Porter Generic Strategies - Differentiation Strategy

Differentiation Strategy

Differentiate the products in some way in order to compete successfully. Examples of the successful use of a differentiation strategy are Hero Honda, Asian Paints, HLL, Nike athletic shoes, Perstorp BioProducts, Apple Computer, and Mercedes-Benz automobiles.

A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These could include patents or other Intellectual Property (IP), unique technical expertise (e.g. Apple's design skills or Pixar's animation prowess), talented personnel (e.g. a sports team's star players or a brokerage firm's star traders), or innovative processes. Successful brand management also results in perceived uniqueness even when the physical product is the same as competitors. This way, Chiquita was able to brand bananas, Starbucks could brand coffee, and Nike could brand sneakers. Fashion brands rely heavily on this form of image differentiation.

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Other articles related to "differentiation strategy, differentiation, strategy":

Porter Generic Strategies - Differentiation Strategy - Variants On The Differentiation Strategy
... timing of the use of specialized knowledge can create a differentiation advantage as long as the knowledge remains unique ... to outlast competitors by practicing a differentiation strategy ...
Porter Generic Strategies - Criticisms of Generic Strategies
... Porter stressed the idea that only one strategy should be adopted by a firm and failure to do so will result in “stuck in the middle” scenario ... He discussed the idea that practising more than one strategy will lose the entire focus of the organisation hence clear direction of the future trajectory could not be ... The argument is based on the fundamental that differentiation will incur costs to the firm which clearly contradicts with the basis of low cost strategy and on the other hand relatively standardised products ...

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