What does a strong competitive advantage often allow a company to do with its pricing strategy?

A strong competitive advantage often enables a company to maintain higher prices while retaining its customers. This advantage can stem from factors such as brand loyalty, unique product features, superior quality, or exceptional customer service. When a company possesses these strengths, customers may perceive its products or services as providing greater value compared to alternatives, making them less sensitive to price fluctuations.

As a result, the company can set higher prices without significant risk of losing its customer base. Customers are often willing to pay a premium for products they trust or believe to be superior. This dynamic not only helps the company maintain profitability but also reinforces its market position, allowing for further investment in the competitive advantages that helped achieve this pricing power in the first place.