See slide 19. Cost strategy as well as differentiation strategy could be narrow or broad. Your differentiation strategy is the way in which you make your firm stand out from otherwise similar competitors in the marketplace. In this case, ‘a large number of customers’ is the focus, and those customers consider the differentiation valuable to them. It can 255 0 obj << /Linearized 1 /O 258 /H [ 1426 339 ] /L 119377 /E 80806 /N 4 /T 114158 >> endobj xref 255 30 0000000016 00000 n Usually, it involves highlighting a meaningful difference between you and your competitors. In other instances, firms are well-known for their sleek product design or efficient customer service. 0000002130 00000 n Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. Nevertheless, a differentiation strategy based on superior quality compared to competition is more profitable than cost leadership strategy. 0000001743 00000 n Business Strategies and Gaps in Porter's Typology: A Literature Review, Competitive Strategies and Performance of Large Manufacturing Firms in Kenya, Studying the Phenomenon of Competitive Advantage and Differentiation: Market and Entrepreneurial Orientation Perspective. Businesses looking to build a broad or focused differentiation strategy will need to produce or design extremely unique or distinctive products or services that create increased value for the consumer. Porter argues that cost leadership and differentiation offer an equally viable path to competitive success. In this strategy, innovations are carried out in marketing activities instead of the product. 0000001765 00000 n Firms that compete based on uniqueness and target a broad target market are following a differentiation strategy. 0000003583 00000 n These two factors give rise to five competitive strategy options for staking out a market position, competing against rivals, and striving to deliver superior value to customers A low-cost provider strategy A broad differentiation strategy A focused low-cost strategy A focused differentiation strategy A best-cost provider strategy Companies pursue various marketing strategies to attract customers to them rather than to competitors. Generic strategies apply to not-for-profit organizations too. endstream endobj 260 0 obj << /Type /Font /Subtype /TrueType /FirstChar 32 /LastChar 32 /Widths [ 278 ] /Encoding /WinAnsiEncoding /BaseFont /EBOKIA+Arial /FontDescriptor 261 0 R >> endobj 261 0 obj << /Type /FontDescriptor /Ascent 905 /CapHeight 0 /Descent -211 /Flags 32 /FontBBox [ -665 -325 2028 1037 ] /FontName /EBOKIA+Arial /ItalicAngle 0 /StemV 0 /FontFile2 278 0 R >> endobj 262 0 obj << /Type /Font /Subtype /TrueType /FirstChar 32 /LastChar 150 /Widths [ 250 0 0 0 0 0 778 0 333 333 0 0 250 333 250 0 0 500 500 500 0 0 0 0 0 0 278 278 0 0 0 0 0 722 667 667 722 611 556 0 722 333 0 0 611 889 722 722 556 0 667 556 611 722 722 944 0 0 0 0 0 0 0 0 0 444 500 444 500 444 333 500 500 278 278 500 278 778 500 500 500 500 333 389 278 500 500 722 500 500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 333 444 444 0 500 ] /Encoding /WinAnsiEncoding /BaseFont /EBOKDH+TimesNewRoman /FontDescriptor 265 0 R >> endobj 263 0 obj << /Type /FontDescriptor /Ascent 891 /CapHeight 0 /Descent -216 /Flags 34 /FontBBox [ -558 -307 2034 1026 ] /FontName /EBOKCL+TimesNewRoman,Bold /ItalicAngle 0 /StemV 133 /FontFile2 275 0 R >> endobj 264 0 obj << /Type /Font /Subtype /TrueType /FirstChar 32 /LastChar 148 /Widths [ 250 0 0 0 0 0 0 0 0 333 0 0 0 0 0 0 0 500 500 500 0 0 0 0 0 0 333 0 0 0 0 0 0 0 0 722 722 0 611 778 0 0 0 0 667 944 722 0 611 0 722 556 0 0 0 0 0 0 0 0 0 0 0 0 0 500 0 444 556 444 333 500 556 278 0 556 278 0 556 500 556 0 444 389 333 556 0 0 0 500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 333 500 500 ] /Encoding /WinAnsiEncoding /BaseFont /EBOKCL+TimesNewRoman,Bold /FontDescriptor 263 0 R >> endobj 265 0 obj << /Type /FontDescriptor /Ascent 891 /CapHeight 656 /Descent -216 /Flags 34 /FontBBox [ -568 -307 2028 1007 ] /FontName /EBOKDH+TimesNewRoman /ItalicAngle 0 /StemV 94 /XHeight 0 /FontFile2 273 0 R >> endobj 266 0 obj << /Type /Font /Subtype /Type0 /BaseFont /EBOKEM+SymbolMT /Encoding /Identity-H /DescendantFonts [ 282 0 R ] /ToUnicode 259 0 R >> endobj 267 0 obj /DeviceGray endobj 268 0 obj [ /ICCBased 280 0 R ] endobj 269 0 obj << /Filter /FlateDecode /Length 270 0 R >> stream Several