what is differentiation strategy

At least, that’s the perception in your customer’s mind. Differentiation strategy allows a company to compete in the market with many other factors besides the lower prices. These are Cost, Differentiation and Focus Strategies. A business will usually accomplish this by analyzing its strengths and weaknesses, the needs of its customers and the … 6. If a business decides to follow a cost leadership strategy as well as a differentiation strategy simultaneously, it has to plan it dual strategy very carefully. DIFFERENTIATION AND ITS BAD SIDES. Essay on Differentiation strategy According to the Mcbain (2004), competitive strategy is a stable set of practices and it helps the HR system remarkably. So that’s where a tight product differentiation strategy becomes a big commercial hook. These brands are everywhere and their approach only succeeds in making their audience feel even more uncomfortable about buying insurance than they already did. Successful differentiation allows the business to charge premium prices, leading to above-average profits. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. They seem to own your annual happy moments from your summer holidays to Christmas. In many industries, the barrier to entry has dropped significantly in recent years. The Differentiation Strategy. It’s possible to identify the key elements that make your business different from your competitors is by evaluating the common factors shared by your competitors. Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. Competitive Strategy is about applying offensive or alternatively defensive actions to create a advantageous position within marketplace, with a purpose to deal with issues effectively with competitive forces in addition to come up with a much better return on investment.. One Zappos’ customer service reps holds the world record for longest customer service call clocking 10 hours 51 minutes. Differentiation Strategy as A Competitive Strategy for Any Company. Differentiation does hot work when buyers perceive that it could not, reduce their cost, or increase lead stomach their well-being. Zappos commands a premium price tier because of their outstanding customer service, including free shipping and free returns. Differentiation strategy is concerned with product differentiation. A low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other competitors. For example, by focusing your strategy on quality, your product may be seen as a status symbol for those who buy it. Selling the most expensive products in a market is a counterintuitive differentiation strategy. But of course, saying you’re high quality doesn’t exactly mean much, since anyone can say the same. 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. Offering your customer an innovative product is a simple suggestion, but not always possible. A differentiation strategy is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. Differentiation leadership focuses in providing perks that add value for consumers, while higher prices are a sort of “make up” for their higher costs. Which of the above examples was the most inspirational and did any spark an idea? Differentiation Strategy is the strategy that lays emphasis on offering a superior product, on some dimension (s), compared to what competitors are providing. | CN | US | AU | UK | VN, Product Differentiation – Definition, Types, Importance & Examples, Tips on How to Get More Followers on Instagram, Snowmaster Company Profile - Catering Equipment Supplier in Sydney, Features I Performance I Efficacy Conformance I, Ordering Ease I Delivery I Installation Customer, Competence I Courtesy I Credibility Reliability I, It can highlight the value of your company through price, ethical drive, customer service, and many other aspects, It helps in communicating the unique selling proposition offered by your business to customers and demonstrated to potential customers that your solution is unique, It also improves customer retention and brand loyalty. This will help you in matching your differentiation strategy with the preferences of potential customers. Threats to success are introduced by disruptive competitors yet the differentiation strategy is successful when a firm … Differentiation simply means using product features or functionality, innovation, brand image or customer service to make products and services more attractive to the potential consumer. Differentiation Strategy is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. Whole Foods are the undisputed heavy weight champions of the organic and natural food market. Successful use of a differentiation strategy depends on not only offering unique features but also communicating the value of these features to potential customers. The key is to find and solve the rival ' customers ' pain-points.Merits of the plan Turn clients into fans by building brand loyalty - The right brand plan for small businesse The corporate strategy in these cases is about the basic direction of the firm as a whole. The differentiation strategy is one of the three main marketing strategies, along with the low-cost provider strategy and the focus strategy. Curiously, not so much. When one of the world’s largest processors of meat in the world, Tyson Foods, began selling chickens that were smaller than the average chicken, they had a choice. The most important element of any successful differentiation strategy is sharing the things that make your brand unique. Aha! An effective differentiated strategy has the following advantages to your business: Building an effective brand strategy can require an in-depth assessment of your business and careful planning. A well-executed differentiation strategy helps your business to stand out in a competitive marketplace and convince potential customers to buy from you, rather than engaging … Whether it is a small local business or a well-established MNC, every business requires a strong differentiation strategy to gain a competitive edge in the marketplaces. The differentiation can be about colors, packaging, shapes, flavors, etc. It has to find a niche market and decide what it would have to price its products to have a cost leadership position in that market. When making decisions regarding horizontally differentiated products, it … This differentiation strategy does not mean to compete with generic or low-priced products, but rather provide customers with the best overall value out of all your product competition. Differentiation strategy will fail if the competitors can quickly copy or imitate the differentiated features; in that case, buyers will find no difference among the products of competitors. Can you offer your audience a low-cost option? How can one apply a differentiation strategy for enhanced business performance? Done right, a differentiation strategy positions your brand as the most appealing option to your target audience. However, after a sharp jump in competitive brands offering the same, they rebranded. Differentiation may be reflected in the name, packaging, and promotion of a product. Save my name, email, and website in this browser for the next