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Explain why the best way for a firm to exploit its cost advantage is through margin...

Explain why the best way for a firm to exploit its cost advantage is through margin strategy when product differentiation is strong

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Margin strategy is the strategy where firms constantly monitor their costs and prices. The firm ensures that they get the highest margin by constantly monitoring costs and then adjusting prices accordingly. Product differentiation is when a firm's products are different from its competitors. Product differentiation helps gain consumer loyalty and boost sales.

When a firm's products are highly differentiated, it can ensure they get the highest margin of profit. This is possible because the firm would have gained customer loyalty. In such cases, the firms continuously monitor costs so that they can keep it low and charge prices as per the margin of profits they desire. A continuous monitoring of the market is required because it will help the firm exploit the market share by charging the right prices. For instance Apple offers differentiated products and also ensures they have a high margin.

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