In a competitive market, when is it most beneficial for a firm to attempt to match its competitor's value proposition?

• A. When matching the competitor's value proposition will lead to higher costs and lower profits for the firm.
• B. Only when the firm is already the market leader and wants to maintain its position.
• C. When the competitor's value proposition attracts a significant portion of the market and matching it can increase the firm's market share without reducing profitability.
• D. When the competitor's value proposition is less attractive to consumers than the firm's current offering.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of a value proposition in a competitive market. A value proposition is the set of benefits or values a firm promises to deliver to customers to satisfy their needs. It influences consumer choice and market share.
2. Step 2: Recognize that matching a competitor's value proposition means adjusting your product or service to offer similar benefits, which can affect costs and revenues.
3. Step 3: Analyze the conditions under which matching the competitor's value proposition is beneficial. This involves comparing the potential increase in market share against any changes in costs and profitability.
4. Step 4: Consider that if the competitor's value proposition attracts a significant portion of the market, matching it can help the firm capture some of that market share, provided it does not lead to lower profits.
5. Step 5: Conclude that the firm should attempt to match the competitor's value proposition only when it can increase market share without sacrificing profitability, meaning the benefits outweigh the costs.