Which of the Following Constitutes an Advantage of the Differentiation

question 74

Multiple Choice

Which of the following constitutes an advantage of the differentiation strategy?

• A) It creates an ability to obtain premium prices from customers.
• B) Companies following this strategy do not need to spend significant funds on advertising.
• C) Companies following this strategy depend on their ability to reduce the price to drive competition out of the market.
• D) Customers always prefer a product with features rather than a cheaper alternative.
• E) Customers are always eager to pay extra to obtain the unique features that a firm is trying to build its strategy around.

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale.

Conversion Cost

Direct labor cost plus manufacturing overhead cost.

Fitting Department

A specific section within a manufacturing facility where products are assembled, fitted, or finished according to specifications.

Weighted-Average Method

A cost-flow assumption used in inventory and cost of goods sold calculations that averages the costs of all similar goods available during the period.