Pitfalls of a differentiation strategy include:

The correct answer is D. Failing to identify gaps in quality or service compared to rivals .

A differentiation strategy depends on offering attributes that customers value and that competitors do not match as well. If a company fails to identify quality or service gaps compared with competitors, it may lose the basis for differentiation.

The strategy material distinguishes differentiation from cost leadership. Exact extract: “Business Strategy Focus: Distinctive competence in the field • Cost leadership • Product differentiation • Focus (cost or differentiation).”

The material also identifies customer-valued competitive characteristics. Exact extract: “Order Winners — Characteristics that make your customers prefer you over competitors” and “Qualifiers — Characteristics you need to get into the game.”

Therefore, a key pitfall of differentiation is failing to understand where the company’s quality or service is not sufficiently different from rivals.

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