Question

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because: a. customers will seek out the lowest-cost product. b. customers of nondifferentiated products are sensitive to price increases. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry because it forces the firm to innovate.

Answer 1

Answer:

The correct answer is letter "C": customers are loyal to brands that are differentiated in meaningful ways.

Explanation:

The differentiation strategy consists of firms generating a differential advantage which implies adding a special feature to a product that makes it unique. Differential advantage does not imply offering services at lower prices. The differentiation strategy is translated into merely quality changes in a product or its service. For instance, a dealership providing free oil and breaks maintenance for 3 years to new vehicles purchased creates a differential advantage.

In such a scenario, customers tend to engage with the firm's brand which boosts their loyalty in the company.