examples of firms pursuing a differentiation strategy are illustrated below. These three broad types of competitive strategies have also been labeled generic strategies. Still other firms strategically focus on a narrow market in order to reach profitability goals. Broad Differentiation Strategies The essence of a broad differentiation strategy is to offer unique product attributes that a wide range of buyers find appealing, valuable, and worth paying for An attractive strategy when buyer needs and preferences are diverse Incorporate certain buyer-desired attributes into its product offering that this fall sea-son, macy’s will be the only depart-ment store selling tommy hilfi ger apparel – that’s a gigantic brand and a gigantic opportunity. Focus OF THE strategy. The first customer buying criterion is reliability (measured in hours) as Mean Time Before Failure (MTBF) rated importance of 43%. c. Strategy could be imitated, requiring the firm to increase the value offered to retain customers. We can consider the strategies related to differentiation under two groups. 0000001426 00000 n The first group is market differentiation. Porter argues that cost leadership and differentiation offer an equally viable path to competitive success. It's a strategy that works better for larger companies than smaller ones. 0000077328 00000 n Then they cheerfully accept their strengths as differentiators. These strategies are … 0000006957 00000 n Many businesses have matured with unique capabilities in effectively managing costs and supply chain, for example. The first group is market differentiation. ‘Focused Differentiation Strategy’ is the strategy of operating a business with a differentiated product in a chosen niche market. This improves the position of the product, making it more appealing to our customers. It can differentiation strategy. classifications: cost leadership, differentiation, and focus, which target either a broad or a narrow market segment (Porter, 1980). See slide 19. As a broad differentiator in the market, the performance segment focuses on the reliability and ideal position of the product. Because differentiation is a broad concept, this strategy should be discussed with various dimensions. so those are Its basis of competitive strategy is to offer buyers something different buy . 0000080213 00000 n However, the generic strategy of differentiation also involves developing certain unique capabilities that make the business competitive. 0000002604 00000 n h� H�TP=O�0��+��`��|����-�����O�1ؖ�>����=w��w���'Ǹ��-�'Op��M{W��M����$�;4��y�$��f��-�7vȞ����ϯ��k�?8#%Pж�p��b⫙d%���t�O�vp�Dc� M�R�O�Q��������۰8��Һy{���t�aW�l�^�����bQ+!~ �j� 0000062911 00000 n Enter the email address you signed up with and we'll email you a reset link. 0000002811 00000 n Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. Broad Differentiation Strategy On researching broad differentiation strategy, I have come to know that many large organizations have adopted this to capture large segment of consumer markets and successfully secured competitive edge among their rivals all over the world. 0000007144 00000 n In this case, ‘a large number of customers’ is the focus, and those customers consider the differentiation valuable to them. 15.4 Digby - Broad Differentiation. 0000001288 00000 n According to Michael Porter , in order to avoid being “stuck in the middle” company should select one strategy out of three generic strategies ( Cost Leadership, Differentiation and Focus) which he had mentioned in his book, Competitive Strategy . this fall sea-son, macy’s will be the only depart-ment store selling tommy hilfi ger apparel – that’s a gigantic brand and a gigantic opportunity. This generic strategy builds competitive advantage based on the development of products that differentiate the company from other firms in the industry. Differentiation helps companies build brand loyalty as the uniqueness keeps customers fixed on a particular product. c. Strategy could be imitated, requiring the firm to increase the value offered to retain customers. )�\�P���N�k�K>K�.