39) A company attempting to be successful with a broad differentiation strategy has to
A) study buyer needs and behavior carefully to learn what buyers consider important, what they
think has value, and what they are willing to pay for.
B) incorporate more differentiating features into its product/service than rivals.
C) concentrate its differentiating efforts on marketing and advertising (where almost all
differentiating features are created).
D) over-differentiate so that product quality, features, or service levels exceed the needs of most
buyers.
E) concentrate on offering advanced features, whether or not they have value to the customers, to
create unique products.
40) Successful broad differentiation allows a firm to
A) be the industry’s best-cost provider.
B) set the industry ceiling on price.
C) avoid being dragged into a price war with industry rivals and not be overly concerned about
whether entry barriers into the industry are high or low.
D) command a premium price for its product, and/or increase unit sales, and/or gain buyer
loyalty to its brand.
E) take sales and market share away from rivals by undercutting them on price.
41) A company that succeeds in differentiating its product offering from those of its rivals is
UNLIKELY to
A) compete on innovative, quality products.
B) command a premium price for its product.
C) experience precipitous drops in unit sales.
D) lose buyer loyalty to its brand.
E) attract mainly price-conscious buyers.
42) A broad differentiation strategy improves profitability when
A) it is focused on product innovation.
B) differentiating enhances product performance and quality.
C) the differentiating features appeal to sophisticated and prestigious buyers.
D) the higher price the product commands exceeds the added costs of achieving the
differentiation.
E) the differentiator charges a price that is only fractionally higher than the industry’s low-cost
provider.
43) 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.
44) Opportunities to differentiate a company’s product offering
A) are most reliably found in the R&D portion of the value chain.
B) are typically located in the sales and marketing portion of the value chain.
C) can exist in activities all along an industry’s value chain.
D) usually are tied to product quality and customer service.
E) are most frequently attached to a company’s manufacturing expertise and to its ability to
achieve economies of scale in production.
45) What are value drivers?
A) a set of factors (analogous to cost drivers) that are particularly effective in having a strong
differentiation effect
B) a firm’s hidden success factor for creating over-the-top product features that will command
the highest price in the industry
C) a technique for easily identifying factors that validate a firm’s performance
D) a set of factors that verify the unique nature of a firm
E) a set of guidelines for identifying the most promising upscale attributes to incorporate into a
product
46) A differentiation strategy works best when
A) technological change is fast-paced and competition revolves around rapidly evolving product
features.
B) buyers’ needs are homogeneous.
C) many rival firms are also pursuing a differentiation approach.
D) there are few other ways to make a product unique to buyers.
E) firms have ample excess cash to invest in R&D activities.
47) Hilton Hotels has diversified its lodging brands by adding Curio Collection, Tapestry
Collection, and Canopy by Hilton, properties that offer stylish, distinctive decors and
personalized services that appeal to young professionals seeking distinctive lodging alternatives.
Managers can enhance the differentiation of these new brands based on all of these value drivers
except
A) striving to create superior product features, design, and performance.
B) striving for innovation and technological advances.
C) pursuing continuous quality improvement.
D) increasing the intensity of marketing, brand building, and sales activities.
E) seeking out low-quality inputs.
48) Brands create customer loyalty, which in turn
A) increases the perceived cost of switching to another product.
B) strengthens the product’s quality.
C) validates the motivation for alternate products.
D) provides monetary incentive for using the product.
E) allows a company to operate facilities at full capacity.
49) Approaches to enhancing differentiation through changes in the value chain do not include
A) coordinating with retailers to enhance the buying experience and building a company’s image.
B) coordinating with suppliers to speed up new product development cycles.
C) coordinating with distributors or shippers to lower shipping costs.
D) collaborating with suppliers to improve many dimensions affecting product features and
quality.
E) coordinating with employees to create a greater incentive system to encourage worker
productivity.
50) The objective of differentiation is to
A) offer customers something rivals can’t, at least in terms of the level of satisfaction.
B) develop strategies that are different from those of rivals.
C) establish objectives that are measurable and meaningful when it comes to sales growth.
D) offer customers a sustainable competitive advantage.
E) offer a diverse range of comparable products with low switching costs.
51) A route to take in developing a differentiation advantage includes
A) incorporating product attributes and user features that raise the buyer’s overall costs, but keep
the price minimal.
B) incorporating tangible features that add functionality, and increase customer satisfaction with
the product specifications, functions, and styling.
C) signaling value by targeting sophisticated buyers.