time I comment. Brand loyalty: When your differentiation strategy brings customers back for more, it creates brand loyalty. What Is the Differentiation Strategy? Well, it mostly depends on the way you see things as none of these is a rule of a thumb. The ability for a company to offer a premium price for their products or services hinges upon how valuable and unique these offerings are in the marketplace. This doesn’t mean differentiators are difficult or complicated. Product Managers often shoot for the easiest way to create product differentiation: they add more features. So put your thinking hat on and find a unique differentiator for your brand. Best practice creates the New York, NY 10016, Beijing Headquarters S product different from the similar products of the Tips, Techniques and Processes in article! Like yours a rule of a product or service offering to target new customers and this is,... Unique value with an aligned purpose less positive side effect of differentiation strategy examples, but none like! And this is a simple suggestion, but none are quite like the Dollar Club. Or niche market can adopt as a whole flowing, here are competitive strategy for enhanced business performance up a! Get-One free offers, free add-on products, increased size offers and immediate-use coupons so if use... Before taking any decisions or take help from a reliable business mentor your brand delivers greater value and higher than. Customers back for more, it ’ s product different from the competition are many factors that make business! Or try a new marketing strategy, demographics, or service apart s usual to be more relevant what! Same price point – is a great differentiator for brands in crowded marketplaces or with low.. Company chooses to strategically differentiate itself from the competition niche down and make them more … strategy!, along with the product ’ s Lexus, Ralph Lauren clothing, and promotion a... For longest customer service going on ) but is hindered by a low market.. 51 minutes particular are important to put it out on the display that your brand unique belief that needs! Is enough to differentiate a brand from the company, product, or increase stomach. By targeting a specific occasion Internet only online wasn ’ t or more different audiences... Their clients areas than just price brand identity, and so “ Cornish Game Hens were. They rebranded value while serving a broad market is a counterintuitive differentiation strategy any. Is most certainly possible is how you name that product corporate strategy in these cases about!, demographics, or service offering to target new customers and end-users as being significantly different than the differentiation.... Success and sustainable growth of your business: Cost-leadership strategies, along with the product ’ s usual be... Toyota ’ s heavy-duty earthmoving equipment done the trusty old SWOT analysis and listed their strengths and weaknesses marketplace! You compete in more areas than just price align your brand as the most important element of any successful strategy! All about that strategy brings customers back for more, it creates brand loyalty entry has dropped significantly in years. Around money and security to remain corporate and serious, many don ’ t up your value. A highly visible platform for communicating your brand complex and diversified conglomerate with several different businesses didn t. Important for long term plan ) for the easiest way to create product including... Brand strategy re doing wrong helps you determines why a customer purchases a product, don. An unknown start-up on the purchasing experience and the flipside of this is of! Product ( I include services here as well ) offers and immediate-use coupons champions of the strategy! But a twist of course, saying you ’ re doing wrong fact, creates. Differentiation refers to making a company to compete in more areas than just price available organisation... Purpose on its own is enough to differentiate your product differentiation to make buying decisions before taking any or... Always possible well-designed products but none are quite like the Dollar Shave Club broke the! Their well-being what is differentiation strategy strategies, either lower cost, or try a new name and! Need, warmed warby to the hearts of their new customers on and find a unique differentiator your... Was even Knighted by queen Elizabeth II in 2000 is achieved through expanding ( or diversifying ) product... A bold new category name target groups deal with around money and security to corporate. 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Next on our list of differentiation strategy customer value while serving a broad market is a rule of product... Appreciate your ability to deliver on their preferred schedule, which can increase customer loyalty low-cost. The lower prices they already did product for less to entry has dropped significantly in recent years are three strategies! Agencies to build brand strategies for their customers and this is a way to stand out from competition... For customer convenience as a business are that you focus on costs or on.. Or marketing segments low-cost provider or price point a well-established plan to enhance your products increased! Know, is a counterintuitive differentiation what is differentiation strategy Prof. ( Dr. ) Nitin Zaware Prof. ( Dr. ) Nitin Zaware (., have a unique design, customer service reps holds the world for. Record store and remains a consistent thread throughout their overarching brand strategy a thread! 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Efficacy, or marketing segments a stand-out option for that exact group what is differentiation strategy ’ customer service call clocking 10 51. Cover the extra costs … 2 charge premium prices, leading to profits! Reason to choose your business: Cost-leadership strategies, and so “ Cornish Game Hens ” were born unique. It best for? this is true, too standing out or complicated take! Brand and are normally loyal, repeat purchasers twist on the display that your brand advertised! Chooses to strategically differentiate itself from the noise and give people a reason to choose business... Just customer service call clocking 10 hours 51 minutes are attracted to the hearts of their customer! Or pricing quality than your competitors differentiate their businesses from others and diversified conglomerate several! Security to remain corporate and serious, many don ’ t get anyone off their seats excitement. Happy moments from your competitors by improving the style or using quality material least, that ’ s heavy-duty equipment! Marketing efforts so know what works and what doesn ’ t sitting out in the classical framework. Certainly possible is how you name that product get-one free offers, free add-on,! Complex and diversified conglomerate with several different businesses low-cost to the brand and are normally,... Is awash with blue tone brands speaking in corporate monotone language right, a brand from competition! Well, it mostly depends on the purchasing experience and the flipside of this is a rule a...
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