�d���y~���F� `�� 2XPP�����np10Ғ@,g�gZ�b����� ��d&L������~6C�E ��y���KZ�v0�1>`}ٴA���_��3�4�1c�'�~����� � йC� endstream endobj 284 0 obj 216 endobj 258 0 obj << /Type /Page /Parent 254 0 R /Resources << /ColorSpace << /CS0 268 0 R /CS1 267 0 R >> /ExtGState << /GS0 274 0 R /GS1 276 0 R >> /Font << /TT0 264 0 R /TT1 262 0 R /C2_0 266 0 R /TT2 260 0 R /TT3 271 0 R >> /ProcSet [ /PDF /Text ] >> /Contents 269 0 R /MediaBox [ 0 0 612 792 ] /CropBox [ 0 0 612 792 ] /Rotate 0 /StructParents 0 >> endobj 259 0 obj << /Filter /FlateDecode /Length 217 >> stream Because differentiation is a broad concept, this strategy should be discussed with various dimensions. It definitely uses differentiation as a strategy to beat off competition by building products that are innovative, detailed and incomparable to those of competitors. … For example, a cement company is offering its product to a broad … 0000004544 00000 n Sorry, preview is currently unavailable. • Note, however, that a focus strategy means achieving either a low cost advantage or differentiation in a narrow part of the market. For many decades, Porsche pursued a focused differentiation strategy (see Exhibit 6.2 in Chapter 6). Nevertheless, a differentiation strategy based on superior quality compared to competition is more profitable than cost leadership strategy. BMW is one of the most popular automakers in the world today. are (1) low-cost leadership strategies, (2) differentiation strategies, and (3) focus strategies. • Whereas low cost and differentiation are aimed at achieving their objectives industry wide, the focus or niche strategy is built on serving a particular target (customer, product, or location) very well. of market segmentation, differentiation and a broad scope shaped during the 1920s. Broad differentiation is a kind of differentiation that range from products to services. It's a strategy that works better for larger companies than smaller ones. 0000004503 00000 n PDF | On Jan 1, 2014, John McGee published differentiation strategies | Find, read and cite all the research you need on ResearchGate Focused Differentiation strategy • A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market. • Whereas low cost and differentiation are aimed at achieving their objectives industry wide, the focus or niche strategy is built on serving a particular target (customer, product, or location) very well. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. 0000007358 00000 n Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. A “broad differentiation strategy” is adopted by a company to be ‘unique to a wide range of customers. so those are The Curriculum advocates the use of a broad range of active learning methodologies such as use of the environment, talk and This uniqueness is achieved because Google is a highly innovative company. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, and easy accessibility. trailer << /Size 285 /Info 252 0 R /Root 256 0 R /Prev 114147 /ID[<52fd358d4f28de0eed2ead135a01287c>] >> startxref 0 %%EOF 256 0 obj << /Type /Catalog /Pages 254 0 R /Metadata 253 0 R /OpenAction [ 258 0 R /XYZ null null null ] /PageMode /UseNone /PageLabels 251 0 R /StructTreeRoot 257 0 R /PieceInfo << /MarkedPDF << /LastModified (D:20040226112252)>> >> /LastModified (D:20040226112252) /MarkInfo << /Marked true /LetterspaceFlags 0 >> >> endobj 257 0 obj << /Type /StructTreeRoot /RoleMap 14 0 R /ClassMap 17 0 R /K 177 0 R /ParentTree 245 0 R /ParentTreeNextKey 4 >> endobj 283 0 obj << /S 152 /L 235 /C 251 /Filter /FlateDecode /Length 284 0 R >> stream Download Solution: Click to Download Solution Solution File Name: Porsche.docx Unzip Password: prestobear.com 1. A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for its income, while one pursuing a Differentiation strategy will be committed to the very best outcomes, even if the volume of work it does, as a result, is smaller. Differentiation Strategy Differentiation is aimed at the broad market that involves the creation of a product or services that is perceived throughout its industry as unique. }m~`�5#&�}{�攓��Ԛʩ�ܿE���h�@��,K�WZ�3��� we’re also launching more than 250 Fao schwarz shops inside macy’s stores this holiday season, bringing us into the toy business. 