Differentiation strategies come about in an effort to create sustainable competitive benefit that comes with the corporation and which has an intense impact on the way one understands the differentiation strategy. The framework for implementing the differentiation strategy includes the needs of the customer, the competitor, services and product labels. There are five major components of the differentiation approaches. These include the product differentiation, personnel differentiation, service differentiation, image differentiation, and channel differentiation. Differentiation strategy refers to strategies that are used to accomplish the competitive advantage that it often holds against the competition to carry out the different strategies that will distinguish the competitor in terms of goods, images, and services.
The fundamental principle behind the use of differentiation techniques that the competition uses to create services and product that are unique to the specific customers and the industry. The principal framework of using the differentiation strategy that the supply the needs of the customers, products, the level of service and the competitors. There are a number of measures that are implemented to carry out the different strategies involved in differentiation. Through the process of differentiation, the brand loyalty that the consumers employ helps to cultivate successful products that help the corporation to deviate from the unswerving conflict between these competitors. As such one could say that differentiation strategies offer efficient and competitive approach that allows businesses to gain the necessary profits that alleviate the industry beyond the average level.
In essence, differentiation strategies “provide the products or services that offer benefits that are different from those of competitors and that are widely valued by buyers,” (Johnson, Scholes & Whittington, 2008 as cited by Baykal, 2011: 6). Additionally, Baykal suggests that there is a general aim to using these strategies and the main aim “is to achieve competitive advantage,” (Baykal, 2011: 6). Researchers suggest that differentiation strategies involve two main factors: the strategic customers, whereby the company seeks to identify the needs of the company and the values that they place on the products; and the key competitors, so as to identify those who compete against these individuals, (Hitt, Ireland, Hoskisson, 2009 as cited Baykal, 2011: 6).
Differential product strategy is employed to garner an advantage that is different from the competition. The organization often provides a unique product that will bring the organization to a differential advantage and allow allows the individual to accept whatever price package is offered. The most logical way for the enterprise to move forward is to implement a patent that allows full control of their original and exclusive product. This strategy will help to prevent any competition from going against the product and in turn allow for the success of the product. The reality is that smart business leaders opt to move ahead by creating low cost products and the intelligent entrepreneur against the competitor through the use of differentiation strategy. In other words, the intelligent organization does not become directly involved with their competitors, but instead they compete through the quality of their products.
Differential service strategy included the entrepreneur’s ability to pay closer attention to content, channels and image of their service. With this strategy in place, the enterprise rises to a higher level as the service features a stringent process that helps to build on personal services. Victor J. Cook postulates that it is business need to consider marketing strategies that will help to promote their business even as they undertake the market analysis of the specific product, (Cook, 1983: 1). In fact, Cook further adds that strategic marketing analysis of any specific product and investment option is integral to the enterprise as it allows the entrepreneurs to avoid the use of any system that classifies the products and deflect the analysis from why there is the potential for marked competitive advantage, (Cook, 1983: 1). Arguably, there is the conceptual framework that can arise from the differential service strategy and this allows the manager the opportunity to focus on the reasons for the significant competitive or differential advantage in the product, (Cook, 1983: 1). By employing this strategy, the company will increase the likelihood of improving its service and creates a marked difference in the way consumers view the product. Clearly, the aim of this strategy is to bring to the forefront the advantages of the product and this will help to differentiate between products of a simple composition. These differential services incorporate, but are not limited to the processes of delivery and customer training.
Another of the differential strategies that is important to the business is personnel differentiation whereby the corporation gathers the differential advantage by employing and training their staff in a process that makes these employees “better” than the competition. The qualities of the staff helps to show that the business is strong and therefore consumers feel confident enough to purchase the product. The fact is that is very important for the business to maintain personnel that will appeal to the customers. The fact that the competition will provide personnel of equal training should not deter the leaders to effectively train their personnel in the field of competence, reliability, credibility, good communication skills, and being responsible. In essence, the organization that employs these individuals will undoubtedly have the advantage over the competitors.
