The marketing manager of Refresh Inc., a leading producer of soft drinks, is considering a differentiated marketing strategy. An important consideration is weighing increased sales against ________ before selecting this strategy.

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The question concerns evaluating a differentiated marketing strategy and asks us to weigh increased sales against ________ before choosing this approach.
Option 1: 'increased demand' appears to be a positive outcome rather than a tradeoff. While higher demand can justify a broader or different marketing approach, it is not a cost or constraint that would temper the decision to differentiate. In fact, increased demand often strengthens the case for segmentation, making this option less aligned with the idea of a tradeoff to consider.
Option 2: 'increased costs' represents the classic tradeoff in differentiated marketing. Creating multiple product variants, running distinct promotions, and possibly distributing to different channels typically raises production, inventory, and marketing expenses. These higher costs must be weighed against the potential sales gains and margin impact to determine if differentiation is worthwhile.
Option 3: 'decreased prices' could occur as a consequence of competitive pricing or added value through differentiation, but it is not the fundamental tradeoff being weighed in most differentiation analyses. Lower prices affect margins, but the core burden to assess is whether the incremental sales and strategic benefits justify those costs and risks, not the price decrease alone.
Option 4: 'increased profits' is a desired outcome of any strategic initiative, not a constraint or risk to be weighed. In a decision framework about differentiation, increased profits would be the expected payoff rather than a negative factor requiring tradeoff consideration, so this option is not describing a risk or limitation to the strategy.
Option 5: 'decreased production' would imply capacity or supply issues, which could be a constraint if differentiation widens product variants beyond what production can efficiently handle. However, this is more a specific operational risk than the broad, primary consideration often cited in differentiating marketing strategies, which centers on costs and profitability rather than a generic production decline.
In summary, among the options, increased costs capture the central tension of choosing a differentiated marketing approach: you may boost sales or market reach, but you must finance the higher costs and assess whether the net effect on profitability justifies the strategy.

Test: Exam 2

The marketing manager of Refresh Inc., a leading producer of soft drinks, is considering a differentiated marketing strategy. An important consideration is weighing increased sales against ________ before selecting this strategy.

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