What is the difference between differentiation and focused differentiation?
While a differentiation strategy involves offering unique features that appeal to a variety of customers, the need to satisfy the desires of a narrow market means that the pursuit of uniqueness is often taken to the proverbial “next level” by firms using a focused differentiation strategy.
an approach to competitive advantage in which a company attempts to outperform its rivals by offering a product that is perceived by consumers to be superior to that of competitors even though its price is higher; in adopting a differentiation focus strategy, the company focuses on narrow market coverage, seeking only ...
Several different factors can differentiate a product. However, there are three main categories of product differentiation. These include horizontal differentiation, vertical differentiation, and mixed differentiation.
The main advantage of the focused differentiation strategy is that it is an efficient way to create value. When a business focuses on a narrow set of customers, it can serve them better than any competitor. This strategy also enables the business to capture part of the value it creates for its target customers.
Differentiation
As the main business strategy of Nike, differentiation has focused on developing unique products for the customers.
Some firms using a focused differentiation strategy concentrate their efforts on a particular sales channel, such as selling over the internet only. Others target particular demographic groups. One example is Breezes Resorts, a company that caters to couples without children.
As opposed to cost leadership, the differentiation strategy allows companies to take on an innovative approach for their products, and charge premium prices for it. For example, Starbucks goes beyond selling coffee by providing a unique coffee experience in their coffeehouses.
Focused differentiation is the second of two focus strategies. A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market (Figure 5.14 “Focused Differentiation”).
A focus strategy is a competitive strategy to direct marketing and sales efforts to a specific market segment. This strategy seeks to exploit underserved or undiscovered segments of a target market.
- Valuable: the perceived benefit exceeds the cost.
- Important: delivers a benefit critical to success.
- Distinctive: unique or offered in a distinctive way.
- Superior: better technology, faster.
- Emotional: ties to a core emotion — love, hate, desire.
- Communicates: understood and visible.
How do you implement a differentiation focus?
To succeed in implementing a differentiation strategy, the business needs to select one type of differentiation best suited to target market desires, as well as its own financial constraints, and focus its efforts on honing products along that dimension.