Differential image strategy is another integral part of the differential strategies that a company needs to employ in order to meet the demands of the consumer. The harsh reality is that the products on the market are quite similar and therefore there is strong competition among rivaling companies. Take for example the sale of coffee. Almost everyone consume coffee, but companies that produce coffee will only surpass the consumer’s expectations if the produce create an image that appeals to everyone who consumes coffee and create the ultimate differential advantage. The term image generally refers to the public’s opinions or views of the product. This image is important to the number of sales that the company will have in the future. Through the use of the printed, social and media campaigns, companies create excellent pictures of their products and appeal to the hearts of the public in general. As a result, the consumer develops an intense interest in the brand that is presented. Clearly product managers need to employ the use of interesting logos, colors, slogans, and name to promote the brand and in turn create a differential advantage for their business.
Finally, differential channel strategy helps to develop marketing skills that the enterprise can employ to promote their brand or product. The strategies may vary, but the ultimate goal is to appeal to target audiences so that the brand eventually becomes and remains a household name. In his review of the differential channel strategy, Sam Ashe Edmunds notes “using a single-channel distribution strategy produces economies of scale that can improve your profit margins,” (Ashe-Edmunds, 2015: 1), yet this strategy often leads to a reduction in the potential for sales as the use of multiple distribution channels leads to an increase in the amount of sales and a reduction in what stays in the business as advertisement comes with a high cost, (Ashe-Edmunds, 2015: 2) can increase your sales, but the strategy comes with increased costs.
Makers of Starbuck Coffee will find an increase in the sales of their coffee in countries like China, but this will also lead to a reduction in the amount of money that the enterprise eventually keeps as there is heavy advertising in China on the product. The fact is that Starbucks Café is grounded in the American market and to spread the value and quality in a foreign land requires much advertising through numerous medium. The truth is that in order to increase the popularity and sales of a brand, the entrepreneur must plan to increase the level of advertisement so as to increase the differential advantage in the coffee industry. The differential advantage here would incorporate all of the differential strategies as China has a number of brands of coffee being sold in the country. The company has revealed a plan to take on a gigantic expansion that will rival all other coffee brands in China in the near future. For many critics, the expansion carries a number of risks that the coffee industry would agree that this expansion is far too aggressive for coffee brand owners in general, but this has not deterred Starbuck coffee makers. The risk comes amidst the existing knowledge that Chinese individuals come from a background of tea-drinkers. Still, Starbucks has aggressively increased strategies to promote the brand in the Orient and appears to be enjoying the success of their daring strategy. The following table shows how Starbucks has used the differentiation strategies to increase their sales by a single digit of seven (7) percent in their recent quarterly reports.
In concluding, the differential strategies in the production and marketing of any goods are integral to the level of achievement of a corporation. Each strategy has a direct way to draw customers to purchase the brand. While Starbucks Coffee is a household name in the United States, it has not reached that level in China. Nonetheless, the producers of the brand have successfully entered the market with their product through the use of the various differential strategies. The differential service strategy is integral to the promotion of the brand as the customers experience the warmth and hospitality of the employees. Channel differential strategy is also important as the continuous marketing of the product on sales channels allows customers to access the product in large amounts. In essence differential strategies allow for effective competition based on the appreciation level of the customer. These strategies are dynamic and entrepreneurs need to market the brand effectively and continuously to build the name and maintain a higher level over other brands of coffee.
Ashe – Edmunds, Sam, (2015) Differentiated Distribution Strategy, Viewed at
www.smallbusiness.chron.com June 15, 2015
Baykal, Jacqueline (2011) Differentiation Strategies in the Fashion Industry, p.6 Viewed at
www.diva-portal.org June 15, 2015
Cook, Victor (1983) Marketing Strategy and Differential Advantage, Journal of Marketing,
Spring, Vol 47: 68 – 75 Viewed at www.tulane.edu June 15, 2015