Broad Differentiation Strategy
In this writing, we’ll try to discuss about the broad differentiation strategy which is the one type of business level strategy under the strategic management. It is the second type after Low Cost Leadership Strategy. And more has Focus Strategy and Best Cost Provider Strategy. However, there are written on the broad differentiation strategy and its ways to achieve, sustainability and shortcomings.
Broad Differentiation Strategy:
When a company is taken strategy about the changing products form (size, shape or physical structure) to different from the competitor’s products, it is called broad differentiation strategy. For example Tanin (manufacturer of plastic products) can differentiate its round-shape plastic tea-table by changing its shape to square-size or oval shape.
Ways to Achieve Broad Differentiation Strategy:
There are various types of different ion themes. Such as:-
Differences in quality:
A company may differentiate its product simply by increasing quality and reliability. Otobi in furniture and Aziz Pipes in PVC products have sometimes followed differentiation strategy based on quality.
For highly technologically complex products, innovation is an important source for differentiation. Computers, stereos, television sets and refrigerators require differentiation based on new innovated features. When products include innovated or valuable features, customers agree to pay for it.
Responsiveness to customers:
A company may differentiate a product based on responsiveness to customers. When this becomes the basis for differentiation, the company offers comprehensive after-sales services including repair. This sort of differentiation is highly workable in the case of products which require frequent after-sales services such as microwave ovens, television sets, computers, cars and the like. In Bangladesh for example 5M Group of companies and Rangs-Sony are famous for their excellence in responsiveness to customers.
Responding to customer’s psychological desires:
A significant foundation of product differentiation is a firm’s retort to the psychological needs of clienteles. Consumers may want to have an exceptional standing or unique respect from using a merchandise. This is particularly vital in the case of amenity or fashion properties and domain products. Numerous customers touch proud of having a BMW car or a Rolex watch.
Wide choice of customers:
Differentiation of a creation may be done by creating obtainable items of any caring in the similar product-line rapidly to clienteles as per their request. Berger Paints Ltd. Has accepted differentiation plan by building ‘color bank’ program. By this plan any shadow of color can be on condition that promptly to any selling paint-customers. It has given a competitive benefit over the contestants.
Sustainability of Broad Differentiation Strategy:
Sustainability of differentiation strategy is an important issue for a company. There are discussed about the sustainability of broad differentiation strategy. Such as:-
- The company must try to adopt those differentiation approaches that would be hard or expensive for the competitors to copy. For example when Nokia introduced video camera and internet capabilities in the mobile sets, Samsung and LG followed the suit.
- Differentiation has to be linked to ‘core competencies/ unique competitive capabilities and superior management of value chain activities.’ The basis for a company’s product differentiation would be sustainable if the opponents cannot willingly tie their capabilities with those of the company. Sustainability can also be accomplished if participants cannot be able to the value chain actions as exclusively as the company itself.
- A company may confirm sustainability of difference when it can vile its differentiation on novel product innovation, technological superiority, quality, reliability, unique competitive capabilities and superior as well as comprehensive customer services. This issue is very important because it would be tough for the competitors to easily copy these differentiating attributes.
- The differentiation attributes must be of value to customers. A particular differentiating attribute may seem to the company very valuable and appealing, but if it is viewed by customers as having no or little value, the differentiation strategy will need sustain.
Shortcomings of Broad Differentiation Strategy:
The common pitfalls and mistakes in pursuing differentiation strategy include:-
Attributes with little value:
While differentiating a product the company may fail to adequately consider the buyer’s perspective in terms of value of the attribute. If buyers deliberate that the altered characteristic is of little worth to them, differentiation strategy will nose-dive.
Incapability to benefit buyers:
Differentiation does not work when buyers perceive that it could not reduce their cost or increase their well-being.
Failure to recognize buyers:
Differentiation will obviously fail if the company cannot understand what buyers consider as of value. Every differentiation must be done based on buyer’s viewpoint – not the viewpoint of the company.
Buyer’s satisfaction with basic product:
When buyers are satisfied with a basic product, differentiation strategy may fail. Because buyers don’t like to have any extra attributes in the products that will increase price.