- Strategic Management Tutorial
- Strategic Management - Home
- Strategic Management - Introduction
- Strategic Management - Types
- Strategic Management - Process
- Strategic Leadership
- Organization Specifics
- Performance Issue
- The Top Leadership
- Entrepreneurial Orientation
- The External Environment
- Organization & Environment
- Analyzing the External Environment
- Judging the Industry
- Mapping Strategic Groups
- Organizational Resources
- The Resource Based Theory
- Intellectual Property
- The Value Chain
- Other Performance Measures
- Company Assets: SWOT Analysis
- Business Level Strategies
- Different Types
- Cost Leadership
- Niche Differentiation
- Focus Strategies
- The Best-Cost Strategy
- Aiding Business Level Strategies
- Competitive Moves
- Competitor's Moves
- Cooperative Moves
- International Marketing Strategies
- Pros & Cons
- Drivers of Success and Failure
- International Strategies - Types
- International Markets - Competition
- Cooperative Level Strategies
- Concentration Strategies
- Vertical Integration Strategies
- Diversification Strategies
- Downsizing Strategies
- Portfolio Planning
- Strategy and Organizational Design
- Organizational Structure
- Creating an Organizational Structure
- Organizational Control Systems
- Legal Forms of Business
- Strategic HR Management
- Growth & Nature
- Organizational & HRM Strategy
- Impact of HRM on Performance
- Strategic Management Resources
- Strategic Management - Quick Guide
- Strategic Management - Resources
- Strategic Management - Discussion
Strategic Management - Niche Differentiation
A differentiated business strategy is one of the two basic types of competitive strategies that companies use as a strategy. In essence, companies can take advantage of one of the many possible ways to differentiate themselves from competitors to drive business.
Differentiation
Differentiation means making an organization or brand stand out by providing unique features, benefits, services or other elements of your solution. This strategy refers to identifying the most important criteria used by buyers in the market and then designing product, service or other offerings in the best possible way to meet those criteria.
Offering the finest-quality product, the best solution, an exclusive or modern feature or tool, or organic materials are examples of differentiation. Differentiation strategies are considered along with higher price points than low-cost providers as more money is needed to offer a better overall solution. Depending on the value-added elements before going for the low-cost options is key.
Differentiation Focus
Differentiation focus relies on one or a small number of target market segments. In some industries, different market segments demand different types of product or service. With a differentiation focus, your business focuses on one or two given segments with which the company’s strengths best align. This more-focused approach allows maximizing the efforts in marketing to the selected segments and lets the organization to invest the resources to convince the segments of your brand's superior benefits.
Low Cost Limitations
Usually, there is always more room for differentiated business strategies than for low-cost strategies. Ultimately, just one company emerges as the true low-cost provider in an industry. Being the second-lowest or third-lowest provider does not make the game change. In some industries, several companies compete to be low-cost providers, however, only one company wins out or limited profits are spread around. Thus, the companies that do not want to engage in a high-risk battle of cost leadership must opt for a differentiated approach.
Porter's Model
Michael Porter offers a mention of differentiation in his famous five forces of competition model by noting four basic competitive-advantage strategies. They include differentiation and differentiation focus, which are two similar but distinct differentiation strategies. Porter noted five competitive forces from rivals, new entrants, suppliers, buyers, and substitutes.
