Lesson 3.8.2

3.8.2 Strategic positioning: choosing how to compete Quiz: AQA Business, Unit 8

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.8.2, Strategic positioning: choosing how to compete: 20 multiple choice questions for the AQA Business (7132), Unit 8: Choosing strategic direction, written with Revision Ninja.

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The 20 questions

  1. What does a cost leadership strategy involve, in Porter's terms?

    • Being the lowest-cost producer in the industry so that prices can be competitive or margins protected
    • Focusing on a narrow segment of customers with specialised needs that larger rivals do not serve well
    • Offering unique features that customers value so that the business can charge a premium price for them
    • Matching the prices of every rival in the market while spending heavily on advertising to win share

  2. What does a differentiation strategy involve?

    • Serving only a very small niche of customers while ignoring the wider market and its growth prospects
    • Offering products with distinctive features or quality that customers value enough to pay a premium for them
    • Copying the leading brand in the market so that customers see no difference between the firms' offers
    • Producing the same standard product as competitors at the lowest possible cost to win price-sensitive buyers

  3. What does a focus strategy involve?

    • Focusing all spending on advertising rather than on the product, price or distribution of the goods
    • Concentrating on a narrow market segment, using either a cost or a differentiation approach within it
    • Selling across every segment of the market with the same product and the same marketing approach
    • Reducing the range of products to a single item and then competing on price with all rivals equally

  4. Which is a benefit of cost leadership?

    • It always allows the firm to charge premium prices for its products without any risk to sales volume
    • It means the firm no longer has to watch the actions of competitors in the market at all
    • It removes all risk of a price war because rivals cannot cut their own prices in any circumstances
    • It allows low prices that can win high volume sales and protect margins against rivals

  5. Which is a benefit of a differentiation strategy?

    • Customer loyalty and reduced price sensitivity, which can support higher margins
    • Guaranteed market leadership, because differentiated products can never be copied by any competitor
    • Lower costs in every area of the business, because unique products always need less investment
    • A removal of the need to spend on marketing, because unique products sell themselves to customers

  6. Which is the best example of a business using differentiation?

    • A bakery that only sells one product at the lowest price in its local area to all customers
    • A discount airline that removes all extras from its service to keep fares as low as possible
    • A car maker that offers a five-year warranty and extra safety features that rivals do not provide
    • A supermarket that matches the price of every rival on its entire range of everyday goods

  7. Which is the best example of a business using cost leadership?

    • A fashion label that builds a strong brand identity to command premium prices in its market
    • A designer furniture maker that offers bespoke pieces made to individual customer requests
    • A no-frills budget airline that removes extras to keep its fares very low
    • A luxury hotel that offers personalised service and high-quality furnishings for its guests

  8. Which example best illustrates a focus strategy?

    • A large supermarket that sells every type of food to all shoppers across the country in its many stores
    • A car maker that competes across all segments of the car market with several different models each year
    • A bakery that serves only customers who need gluten-free products, pricing and designing its range for them
    • A bank that offers the same current account and loan products to every customer in every region

  9. A firm sells a product at 12 pounds, with unit cost of 8 pounds, and sells 50,000 units. What is the total contribution?

    • 200,000 pounds
    • 600,000 pounds
    • 400,000 pounds
    • 100,000 pounds

  10. A cost leader has unit cost of 6 pounds, sells at 8 pounds and sells 100,000 units. What is the total profit before fixed costs?

    • 600,000 pounds
    • 200,000 pounds
    • 100,000 pounds
    • 800,000 pounds

  11. A product sells for 20 pounds and costs 15 pounds per unit to make. What is the gross margin as a percentage of price?

    • 75%
    • 33%
    • 5%
    • 25%

  12. Which is a difficulty in maintaining a competitive advantage?

    • The advantage cannot be damaged by changes in the market because customers never change their preferences
    • Competitors are unable to copy any advantage because the law forbids it in every market in the world
    • The advantage is always permanent once it has been established, so it requires no maintenance by managers
    • Rivals may imitate the advantage, and changing customer tastes or new technology can erode it over time

  13. Why is a competitive advantage valuable?

    • It can support higher margins or market share, which often leads to sustained superior returns
    • It eliminates the influence of costs, so prices can be set without regard to the firm's actual cost base
    • It means the firm will never face any risk from changes in its market or from new technology
    • It removes all need for the firm to plan its strategy, because success is guaranteed by the advantage alone

  14. Evaluate the risks of a cost leadership strategy.

    • Cost leadership removes the need to watch competitors, because the firm's prices will always be the lowest available
    • Rivals may match or undercut prices, so margins may fall, and the firm needs continued cost control to stay ahead
    • Cost leadership carries no risk because customers always buy the cheapest product in every market in all circumstances
    • Cost leadership is impossible for any firm that produces goods in volume, so the risks do not apply to it

  15. Evaluate the risks of a differentiation strategy.

    • Differentiation removes the need for marketing, so the firm can avoid spending on promotion of its products
    • Differentiation always reduces costs, so the firm will never have to worry about the price it charges customers
    • Differentiation carries no risk because customers will always pay a premium for any product that is different
    • Premium features raise costs, and customers may stop paying the extra if they no longer value the difference

  16. A firm chooses a focus strategy within a niche. What is the main risk?

    • Focus means the firm must sell to every customer in the market, which increases its competitive risk
    • The niche may shrink or be entered by rivals, leaving the firm dependent on a small market
    • The niche always grows faster than the market as a whole, so the firm never faces any risk of decline
    • Focus strategies cannot be used by small firms, so the firm must abandon its niche as soon as it starts

  17. Which statement best explains the link between positioning and competitive advantage?

    • A positioning strategy that matches the firm's capabilities to customer needs can create an advantage that rivals find hard to match
    • A positioning strategy has no effect on advantage, because advantage depends only on the size of the firm's workforce
    • Positioning is set by regulators, so firms cannot create any advantage through their own strategic choices
    • Competitive advantage depends solely on advertising spend, so positioning choices are irrelevant to it

  18. A firm's margin is falling because a rival has cut prices. What is the most appropriate response?

    • Ignore the rival and let sales fall, because margin matters more than market share in every market
    • Review costs and test whether a differentiated feature can defend price without a damaging cut
    • Increase prices sharply to match the cost of the rival's price cuts, which will restore the firm's margin
    • Cut prices as far as possible at once, regardless of the effect on costs or the firm's long-term position

  19. Evaluate whether a business should always aim for cost leadership.

    • Cost leadership suits price-sensitive markets, but the choice should reflect the firm's capabilities and its customers' needs
    • Cost leadership is always the best strategy in every market, so firms should never consider any other approach
    • Cost leadership only works for the public sector, so private firms should always avoid it when setting their strategy
    • Cost leadership is never suitable for any business because customers always reject low-cost products in every case

  20. Which of these shows a firm choosing a positioning strategy that competes on benefits rather than on price?

    • A retailer that copies the lowest-priced rival's product range in every store
    • A brand that repeatedly reduces its price to win market share from its rivals each season
    • A brand that emphasises quality, service and design to command a premium
    • A supplier that sells the cheapest standard component to all manufacturers at the lowest cost

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