By choosing a differentiation policy, the company relies on uniqueness and maximum distinction from competitors in the industry. This refers to:
unique characteristics;
the latest technologies;
interesting design;
special brand image;
talented employees of the company;
special support from management;
outstanding customer experience.
Michael Porter noted in his book cash app database that unique products must fully meet the individual needs, tastes or self-expression of consumers. This is what they are willing to pay extra for. Of course, uniqueness must be justified.
If a standard product suits customers both in price and functionality, then few will overpay for originality. Marketers must conduct research. Identify what specific needs the consumer has. Based on this, management will be able to understand what specific features of the manufactured product can cover them.
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The advantages of a company's competitive strategy focused on differentiation:
If the product is truly unique, very high quality and useful, then this will increase consumer loyalty to the company.
It is possible to justifiably increase the price by referring to the above-mentioned qualities.
There is a possibility of avoiding direct competition when new players enter the market.
It is possible to establish a reputation for the company as being particularly concerned about the high quality of its products.
Cons:
Large expenses are spent on creating an impeccable image of the company and then maintaining it.
You need to be prepared for the fact that demand for the products being sold may decrease at any moment.
The factor of copying unique product features by competing companies cannot be ruled out.
You can put any business characteristic at the center of your strategic plan, but it should be something that attracts customers and not based on cost. It is best to choose something that is unique but useful to people. These qualities may include:
Special characteristics of the product
For example, the company ZipRecruiter, which offered users something unusual. This application is the leader in job search in America. As a differentiation - an unusual experience of posting a resume and responding to employers.
Competitive strategy according to Porter "Broad differentiation"