Product differentiation Flashcards
1
Q
Horizontal differentiation
A
Products are equally priced but SOME consumers prefer one vs other
2
Q
Vertical differentiation
A
products are almost equally priced and ALL consumers prefer purchase one over other
3
Q
Examples for vertical differentiation
A
Location, gender, demographic
4
Q
examples horizontal integration
A
Quality, reliability, performance
5
Q
Scope for differentiation
A
Degree of heterogeneity (distinctness of customer segment)
6
Q
Differentiation hardens price competition T/ F
A
F - softens price competition
7
Q
Maximum differentiation
A
Differentiating to largest degree possible
8
Q
Increase price
A
Extract more surplus from target segment
9
Q
Reduce price
A
defend target consumer against competing product
10
Q
Limits of differentiation
A
- Narrow scope for differentiating
- Consumer preferences are clustered
- Demand side factors reduce benefit
- Quality changes may disadvantage product (price, value)
11
Q
A
