A differentiation strategy can be effective 1. The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because a. customers will seek out the lowest cost product. b. customers of non-differentiated products are sensitive to price increases. c. customers are loyal to brands that are differentiated in meaningful ways. d. the differentiation strategy benefits from rivalry because it forces the firm to innovate. 2. Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically-raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. Wholesomeâ€™s main supplier of lamb has announced that the price for lamb will be 15 percent higher next year. a. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer. b. Companies pursuing Wholesomeâ€™s business strategy are especially vulnerable to this risk. c. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina. d. Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns. 3. Which of the following is NOT a value-creating activity associated with the differentiation strategy? a. intensive training programs to improve employee effectiveness and efficiency b. strong capability in basic research c. rapid and timely deliveries to customers d. procurement systems focused on finding the highest quality raw materials 4. A differentiation strategy can be effective in controlling the power of substitutes in an industry because a. customers have low switching costs. b. substitute products are lower quality. c. a differentiating firm can always lower prices. d. customers develop brand loyalty. 5. Recently, the only type of car available for Anthony to rent on a business trip was a compact, fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is in the market for a new car and had previously considered only buying another luxury SUV. Now, he is thinking about the significant cost savings he would have if he bought the compact vehicle rather than a new SUV. This is an example of the competitive risk that a. a competitorâ€™s products can convey a productâ€™s differentiated features to a customer at a significantly reduced price. b. a product imitation can cause customers to perceive that competitors offer essentially the same good. c. experience can narrow a customerâ€™s perceptions of the value of a productâ€™s differentiated features. d. brand loyalty insulates a company from rivalry with competitors. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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