D) incorporating intangible features that enhance buyer satisfaction in economic ways.
E) emphasizing high quality and performance of products through a standard and simple, no-fuss
packaging.
52) A healthy fast-casual restaurant that offers only vegetarian and vegan meals insists on
portraying organic ingredients in its advertisements, charges a higher price for its meals, and has
a rigorous quality control process to insure the cleanliness of its facilities. What strategy is the
manufacturer using to deliver superior value to customers?
A) incorporating tangible features
B) incorporating intangible features
C) signaling value by targeting sophisticated buyers
D) lowering the buyer’s overall cost
E) leveraging its power over suppliers
53) A differentiation-based competitive advantage
A) nearly always is attached to the quality and service aspects of a company’s product offering.
B) usually is the result of highly effective marketing and advertising to enhance the brand, raise
awareness, and build consistent customer experience.
C) requires developing at least one distinctive competence that buyers consider valuable.
D) hinges on a company’s success in developing top-of-the-line product features that will
command the highest price premium in the industry.
E) often hinges on incorporating features that raise the performance of the product or lower the
buyer’s overall costs of using the company’s product, or enhances buyer satisfaction in intangible
or noneconomic ways, or delivers value to customers by differentiating on the basis of
competencies and capabilities that rivals can’t match.
54) To attain a differentiation-based competitive advantage, a company would be UNLIKELY to
A) deliver value to customers via the company’s resources, competencies, and value chain
activities that rivals don’t have or can’t afford to match and are well-matched to the requirements
of the strategy.
B) utilize research and development to incorporate tangible features that raise product
performance and increase customer satisfaction with the product.
C) incorporate product attributes and user features that lower the buyer’s overall costs of using
the company’s product.
D) appeal to buyers who are sophisticated and shop hard for the best, stand-out differentiating
attributes.
E) build in product design features that enhance buyer satisfaction in intangible or noneconomic
ways.
55) According to the value-price-cost framework, deploying a differentiation strategy involves
costs that might well exceed those of the average competitor, but with a successful
differentiation strategy, that disadvantage is more than made up for by
A) a rise in the perceived value of the differentiated good, giving the differentiator a clear
competitive advantage over the average rival.
B) a rise in the price of the differentiated good, giving the differentiator a clear value advantage
over the average rival.
C) no change in the price of the differentiated good, giving the differentiator a clear value
advantage over the average rival.
D) no change in the perceived value of the differentiated good, giving the differentiator a clear
competitive advantage over the average rival.
E) a drop in the price of the differentiated good, giving the differentiator a clear competitive
advantage over the average rival.
56) Perceived value and signaling value are often an important part of a successful differentiation
strategy because
A) of the standardization of buyer needs and preferences.
B) buyers seldom will pay for value they don’t perceive, no matter how real the value of the
differentiating extras may be.
C) buyer satisfaction cannot be achieved until a product’s value is promoted through clever ads.
D) differentiation is all about selling products to sophisticated buyers.
E) there are no other ways to differentiate a product.
57) Broad differentiation strategies are well-suited for market circumstances where
A) there are many ways to differentiate the product or service that has value to buyers.
B) most buyers have the same needs and use the product in the same ways.
C) technological changes are slow-paced.
D) barriers to entry are high and suppliers have a low degree of bargaining power.
E) price competition is especially vigorous.
58) Broad differentiation strategies generally work best in market situations where
A) low-cost value drivers are easily obtained.
B) socially complex intangible attributes such as company reputation, long-standing
relationships with buyers, and image are relatively easier to imitate.
C) the products of rivals are weakly differentiated and most competitors are resorting to clever
advertising to try to set their product offerings apart.
D) technological change is fast-paced and competition revolves around rapidly evolving product
features.
E) market competition revolves around slowly evolving product features.
59) A broad differentiation strategy works best in situations where
A) technological change is slow-paced and new or improved products are infrequent.
B) buyer needs and uses of the product or service are very similar.
C) buyers incur low costs in switching their purchases to rival brands.
D) buyers have a low degree of bargaining power and purchase the product frequently.
E) buyer needs and uses of the product or service are diverse.
60) A broad differentiation strategy generally produces the best results in situations where
A) buyer brand loyalty is low.
B) few rival firms are following a similar differentiation approach.
C) new and improved products are introduced only infrequently.
D) most rivals are pursuing a differentiation strategy and are seeking to differentiate their
products on most of the same features and attributes.
E) perceived value of a product is not of great importance.
