Which of the following is true regarding the differentiation strategy?
A)The differentiation strategy cannot protect a company from price sensitivity.
B)Brand images play a negligible role in differentiation strategies.
C)Companies using the differentiation strategy have to build large-scale facilities.
D)Companies have to control their overhead costs to use the differentiation strategy.
E)Companies achieve above-average returns if they succeed in their differentiation strategy.

Question

Quizplus · Accepted Answer

The differentiation strategy aims to offer unique features and attributes to differentiate the products or services from competitors, and customers are willing to pay a premium price for such differentiation. If a company succeeds in this strategy, they can achieve above-average returns from their higher profit margins. Therefore, option E is the correct choice. The other options are incorrect because the differentiation strategy can help protect companies from price sensitivity, brand images play a significant role in differentiation strategies, large-scale facilities are not necessary for differentiation, and controlling overhead costs is important for overall profitability but not specific to differentiation strategy.

Which of the Following Is True Regarding the Differentiation Strategy