- Product parameters :Size, shape, design, quality performance
- Services back-up: delivery, installation, repairs, training etc.
- Personnel: Better and experienced personnel to serve customers.
- Promotion: Differentiating claims in promotion appeals.
- Image: Projecting organization or brand
Conditions for the best use of differentiation strategies:
- Diverse buyers’ needs
- Different ways to differentiate
- Different approach followed by few rivals
- Fast technological change
- Buyers’ are less price sensitive
c. Focus Strategy: The focus strategy applies to a narrow segment of a total market. Usually companies using this strategy have a reduced size, focus all their resources and efforts on a narrow and well defined segment of market, and have the advantage of a high degree of customer loyalty. They can therefore pass higher costs on to their customers because close substitute products or services are less likely to exist. Beauty Parlors, local bakeries & retail boutique are the examples of enterprises that serve narrow or local customer segments.
The niche can be defined by:
- Demographic characteristics (particular group of customers based on age, occupation, income etc.
- Geographical (Tarai, Himal etc. people)
- Specialized requirements.
- Special product attributes
The focus strategy has two variants.
- In cost focus a firm seeks a cost advantage in its target segment,
- Differentiation focus a firm seeks differentiation in its target segment. (Cost focus exploits differences in cost behavior in some
segments, while differentiation focus exploits the special needs of buyers in certain segments.)
Conditions for the best use of focused strategies:
- The customers are based in terms of unique tastes & preference and specialized requirements.
- The customers are willing to pay higher price or upscale (Higher class) buyers.
- Major competitors do not see the presence of niche as crucial to their own success.
- Target market for niche is big enough to be profitable.