Question

A differentiation strategy can improve a company's position vis-a-vis Porter's forces due to which of the following? (Check all that apply.)O The threat of substitutes is decreased due to customer loyalty.O Customer loyalty results in increased barriers to entry for potential competitors.O Rivalry is decreased because brand loyalty lowers customer sensitivity to price.

Answer 1

A differentiation strategy improves a company's competitive stance by decreasing the threat of substitutes and rivalry, as well as raising entry barriers, through customer loyalty and unique product offerings.

Step-by-step explanation:

A differentiation strategy is a significant tool in shaping a company's competitive advantage and can directly influence the competitive forces highlighted by Michael Porter. It does so through a variety of means:

• The threat of substitutes is decreased due to customer loyalty, as consumers who are committed to a differentiated brand are less likely to switch to alternative products.
• Customer loyalty results in increased barriers to entry for potential competitors because the established brand's hold on the market requires new entrants to invest heavily in marketing and innovation to compete.
• Rivalry is decreased because brand loyalty reduces the customers' price sensitivity, thereby allowing companies to maintain a competitive edge without engaging in price wars.

These factors all contribute to strengthening a company's market position by reducing the power of competitive forces through the creation of brand loyalty and differentiated products.