When a company following a differentiation strategy ensures that the higher price it charges for its higher quality is not priced too far above the price of the competition,the company is using the process of
A) low-cost differentiation.
B) cost leadership.
C) cost proximity.
D) basic differentiation.
E) price fixing.

Question

Quizplus · Accepted Answer

The process described in the question is known as cost proximity, where a company tries to differentiate itself by offering higher quality products or services, but keeps its price close enough to that of the competition to avoid alienating customers. This approach allows the company to capture the benefits of differentiation (higher margins, customer loyalty), while avoiding the disadvantages (reduced demand due to higher prices). This approach is typical of companies following a differentiation strategy, where the focus is on offering unique and high-quality products/services to customers.

When a Company Following a Differentiation Strategy Ensures That the Higher