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:

Book Income Tax Expense

The income tax expense reported in the financial statements, calculated based on the accounting income before taxes.

Temporary Difference

Differences between the carrying amount of an asset or liability in the balance sheet and its tax base that will result in taxable or deductible amounts in the future.

Taxable Income

Income subject to tax, computed by deducting allowable deductions from gross income.

Book Income

The income reported by a business according to accounting principles, before taxation.