Every brand is built on a product (I include services here as well). Taking an example of the tourism industry, tour packages of all companies are different and the tour package might have its own differentiating factors. In this case, ‘a large number of customers’ is the focus, and those customers consider the differentiation valuable to them. successful differentiation, increase price more than cost, get higher profit & growth. Read more: A Guide to Developing High Performing Teams. Research will help you align your business’ offerings with the wants and needs of current and potential customers. Starbucks has made the organization well-known for tailoring to broad customers’ needs by preparing orders to meet customers’ wishes, no matter how detailed they are. For example, if you have a brand that is marketed by a sports figure, it will likely increase brand loyalty because it enhances the value of your brand. If you are taking care of user convenience, the customer will always come back to you. B. One strength of a differentiation strategy is that it builds on the unique qualities in a product. broad differentiation strategy. It is applied to the industry and will appeal to a vast range of consumers. When aimed at a broad mass market seeks to create uniqueness on an industry wide basis. Increased customer loyalty because of the 'unique' product or service offering. Thus, Differentiation strategy is being used by all top companies for their products. I am writing my thesis about the different ways of differentiation. The best way to implement differentiation strategy is to invent or innovate. Strategic management is the process of managing in a way that is consistent with the corporate ... differentiation strategies, and (3) focus strategies. • Some firms using a focused differentiation strategy concentrate their efforts on a particular sales channel, such as selling over the Internet only. Aggressive marketing. This is the reason why, even though there are so many big retail outlets in the market, the smaller shops still run well. Focused Differentiation strategy • A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market. Thus, packaging is important. Your promotion mix and the marketing communications of the company play a crucial role in the differentiation strategy of your product. Mobile handset companies like Samsung and apple target the cream segment whereas companies like Micromax and Xolo target the price sensitive segment. When you don’t have a clear strategy for competitive advantage you end up with a product that is stuck in the middle ground of mediocracy. Reputation. And how does word of mouth marketing happen? There are three/four generic strategies, either lower cost, differentiated, or focus. Aggressive Marketing B. brand. You can follow me on Facebook. It concerns how a diversified company intends to establish business positions in different industries. Better sales because consumers are wowed by the product being offered. Each differentiator may be broad at first, so you may try writing down your differentiators and then create smaller subsections that narrow them down. In this saturated business environment, each and every company has to take steps to differentiate itself from competition and ensure that it has a high positioning in the customers mind. A “broad differentiation strategy” is adopted by a company to be ‘unique to a wide range of customers. Thus, youngsters will like pepsi, young adults will like Thums up, families will like Fanta, and Coke can be an all time favorite for everyone. mhammonds74 TEACHER. Thus, by incorporating product differentiation strategy at product level, the brands can use differentiation strategy themselves from competitors in the eyes of the customer. Cost leadership strategy and differentiation strategy share one important characteristic: both are used to attract customers in general. Innovation / Invention – The best way to implement differentiation strategy is to invent or innovate. 1. Followings are the characteristics associated with the three broad corporate strategies… approach in which a firm purposes to establish and market an exclusive product for various consumer segments Of course, from a marketing point of view, commodities are the anti-thesis of the value-added products and services that marketers today are tasked with building. For example, a cement company is offering its product to a broad … I am a serial entrepreneur & I created Marketing91 because i wanted my readers to stay ahead in this hectic business world. Which of the following is not characteristic of a broad differentiation strategy? By innovating or inventing, you become the market leader because your product is the first entrant in the market. Thus, there are many ways for implementing a differentiation strategy. This strategy is concentrated on a broader segment of the total market. Evaluate your mission, vision and values, and you’ll be able to craft an overall story about what sets you apart, which turns your target audience into customers. References: [1] Hill, Charles. This way, you will be able to provide a narrow differentiator to your customers. 2 depicts a scatterplot of the data clustered as hypothesized per the two-by-two differentiation strategy model. Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. Here are the possible benefits of creating a differentiation strategy: Differentiation strategy allows a company to compete in the market with something other than lower prices. A business will usually accomplish this by analyzing its strengths and weaknesses, the needs of its customers and the overall value they can provide. ” The Leaders: 3M and Vistakon. Product differentiation deals with making changes in the marketing mix of a product so as to differentiate it from whatever the competition is offering OR to offer a product which stands out in the market. Word of mouth marketing is another product differentiator and all brands targeting a niche audience know the importance of word of mouth marketing. How can one apply differentiation strategy for enhanced business performance? There are Sec A, B and C segment customers. These strategies are known as focus strategies and they are applicable to both cost leadership and differentiation. Free subscription Get the news that matters from one of the leading news sites in Kenya. Broad characteristics of the key themes of strategic positioning-----1. Inventions are of course difficult and require regular R&D expenditure. Strategic Management Theory. While it is likely to have a lower market sharethan a firm following a cost leadership strategy, profits are high due to the perceived product and service differences among customers. Effective differentiation may create brand loyalty in customers if a business maintains the perceived quality of your products. A strategy directed toward creating something that is perceived as being unique. In fact, many a times, customers might buy a book based on the top cover. There are various ways to differentiate your product via using a differentiation strategy . This second generic strategy makes the business stand out based on certain characteristics. I love writing about the latest in marketing & advertising. You can also use social media channels to have a running dialogue with your customers as you share products and services with them on a more personal level. The corporate strategy in these cases is about the basic direction of the firm as a whole. But innovations are more practical and are a Differentiation strategy used by technological companies like Apple and Google. Its strategy is a focused differentiation strategy. A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. Several broad characteristics of these "treatment resisters" are identified, and the implications of these findings for future research are discussed. Broad Differentiation Strategy Ability to apply premium pricing to products or services deemed by consumers as different. Starbucks Coffee uses the broad differentiation generic strategy for competitive advantage. Their priority is to deliver the best new product, at any cost. Increased customer loyalty because of the 'unique' product or service offering. concentrating on a narrow buyer segment (or market niche) and outcompeting rivals on costs, thus being able to serve niche members at a lower price. Effective differentiation takes place when teachers adjust aspects of content, process and product in direct response to a student’s readiness, interests and learning profile. R. (2007). highlights the different stages in scientific data based deces… 34 terms. Corporate strategy is the overall managerial game plan for a diversified company. The differentiation strategy should not be mistaken for providing unique products simply for the sake of being unique; rather the differentiation should be tied to customer demand or willingness to pay. There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. Differentiation strategy 1. Broad Differentiation Strategy Ability to apply premium pricing to products or services deemed by consumers as different. What are two characteristics of a broad differentiation strategy? Starbucks serves a market that is defined by coffee drinkers. Differentiation Strategy: Allows a company to command a premium price 3. The same can be seen when you enter a mall and you have 100’s of shelves with different types of cereals, soaps, shampoos, detergents etc. View Show abstract This will also inform your selection of differentiators to make your expertise more appealing. Indeed is not a career or legal advisor and does not guarantee job interviews or offers. In this case, ‘a large number of customers’ is the focus, and those customers consider the differentiation valuable to them. The two generic routes are fundamentally different. Cost structure changes under the proposed strategy. A differentiation strategy in retail can be supported by … Do you know the three types of learning styles? In this article, we discuss what a differentiation strategy is, how to create one and how a differentiation strategy can benefit your business. There are several ways to achieve product differentiation. Write down the strengths and weaknesses of your overall brand or specific products. differentiation strategy A business strategy in which a company tries to gain a competitive advantage by providing a unique product or service, or providing a unique brand of customer service. price. It's a strategy that works better for larger companies than smaller ones. Hosted events, ran multiple blogs and created an app that shows innovation in everyday tasks. They have done the trusty old SWOT analysis and listed their strengths and weaknesses. 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