Differentiation As A Competitive Strategy.

Differentiation strategy as a competitive approach

Differentiation.

According to study.com, it’s an approach that a business takes to develop a unique product or service that customers will find better than or in another way distinctive from products or services offered by competitors.

To implement this competitive strategy, the business needs to create some distinctive features which are highly valued by customers for their uniqueness. The focus here is the customer.

The best way to achieve this is to make the product different or unique in specific ways. For example, it can be a difference in terms of functionality and service. It should be noted that the business must take the cost factor into consideration even though cost is not the most important feature in this strategy.

Differentiation Strategy Explained In Blocks
Differentiation Strategy Explained In Blocks

Advantages Of Differentiation

  • The firm can pick interest and encourage loyalty in it’s customers.
  • Customers will become less sensitive to prices.
  • The business can sell the product at a higher than average price to earn a higher profit and use the profit to further improve it’s distinctive features.

SEE HERE [ Identifying Basic Competition Strategies ]

How Can Differentiation Strategy Help The Business To Compete. [ according to porter’s 5 forces model]

(A) From Competitors Within The Industry;

  • Loyalty makes the customers feel less sensitive to prices ( customer’s loyalty to products )

(B) To Customers; difficulty in striking a comparison between products.

(C) To Suppliers;

  • Suppliers will buy because of the high profit, so they can buy the product at a higher price.

(D) To Potential Competitors;

  • The uniqueness creates a barrier or hinderance which will make them not want to enter into same market.

(E) To Substitute Products;

  • The firm has more advantages than its competitors of same industry with substitute products because of it’s uniqueness.

Summarily

In differentiation strategy, the business needs to create some distinctive features which are highly valued by customers for their uniqueness. The focus here is the customer.

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