Bill's Biscuits currently serves plain biscuits and makes just enough money to keep Bill (the owner) content by covering his opportunity cost. To improve his profitability, he wants to introduce a branded, differentiated product, so he hires a couple of local student groups from a micro econ class to give him suggestions. The two groups have each proposed their solution:

Group 1's suggestion: Introduce Bronco Biscuits, named after the local college mascot. This group estimates he can sell 45 Bronco Biscuits each day at a price of $3. Bill estimates that his ATC would be $2.50 for this product.

Group 2's suggestion: Introduce a Premium Biscuit of the Week (the PBoW) product with each week's flavor announced via social media. This group estimates the buzz around the exciting new flavors will sell 60 PBoWs each day at a price of $3.50. Bill estimates that his ATC would be $3.15 for this product.

Use this information to post your answers to the questions below:

• 1. If you were Bill, would you view either of these options to be a successful differentiation strategy? Why or why not?
  2. If Bill decides to choose one of the two options, which would you advise him to try? Why?