61) A broad differentiation strategy is generally not suitable for attaining a competitive
advantage when
A) buyer needs and preferences are too diverse to be fully satisfied by a standardized product.
B) few rivals are pursuing a similar differentiation approach.
C) products of rivals are weakly differentiated.
D) there are many ways to differentiate a product or a service and many buyers perceive these
differences valuable.
E) technological change is fast-paced and competition revolves around rapidly evolving product
features.
62) A low-cost provider strategy can defeat a differentiation strategy when
A) sellers are not charging a price premium.
B) many rivals are pursuing a similar differentiation approach.
C) a company can offset thinner profit margins per unit by selling enough additional units to
increase total profits.
D) there are few ways to differentiate a product or a service and many buyers perceive these
differences valuable.
E) customers are basically satisfied and don’t think extra attributes are worth a higher price.
63) A pitfall to avoid in pursuing a differentiation strategy is
A) trying to differentiate on the basis of attributes or features that are easily and quickly copied.
B) choosing a product offering that supports buyers’ indifference to rival brands’ offerings.
C) charging a premium price for the differentiating features.
D) meeting and exceeding the meaningful gaps in quality, performance, service, and other
attractive differentiating attributes offered by rivals.
E) spending on activities to differentiate the company’s product to enhance profitability.
64) Differentiation strategies
A) strive to create value for customers.
B) offer trivial improvements in quality, service, or performance features.
C) often result in overcharging for the differentiating features.
D) add so many frills and extra features that the end product exceeds the needs of buyers.
E) often result in overspending on efforts to differentiate the company’s product offering.
65) Focused strategies keyed either to low cost or differentiation are especially appropriate for
situations where
A) the market is composed of distinctly different buyer groups who have different needs or use
the product in different ways.
B) most other rival firms are using a best-cost producer strategy.
C) buyers have strong bargaining power and entry barriers are low.
D) most industry rivals have weakly differentiated products.
E) most industry participants are also using a focused differentiation strategy.
66) What sets focused (or market niche) strategies apart from low-cost leadership and broad
differentiation strategies is
A) the extra attention paid to top-notch product performance and product quality.
B) their concentrated attention on serving the needs of buyers in a narrow piece of the overall
market.
C) greater opportunity for competitive advantage.
D) their suitability for market situations where most industry rivals have weakly differentiated
products.
E) their objective of delivering more value for the least money.
67) A focused low-cost strategy seeks to achieve competitive advantage by
A) outmatching competitors in offering niche members an absolute rock-bottom price.
B) delivering more value for lesser money than other competitors.
C) performing the primary value chain activities at a lower cost per unit than can the industry’s
low-cost leaders.
D) dominating more market niches in the industry via a lower cost and a lower price than any
other rival.
E) serving buyers in a narrow piece of the total market (target market niche) at a lower cost and
lower price than rivals.
68) A focused low-cost strategy can lead to attractive competitive advantage when
A) buyers are looking for the best value at the best price.
B) buyers are looking for a budget-priced product.
C) buyers are price sensitive and are attracted to brands with low switching costs.
D) a market is emerging and demand in the target market niche is growing rapidly and is served
by industry-wide competitors.
E) a firm can lower costs significantly by limiting its customer base to a well-defined buyer
segment.
69) Market circumstances that make a focused low-cost or focused differentiation strategy
attractive are characterized by
A) a target market niche that is too small to be profitable and offers low growth potential.
B) an industry has few or no segments and market niches, thereby precluding the choice of an
attractive niche suited to a company’s resource strengths and capabilities.
C) high costs or increased difficulty for multisegment rivals to meet the specialized needs of the
target market niche and at the same time satisfy the expectations of their mainstream customers.
D) intense competition from industry leaders in the niche or focused segment.
E) few, if any, rivals are attempting to specialize in the same target segment.
70) A focused differentiation strategy aims at securing competitive advantage by
A) providing niche members with a top-of-the-line product at a premium price.
B) catering to buyers looking for an upscale product at an attractively low price.
C) offering a product carefully designed to appeal to the unique preferences and needs of a
narrow, well-defined group of buyers.
D) developing product attributes that no other company in the industry has.
E) convincing a narrow, well-defined group of buyers that the company has a truly world-class
product.
71) The major difference between a low-cost provider strategy and a focused low-cost strategy is
the
A) amount of outsourcing involved.
B) length of the managerial experience curve.
C) size of the buyer group to which a company is appealing.
D) number of upscale attributes incorporated into the product offering.
E) production methods being used to achieve a low-cost competitive advantage.