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.
Answer: the higher price the product commands exceeds the added costs of achieving the differentiation.