Facing stiff competition in the e-reader market, Sumac Industries wants to protect its competitive advantage by increasing the perceived value of its reader. Sumac's best strategy to accomplish this would be to
A) increase the cost of production to add innovative new features.
B) highlight the number of celebrities who use Sumac e-readers.
C) lower the retail price of its e-reader to attract new customers.
D) try to imitate some of the features found in competing products.

Question

Quizplus · Accepted Answer

A valuable product enables a firm to improve its profit margin by increasing sales without raising production costs. By touting the use of Sumac e-readers by celebrities, Sumac can differentiate itself from competitors and improve its perceived value, leading to higher sales. Adding expensive new features or lowering the retail price, on the other hand, will erode Sumac's profit margins, while imitating competitors will make it difficult for Sumac to differentiate itself.

Facing Stiff Competition in the E-Reader Market, Sumac Industries Wants