Differentiation focus strategy
Category: Marketing
The D company has chosen the two following strategies:
To obtain differentiation of its product by identifying special needs which the customer consider useful and valuable and integrating the corresponding characteristics in the product/services
To make sure that the realisation of the differentiation strategy is embodied in a limited part of the market, often one or more segments which only consist of a part of the entire market width.
The strategy is more or less the same as for companies with a differentiation strategy but the products services are tailor-made and adapted to specific needs of the customers with a view to create high customer preference, and the company focus on the limited part of the market which has special needs separating it from the rest of the market.
To realise this strategy successfully it is important that the company carefully defines the specific segments of the market which by need is different from other customers in order to obtain a higher price for the product/services.
The company must continuously focus on the relationship between the customer groups of the market and the special needs and demands of each group. Assuming that a market offers customer groups with special needs which are different from other markets, the company should adapt its product in order to be in a stronger position than its competitors.
In addition to the risks mentioned within ‘differentiation strategy’, the D company could often be tempted to incorporate new segments in the strategy which necessitate alternative product types and services. The result of such a development could be that the company blurs the original market focus and makes itself vulnerable to competition. The former competition strength can quickly turn to vulnerability if the focus is partly or completely lost.