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Successful differentiation mainly allows a firm to :

A. be the industry's best-cost provider.

B. set the industry ceiling on price.

C. avoid being dragged into a price war with industry rivals and not be overly concerned about whether entry barriers into the industry are high or low.

D. command a premium price for its product, and/or increase unit sales, and or gain buyer loyalty to its brand.

E. take sales and market share away from rivals by solely undercutting them on price.

1 Answer

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Answer:

D. command a premium price for it's product, and/or increase unit sales, and or gain buyer loyalty to its brand

Step-by-step explanation:

Product differentiation refers to making distinct additions to product attributes and enhancing it's value, making it unique and distinct from competitors products, in order to gain a competitive advantage.

In markets full of similar products offering the same utility, product differentiation makes one product stand out against others owing to it's unique set of product attributes which no other offers.

Product differentiation if successful, leads to a business gaining competitive edge, since what it offers w.r.t it's products is something unique, of value, and which cannot be replicated by competitors.

Such competitive edge allows a firm to charge premium prices for its differentiated products and build customer loyalty towards brand. For instance Rolex watches would classify under differentiation, which allows it to set a premium price and have successfully built buyer loyalty over time.

User Kaushik Lele
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