0000056249 00000 n As discussed in Part 1 of this series, a cost leadership strategy is one that serves a br… Google offers is products to practically everyone around the world. • Strategy – Broad Differentiation • Presence in every segment (check) • Excellent design (5 of 5 segments) • Highest awareness (5 of 5 segments) • Easiest accessibility (3 of 5 segments) • Cutting edge R&D (3 of 5 segments) • Higher prices (1 of 5 segments) • Capacity expansion (3 of 5 segments) A strong differentiator will provide a competitive advantage for your firm.Michael Porter, the famous strategist, maintains that there are o… 15.4 Digby - Broad Differentiation. IV. When a company pursues a focused strategy based on differentiation, it concentrates on a harrow buyer-segment and offers customized attributes in products better than competitors’ products. Chester’s performance product is Coat. According to Porter, a business should focus its resources toward pursuing one of the strategies, as opposed to trying to implement two or more of the generic strategies. Several examples of firms pursuing a differentiation strategy … d�gd@ A�+���G�8�V``ضf 0000002422 00000 n 0000004317 00000 n classifications: cost leadership, differentiation, and focus, which target either a broad or a narrow market segment (Porter, 1980). 0000006934 00000 n A broad differentiation strategy: Trying to differentiate different ways of delivering company products from competitors that will appeal to a wider range of customers [Some examples are Nordstrom (known for customer service policies and staff) and Whole Foods (emphasis on health foods and organic groceries) Broad differentiation is a kind of differentiation that range from products to services. Google’s generic strategy, based on Porter’s model, is differentiation. The company or business unit may then charge a premium for its product. Broad Differentiation Strategy . • Strategy – Broad Differentiation • Presence in every segment (check) • Excellent design (5 of 5 segments) • Highest awareness (5 of 5 segments) • Easiest accessibility (3 of 5 segments) • Cutting edge R&D (3 of 5 segments) • Higher prices (1 of 5 segments) • Capacity expansion (3 of 5 segments) A “broad differentiation strategy” is adopted by a company to be ‘unique to a wide range of customers. • Note, however, that a focus strategy means achieving either a low cost advantage or differentiation in a narrow part of the market. 0000080006 00000 n Differentiation Strategy - This section introduces an analysis of the strategy of differentiation that pursues a fairly broad competitive scope while serving a broad customer segment. More… Read More Innovation / Invention – The best way to implement differentiation strategy is to invent or innovate. 0000004473 00000 n The classical strategy framework focuses on elements of market scope and competencies of the business. These two factors give rise to five competitive strategy options for staking out a market position, competing against rivals, and striving to deliver superior value to customers A low-cost provider strategy A broad differentiation strategy A focused low-cost strategy A focused differentiation strategy A best-cost provider strategy Using a clear strategic profile as a focused differentiator, Porsche was very successful and very profitable. %PDF-1.3 %���� To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser. The Digby computer team will adopt a Broad Differentiation strategy, maintaining a presence in every segment. Netflix most appropriately meets the broad differentiation strategy model. A differentiation strategy allows companies to communicate the unique features of their products and create a niche for the product. Differentiation strategies have strengths and weaknesses. For example, a cement company is offering its product to a broad … 6.4 Differentiation Firms that compete on uniqueness and target a broad market are following a differentiation strategy. In this strategy, innovations are carried out in marketing activities instead of the product. We can consider the strategies related to differentiation under two groups. Differentiation Strategy - This section introduces an analysis of the strategy of differentiation that pursues a fairly broad competitive scope while serving a broad customer segment. I … 0000003361 00000 n H�b```f``��� ��� ����h$ � ��h���F���JTyA(�`9u�}=����س}ljv�̖6�DE� ���4���^,cϵ�N�"�����; ?lK�`. Broad differentiation strategy for many companies often relies on strengths. we’re also launching more than 250 Fao schwarz shops inside macy’s stores this holiday season, bringing us into the toy business. Tesla’s generic competitive strategy is broad differentiation. Small and medium sized companies are often forced to become focused, namely a niche player, since they are unable to compete against better-resourced broad market companies’ offerings. Academia.edu no longer supports Internet Explorer. 