A company usually follows a focus strategy when it can serve a narrow piece of the market better than competitors. Success with a focus strategy to a large extent depends on the ability of the focuser-company to compete effectively in the market. The car market in India had just opened up and there was a craze for car accessories. Know the advantages and disadvantages of focus strategies. This differentiation strategy focused on producing high quality products at a low-cost to the consumer. Also, market leaders may not like to enter into a niche market as they do not consider it important to be a niche marketer for their business success. This happened in the garments sector in Bangladesh in the 1980s and ‘accounting software’ in the 1990s. Available in a condensed and printable list for your desk , you can use 16 in most classes and the last four for math lessons . When an industry has different niches/market segments, the marketer can pick up the attractive niche(s) based on its strengths. Another risk emanates from the possibilities of shifting customers’ preferences and needs for a particular product in the niche market. Kohinoor Chemical Company for its Tibet Snow initially used niche strategy particularly directed towards rural women. These are: i) cost leadership strategy, ii) differentiation strategy, and iii) focus strategy. The segment it serves is between full ownership of a corporate jet or commercial travel. With differentiation strategy, a company makes efforts to appear unique from its competitors. Let us consider two examples here, NetJets (USA, Europe, and China) and another of DC designs (India.) Clear identification of competitors who serve a market broader than the niche market but are unable or disinterested to serve the niche for some reason. If this happens, the advantages of a focus strategy may be reduced or eliminated. 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. At times the opportunity for focus is created because conventional business models are not able to cater to the needs of some segments. The focus strategy concentrates on a narrow segment and within that segment seeks to achieve either a cost advantage or differentiation. Word of mouth and references are the basis of publicity and entry into the travel group. To be profitable, the market- niche must be able to offer good growth potential. While most of the other differentiation strategy examples were born during the brand development stage, this example was introduced well after the brand had established itself. Before the organizations or individuals buy a share their needs are assessed and options rolled out. For example, follows of focused differentiation strategy in that it offers normally bolted cola, canned cola, and diet-cola for differentiation of different segments. sustainable competitive advantage. While a company using differentiation strategy is free to charge higher prices for its specialized expertise, focusing on a smaller market automatically alienates consumers in the broader market. Following with the energy drink Market, once Monster succeeded with its low prices, many other companies tried to replicate its success. The designs are meant for the discerning car buyer who may often spend more on refurbishing than they did on the original car. Here are 10 companies that brilliantly differentiated their brands from the competition. A firm’s success in strategy rests upon how it positions itself in respect to its environment. A Focused Differentiation Strategy Differentiation depends on the right metrics. I previously touched upon Michael Porter’s generic cost leadership strategy here. Others … The organization has the resources, skill, and competence to serve the segment. At this time he diversified in refurbishing cars. a particular product line (such as lemon juice, children’s shoes or detergent with bleach). These risks originate mainly from more appealing products by rivals, shifting of product-preferences of customers, and high attractiveness of the niche-market. Chavarria, who was trained at General Motors in the U.S., had an insight about car design and engineering and his accessories business was doing very well. The former is an expensive proposition with all the attendant problems of maintaining an aircraft. NetJets is a company that buys aircraft and allows corporate clients to buy part-ownership of that aircraft. NetJets serves a very narrow segment of the business travel market. A focused differentiation business strategy involves targeting a specific or small group of customers with differentiated products. Coca-Cola Company has introduced ‘diet cola’ to serve the niche market consisting of diabetic patients. Its unique feature is that “it provides fractional jet ownership giving individuals and businesses the benefits of aircraft ownership and more at a fraction of cost.”. The company has focused on the niche segment for differentiation. You need to have a history with the brand, having spent a … Examples of Focused Differentiation The dedication of Mercedes-Benz to cutting-edge technology, styling, and safety innovations has made the firm’s vehicles prized by those who are rich enough to afford them. Differentiation strategy examples … Starbucks Another great example of user-generated content, Starbucks’ White Cup Contest launched in April 2014. Fact Check: Is the COVID-19 Vaccine Safe? Effective competition is possible when the company has enough resources, capabilities and market image. 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. The focus strategy is very different in terms of the segment the pursuing organization decides to serve. With focus strategy, a company chooses a small segment of the industry to focus its marketing efforts on. Differentiation strategy examples … Starbucks Another great example of user-generated content, Starbucks’ White Cup Contest launched in April 2014. geographic uniqueness (such as south of USA or South of France). 7 Ways to Differentiate Your Business from the Competition / How Organizations Can Achieve Product Differentiation Thus, niche-market profits will slide down. Example. It is specific to a very narrow group of buyers. For example, Alam Soap Company competes against other soap producers in the ‘laundry bar soap’ segment of the soap market, not in the perfume-soap or liquid-soap markets. Since the focuser company knows the needs of niche customer-groups, it can successfully differentiate its products. Companies using “Focus Strategy” – incorporating ethics for differentiation When asked to name a few companies that uses the “Focus Strategy”, a strategy that targets a niche market by differentiation or cost advantage, a few companies immediately came to my mind. A company may find it useful to follow 9 focus strategy if rival companies avoid specializing in the same segment. It does this by emphasizing one or a few features that consumers consider important, such as brand image or durability, and by focusing marketing efforts on these features to lure consumers away from competitors. By applying … A focus strategy involves offering the niche-customers a product customized to their tastes and requirements. Branding is hard, but differentiation is even harder. All of these are incredibly necessary internal metrics, however, none of these matter to the customer — This is all great information for the company to have as its control panel, but these metrics have extraordinarily little that matters to customers. Rolls Royce did so for the Indian Maharajas.