Janis Joplin’s musical tribute to Mercedes-Benz underscores the allure of the brand. It sometimes seems that many businesses have more measurements, controls, and processes than NASA. Onishi, N. (2010, April). Differentiation can be had by superior performance in two to three top buying criteria. But if you can validate with good metrics that you have better quality, more accuracy in shipment, better on-time performance, etc., you are building operational strategic differentiation. All Rights Reserved. As with a focused low-cost strategy, narrow markets are defined in different ways in different settings. The firm’s customers have included professional musicians such as Dan Fogelberg, Leo Kottke, Herb Ohta (Ohta-San), Lyle Ritz, Andrés Segovia, and B. J. Thomas. When we delivered the findings to the company executive team, we learned: To top it off, less than 5% of SMBs (small, midsized business) invested in any serious customer research. All it takes is a script of your competitive advantages. High-quality coffee beans often sell for $10 to $15 a pound. Ninety-eight percent of our designers who entered design competitions won awards–a total of 59 in the past ten years. Question: Also, for the past several years by following the Internet forums and such has been extremely beneficial. Read more: How to Write a Strategic Plan: Guide to Strategic Planning. In his continued effort to be the most cutting-edge designer in the fashion industry, Mugatu developed a new line of clothing inspired “by the streetwalkers and hobos that surround us.” His new product line, Derelicte, characterized by dresses made of burlap and parking cones and pants made of garbage bags and tin cans, was developed for customers who valued the uniqueness of his…eclectic design. Recreational Equipment Incorporated (REI), for example, commands a premium for their outdoor sporting goods and clothes that feature name brands such as The North Face and Marmot. These efforts to appeal to broad markets can be contrasted with strategies that involve targeting a relatively narrow niche of potential customers. When it comes to uniqueness, few offerings can top Kopi Luwak coffee beans. Checkers targets drive-thru customers and offers them big burgers at rock-bottom prices. https://www.youtube.com/watch?v=cSMD6MoNeBo&feature=emb_logo, http://www.nytimes.com/2010/04/18/world/asia/18civetcoffee.html?pagewanted=all, https://commons.wikimedia.org/w/index.php?curid=84685638, https://upload.wikimedia.org/wikipedia/commons/f/fc/Jake_Shimabukuro.jpg, Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Claire’s use of a focused cost leadership strategy has been very successful; the firm has more than three thousand locations and has stores in 95% of US shopping malls. Your Differentiation Strategy is at Risk. Redbox rents DVDs and video games through vending machines for only $1. A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market (Figure 5.14 “Focused Differentiation”). Papa Murphy’s targets its inexpensive take-and-bake pizzas at value-conscious families. Thus the unique features provided by firms following a focused differentiation strategy are often specialized. After all, remember your competitive advantages answer the customer’s most crucial question: Why should I buy from you? Do the preferences of Japanese customers differ from those of Americans? Decide what you want to be known for. Amazon clearly paved the way for online shopping. 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 The graph shown below, from the Association of Fitness Studios 2016 Operating & Financial Benchmarking Report details the KPIs of primary focus for fitness studios of all sizes and disciplines. Providing indoor seating creates expenses for fast-food restaurants. Thus the unique features provided by firms following a focused differentiation strategy are often specialized. For customers, the large selection of organic goods comes at a steep price. Those clients knew the quality and reliability of the firm’s work. Also, the niche could disappear or be taken over by larger competitors. To be fair, they hear it all day every day. The Japanese want only high-end instruments. Focused differentiation is the second of two focus strategies. Aesthetics are very important to the Japanese along with high-quality materials and workmanship. The goal is to have competitive advantages derived from operational excellence that can be validated with solid metrics for the top three to four top customer buying criteria. Augustino Loprinzi: Although most grocery stores devote a section of their shelves to natural and organic products, Whole Foods Market works to Your company may create a list of characteristics its products contain that your competitors lack. Here are some steps to create a differentiation strategy: You must have an idea of your expertise in your business. Checkers saves money in a variety of ways by not offering indoor seating to its customers—Checkers’s buildings are cheaper to construct, its utility costs are lower, and fewer employees are needed. That is because negotiation is underway. YouTube. Although most grocery stores devote a section of their shelves to natural and organic products, Whole Foods Market works to sell such products exclusively. What is the most expensive guitar you’ve ever sold? Many gun stores went out of business after large retailers such as Walmart started carrying an array of firearms. There are plenty of sales schools that the CEO could have turned to, but they can be expensive and time-consuming and would keep his designers off the showroom floor too long.