Question

In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of

Answer 1

Answer: In an effort to differentiate its offerings from its competitors, Pegasus added additional features that increased the price of the laptops by $500.

This is an example of Porter's competitive strategies ( product differentiation strategy).

Explanation:

The differentiation strategy consists in offering a product similar to one of another company in the market but that has certain characteristics that make the customer perceive it as unique and to be willing to pay a higher price for it.

Strategy Variables:

• Product characteristics.
• How the company communicates with its customers.
• Market features.

It can happen when the price increases, that the difference between this and and another product ´s features is not too large, so that we lose the loyalty of our customers because they don ´t want to pay the new price .