Differentiation Strategies

Differentiation Strategies

When a product is manufactured in such a way that it is perceived as unique by the customers. Then such product is managed through differentiation strategies. Some unique features or benefits are added to the product in order to make it differentiated. These differentiating features and benefits highlight the certain product. Specifically among a pool of different products. The customers consider that product as a unique one that will provide superior value to them. It is clear that the customers are interested in such a differentiated product. Because they considered it as unequaled and unrivaled. This results in reduction in the price elasticity of demand of that product.

So the customers are more loyal to such kinds of brands of product. In such a way, Differentiation Strategies help the organization to keep itself away from the stressful competition. Although by ensuring the production and delivery of more profitable or unique products to customers.

Essentials of Differentiation Strategies

When additional features and benefits are associated with the product, there incurred some additional costs by the organization which need to be considered in setting the pricing strategy of that product. For this purpose, a premium pricing strategy is required which needs to be properly maintained. Following are some of essentials of maintaining premium pricing strategy.

• The research and development skills of the organization should be strong enough that contain all the latest methods and techniques
• The product engineering skills should be strong enough and according to the latest standards
• Creativity skills of the organization are strong enough and facilitates the production of creative and innovative products
• All the distribution channels of the organization have effective cooperation in the delivery of products from point of production to the point of final consumption
• The organization should possess potential marketing skills that can better cover all the marketing activities of the organization
• Subjective measures are set by the organization in order to provide incentive for the high performances
• The importance of the characteristics of differentiating products is better communicated to the customers. So that they can point out the potential features of the unique product
• Stress should be made on innovation and continuous improvement in the existing product
• The creative and highly skilled people should be attracted towards the organization that can add value to the organization through their better performance
• The product flexibility should be increased for the convenience of the customers in managing their different kinds and levels off demand
• There should be increased compatibility in the organization
• The costs of the organization should be lowered enough
• The services provided to the customers should be improved enough
• There should be increased convenience
• More effective features should be added to the products in order to make them more unique and differentiated.

Kinds of Strategies

In short, the organizations charge higher price through differentiation strategies while their customers remain more loyal. There is a kind of differentiated strategy called differentiated focus strategy in which the organization tries to differentiate in one or a limited number of segments of the target market. The particular needs of the segment are fulfilled through provision of products that are much different from the competitor’s products serving a broader segment of the market. While pursuing this strategy one point should be considered first that the customers have certain needs & wants that are not satisfied through existing products of the competitors.

Focus Strategy

In this strategy, the organization chooses few target markets. This strategy is also called niche strategy because one or two smaller segments of the market are targeted so that the special needs & wants of those targeted segments are better fulfilled through tailoring the marketing mix of the organization to provide the required products. In this way the organization can gain Competitive Advantage by applying effectiveness factor rather than efficiency. It can be used by any organization but smaller size organizations are more suitable. Focus strategy can be applied keeping in view the following aspects.

• The targeting segment should be proper size of the industry
• There should be effective growth potential
• The customers of the targeted segment have distinctive segments
• Major competitor’s success do not depend on that segment
• The competing organization do not attempt to specialize in the same segment of the market

The organization may get the advantage of low cost by targeting or of few smaller segments. The offering product should have sufficient demand in the targeting segment of the market.

Niche Strategies

The organization selects only a single segment & offers specialized products to only that particular segment through formulating & implementing niche strategies. By targeting a single segment, the organization gets competitive advantage over its competitors because it can be specialized in providing a particular kind of product or service to the customers of that segment. The organization can either lower its costs or make its products differentiated ones that can better satisfy the needs & wants of customers of targeted segments.