Question 1

The way a product is differentiated from other products of its type and the price of the product determine which product a customer chooses to satisfy his or her needs.

Accepted Answer

The differentiation and pricing of a product are two important factors that influence a customer's decision to choose a specific product to meet their needs. Customers are likely to choose a product that offers unique features, benefits or value compared to other products in the market. The price of a product also plays a critical role in customer choices, as customers may be more likely to choose products that offer a good balance of value and affordability. Therefore, both differentiation and price are important considerations for businesses seeking to attract and retain customers.

Question 2

Companies that follow a standardization strategy ignore the many different market segments in an industry and position their products to appeal to the average customer.

Accepted Answer

Companies that follow a standardization strategy offer the same products or services to all markets, thus ignoring the unique features of individual market segments, and positioning themselves for the average customer.

Question 3

Companies with a differentiation advantage tend to charge a lower price for their products.

Accepted Answer

Companies with a differentiation advantage tend to charge a premium price for their products as customers are willing to pay more for the added value and unique features offered by the product.

Question 4

The brand loyalty enjoyed by the differentiated company will not always protect it from substitute goods and services.

Accepted Answer

The answer of The brand loyalty enjoyed by the differentiated...

Question 5

Differentiation can help a company to grow overall demand and capture market share from its rivals.

Accepted Answer

Differentiation can make a company's products or services stand out from competitors, which can attract more customers and increase demand. Additionally, if a company can differentiate itself effectively, it can become a leader in that particular market and capture more market share from its rivals.

Question 6

The generic business-level strategies are cost leadership, differentiation, and mass marketing.

Accepted Answer

The generic business-level strategies are cost leadership, differentiation, and focus strategy, not mass marketing.

Question 7

A company has a competitive advantage if it can increase costs relative to rivals.

Accepted Answer

A company has a competitive advantage if it can reduce costs relative to rivals, not increase costs. Increasing costs will weaken a company's competitive position.

Question 8

Mike's Eatery, a fast food chain, neither customizes its product offerings nor sells new products based on  market segments. Mike's Eatery is pursuing standardization strategy.

Accepted Answer

Mike's Eatery is pursuing standardization strategy by offering the same product offerings without customization across all its locations.

Question 9

A generic business-level strategy is a strategy that gives a company a specific form of competitive position and advantage over its rivals that results in above-average profitability.

Accepted Answer

A generic business-level strategy does provide a company with a specific form of competitive position and advantage that leads to higher profitability. Examples of generic business-level strategies include cost leadership, differentiation, and focused/niche strategies.

Question 10

Differentiation leads to high brand loyalty, which in turn significantly increases the threat of new firms entering the industry.

Accepted Answer

Differentiation can lead to high brand loyalty, which typically decreases the threat of new firms entering the industry, as loyal customers are less likely to switch to new entrants.

Question 11

When a company already has a low-cost structure, it has to give up a lot of differentiation in its product offering to get additional cost reductions.

Accepted Answer

This is because a low-cost structure means that the company has already cut costs as much as possible, so any additional cost savings would likely require sacrificing differentiation or quality in the product offering.

Question 12

When a company decides to serve a limited number of segments, or just one segment, it is pursuing a segmentation strategy.

Accepted Answer

The answer of When a company decides to serve a...

Question 13

Companies that focus on the higher-income or higher-value end of the market will tend to have a higher cost structure.

Accepted Answer

Companies that target higher-income or higher-value customers often invest more in creating premium products or services, providing more personalized customer service, and differentiating themselves through marketing and branding efforts. All of these factors can increase a company's cost structure, compared to those that focus on more price-sensitive customers.

Question 14

A low-cost company is often best positioned to survive price rivalry in its industry.

Accepted Answer

A low-cost company has a competitive advantage in price rivalry because it can offer products or services at a lower price than its competitors. This makes it an attractive option for price-sensitive customers and helps the company maintain or increase its market share.

Question 15

In commodity markets, competitive advantage goes to the company that has the lowest costs.

Accepted Answer

In commodity markets, the products are typically viewed as standardized and interchangeable. Therefore, the company that can produce the product at the lowest cost will have a competitive advantage in pricing and profitability.

Question 16

A firm's business model should contain three components: what is to be satisfied, who is to be satisfied, and how they will be satisfied.

Accepted Answer

A firm's business model should include the three components of what will be satisfied (the firm's value proposition), who will be satisfied (the target customers), and how they will be satisfied (the firm's revenue streams and operations).

Question 17

All focus strategies entail serving a specific market segment using a differentiation approach.

Accepted Answer

Focus strategies can involve either a differentiation approach or a cost leadership approach, not just differentiation.

Question 18

A product's appeal to customers' desires cannot be considered a source of differentiation.

Accepted Answer

A product's appeal to customers' desires can be a source of differentiation, as it can set it apart from similar products in terms of features or benefits that are most important to the target audience.

Question 19

An efficiency frontier shows all of the different positions that a company can adopt with regard to differentiation and cost.

Accepted Answer

An efficiency frontier, also known as a productivity possibility frontier, shows the different combinations of cost and differentiation that a company can achieve. It represents the trade-offs between cost and differentiation, and illustrates the optimal positions that a company can adopt to maximize its value proposition.

Question 20

Market segmentation refers to the process of subdividing a market into clearly identifiable groups of customers with similar needs, desires, and demand characteristics.

Accepted Answer

Market segmentation is the process of dividing a market into smaller groups with similar characteristics. This allows companies to tailor their marketing efforts and messages to specific segments, increasing the effectiveness of their campaigns.

Quiz 5: Business-Level Strategy