How Does a Differentiation Strategy Help in Gaining Competitive Advantage

question 55

Essay

How does a differentiation strategy help in gaining competitive advantage?

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Definitions:

Consumer Surplus

The split between the total amount consumers are prepared to spend on a good or service and the actual amount they spend.

Demand Curve

A diagram that displays the connection between the cost of a commodity and the level of demand for it within a set timeframe.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, measured above the supply curve to the equilibrium price.

Price Floor

A government-imposed minimum price charged for a good or service, intended to prevent prices from falling below a certain level to protect producers or market sectors.