Question

Which of the following are reasons a differentiation strategy may not succeed? (Check all that apply.)

A. Other companies may be able to imitate the differentiation of the product or service.

B. Companies may erode their quality brand image if they sell other lines of products or services at lower prices and quality.

C. Profit margins tend to be somewhat lower when companies use a differentiation strategy.

D. The product's or service's price is too high for the value customers receive.

Answer 1

A differentiation strategy may fail if other companies can imitate the differentiated products, if the company's quality brand image is diluted by selling lower quality products, or if the price is too high in relation to the value provided.

Step-by-step explanation:

The reasons a differentiation strategy may not succeed include various factors. Some of the key factors are:

• Other companies may be able to imitate the differentiation of the product or service, reducing the uniqueness of the offering.
• Companies may erode their quality brand image if they sell other lines of products or services at lower prices and quality, which can create confusion among consumers and dilute the brand's premium status.
• Contrary to the statement, profit margins tend to be higher when companies use a differentiation strategy, as they can often charge premium prices; thus, low profit margins are not typically associated with successful differentiation.
• If the product's or service's price is too high for the value customers receive, it can result in customers turning away from the product in search of more cost-effective alternatives.