Whether a Broad Differentiation Strategy Ends Up Enhancing a Company's

question 109

Multiple Choice

Whether a broad differentiation strategy ends up enhancing a company's profitability depends mainly on whether

• A)many buyers view the product's differentiating features as having value.
• B)most buyers have similar needs and use the product in the same ways.
• C)most buyers accept the customer value proposition as unique and the product can produce sufficient unit sales to cover the costs of achieving the differentiation.
• D)buyer switching costs are low and customer loyalty to any one brand is low.
• E)buyers are prone to shop the market for sellers offering the best price.

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Definitions:

Direct Labor Costs

Costs that can be directly attributed to the production of goods or services, such as wages paid to workers manufacturing a product.

Net Operating Income

This is the income derived from normal business operations after deducting operating expenses but before interest and taxes.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested in the business.

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.