Under Which Condition Would a Differentiation Strategy Be Especially Effective

question 18

Multiple Choice

Under which condition would a differentiation strategy be especially effective?

• A) When the target market niche is large, profitable and growing.
• B) When technological change is fast paced and competition revolves around rapidly evolving product features.
• C) When industry leaders do not consider the niche to be crucial to their own success.
• D) When the industry has many different niches and segments, thereby allowing a company to pick a competitively attractive niche suited to its own resources.
• E) When few, if any, other rivals are attempting to specialize in the same target segment.

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Definitions:

Net Operating Income

A measure of company profitability equal to revenue minus operating expenses, excluding taxes and interest.

Price Reduction

A decrease in the selling price of a product or service, often to increase demand or sales volume.

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific segment or department within a company.

Net Operating Income

Net operating income reflects a company’s financial performance by showing profit calculated from its core business operations, excluding taxes and interest expenses.