the case of funtext creating a text messaging app. so to promote their product and have a competitive advantage over their competitors they employed a differentiation strategy of offering a six months membership extension with no additional charges. by doing this, they are communicating how their business is different from others by positioning their product in the mind of their customers.