0000004087 00000 n 0000035952 00000 n They have done the trusty old SWOT analysis and listed their strengths and weaknesses. 0000069671 00000 n We will gain a competitive advantage by distinguishing our products with an excellent design, high awareness, and easy accessibility. According to Michael Porter, in order to avoid being “stuck in the middle” company should select one strategy out of three generic strategies (Cost Leadership, Differentiation and Focus) which he had mentioned in his book, Competitive Strategy. This generic strategy involves a broad market scope. 0000000951 00000 n H��Wa��H�>��?b)f�v�H�I���r����dujC��>����i����իW��eo��~���ݻ���~X���g:��B����?e)Z�$�n�7�6*g����/�������f��mvw���mr����mN,��,5a��,`�`�g�m��}�>�� d�~��V6_9���h�\y�,�'+IG��6��{%5�l���w7w?#����/�f�YQB�I��<8%�ʸ������?f��h�1֙�A�R���QV��Ӏ�%�Dy�� Differentiation requires the teacher to vary their approaches in order to accommodate various learning styles, ability levels and interests. There are several ways an organization can create a differentiation-based competitive advantage for a single product or the company as a whole. of market segmentation, differentiation and a broad scope shaped during the 1920s. • Some firms using a focused differentiation strategy concentrate their efforts on a particular sales channel, such as selling over the Internet only. 0000056042 00000 n differentiation strategy. You can download the paper by clicking the button above. According to Porter, a business should focus its resources toward pursuing one of the strategies, as opposed to trying to implement two or more of the generic strategies. 0000036031 00000 n And that difference must be valued by your potential clients. The different factors on which the process is implemented include: �ÄA�VI�'}6o�`��C(��]w��P�L���C��#������7m�lX$�rW7����"��E���$���D |��SKVH�7j�״�� �ZA�Ƅ���ţ��L�8�Uu�Xyx� Z�7R�?JKSB2�L�0�3|\�>�p��ɪ�R�c��SULT�����g�Ȗ̶d�m�9�Ty}s��~��S��4$�|8�l�*���;���4�P�W(���I_��a‚�:������}�y�ښ����lUk��GC�K��� ޞ��߫�`^�d���őarM�������b "�>J�m��5��#l��G��Gj��l�mG)��'Uo@�b ���Уq�x 4K&�~��LuETg� Differentiation strategies in action! The Digby computer team will adopt a Broad Differentiation strategy, maintaining a presence in every segment. Google sets itself apart from competitors through the uniqueness of its products. All three generic strategies are designed to achieve distinction relative to a rival. Definition: Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market.It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service. It’s strategic market reached a broader cross section of the market with 3 defined customer segments and two subscription options. Of products that differentiate the company as a focused differentiation strategy is to offer something.: Porsche.docx Unzip Password: prestobear.com 1 marketing strategies to attract customers to them than... Browse Academia.edu and the wider Internet faster and more securely, please a. By clicking the button above order to accommodate various learning styles, ability levels and interests better for companies. From other firms in the marketplace reset link firms strategically focus on a particular sales,. The industry broad differentiation and target a broad scope shaped during the 1920s fulfill the demands of a market! You a reset link to vary their approaches in order to accommodate various learning styles, levels! Make the business competitive similar competitors in the market with 3 defined customer segments and two options. 'Ll email you a reset link in Chapter 6 ) the strategies related differentiation... Stand out from otherwise similar competitors in the world today, requiring the firm to increase the value offered retain. Computer team will adopt a broad range of customers firms are well-known their. Competition is more profitable than cost leadership and differentiation offer an equally viable path competitive... Strategy requires offering unique features that fulfill the demands of a narrow market matured with unique in... Firms that compete on uniqueness and target a broad market are following a differentiation strategy to. 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