Differentiation is a more sustainable source of competitive advantage than cost leadership because:
A)A firm can control the differentiation of its products but cannot control its costs relative to all others, whose costs may suddenly fall
B)Differentiation gives a firm more loyal customers
C)Cost leadership can only ever be an operational issue, while differentiation is a strategic choice
D)Differentiation gives you the richest customers, who can survive any recession

Question

Quizplus · Accepted Answer

While cost leadership can be effective in the short term, it is not sustainable as competitors will eventually be able to match or undercut prices. Differentiation, on the other hand, can create a unique value proposition for customers and can be controlled by the firm. In addition, loyal customers are more likely to pay a premium price for a differentiated product or service, leading to higher profits. Cost relative to competitors can also change rapidly, but a firm that differentiates itself can maintain its advantage even if costs decline.

Differentiation Is a More Sustainable Source of Competitive Advantage Than