Final answer:
A firm implementing a differentiation strategy expects to charge premium prices due to unique product qualities that reduce customer price sensitivity and distinguish the product in the market.
Step-by-step explanation:
A firm successfully implementing a differentiation strategy would expect to charge premium prices. Differentiated products are those that a firm has made distinct from those of its competitors through differences in the physical aspects of the product, location, intangible aspects, or perceptions. By doing so, they create products that stand out in the marketplace, allowing the firm to charge higher prices because customers perceive these products as unique or of higher value. Therefore, customers are typically less sensitive to price increases for such differentiated products, especially when the brand has built a well-respected name over time or when there is significant variety that justifies the differentiation.
However, a differentiation strategy does not inherently mean there will be high levels of industry rivalry or that products are perceived as typical of industry products. In fact, successful differentiation often leads to reduced price sensitivity and a unique market position.