Which of the following changes should be implemented?

An organization’s attempts to differentiate its product in the marketplace have failed, and sales are below projections.

Which of the following changes should be implemented?
A . Cut costs across the board, reduce the price below that of the competition, and depend on volume for profits.
B . Isolate the differentiating product factors, reduce costs in other areas, and reduce the product’s price.
C . Increase the marketing effort to raise awareness of the product’s uniqueness and raise the price.
D . Withdraw the product from the market, redesign it to enhance its uniqueness, and reintroduce it at the same price.

View Answer

Answer: B

Explanation:

Isolate the differentiating product factors, reduce costs in other areas, and reduce the product’s price. Differentiation strategies focus on setting the product or service apart from its competition by giving it unique characteristics that consumers value and for which they will be willing to pay a premium price. Even with a differentiation strategy, an organization has to pay attention to its cost position. In this case, the cost for uniqueness exceeds what customers are willing to pay. To strike a balance, the organization will need to reduce costs in all areas not related to the differentiation and may need to reintroduce the product at a lower price.