Which is a risk of pursuing a differentiation strategy? A wide difference in cos
ID: 359378 • Letter: W
Question
Which is a risk of pursuing a differentiation strategy?
A wide difference in cost between differentiated and undifferentiated products
Absolutely no difference in cost between differentiated and undifferentiated products
A small difference in cost between differentiated and undifferentiated products
None of the above
A.A wide difference in cost between differentiated and undifferentiated products
B.Absolutely no difference in cost between differentiated and undifferentiated products
C.A small difference in cost between differentiated and undifferentiated products
D.None of the above
Explanation / Answer
D. None of the above
In case of pursuing a differentiation strategy, the cost of pursuance may be either high or low, but does not impact the market share even if the cost is passed on to the consumers by way of its final mark-up price for the reason being the products are so unique in the market that would prevent the other market players from entering into the market and quoting their price. Hence the consumers may be willing to pay any price in order avail this distinct product that none other offers in the market. Accordingly, the cost differentiation cannot be the risk of pursuing the differentiation strategy. Although one small risk involved is that the price-sensitive consumers may resort to cheaper substitutes owing to the higher cost of these unique differentiated products in the market.
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