Final answer:
To prevent cannibalization, a company should use a differentiated targeting strategy, which aligns with the economic principle of offering a variety of products and allows companies to cater to different market segments without their products directly competing with each other.
Step-by-step explanation:
To avoid cannibalization, a company that has competing products or brands within a market should use a B) A differentiated targeting strategy. This strategy involves targeting different segments of the market with different products, tailored to each segment's unique preferences and needs. By doing so, the company can minimize the risk of its products competing against each other, which is beneficial in a market with product differentiation and monopolistic competition.
A differentiated targeting strategy allows a firm to distinguish its products through various means such as physical aspects, location, intangible aspects, and perceptions. This can help create loyalty for particular products without directly competing against its other offerings. It also aligns with the economic discussion on the benefits of a market-oriented economy that provides a wide variety of differentiated products, giving consumers the freedom to choose products that best match their preferences.