Question

Differentiation Strategy Read the overview below and complete the activities that follow. Early in the process of crafting a strategy, company managers must decide which of the five basic competitive strategies to employ: overall low cost, broad differentiation, focused low cost, focused differentiation, or best-cost provider. Broad differentiation strategies seek to produce a competitive edge by incorporating attributes and features that set a company's product/service offering apart from rivals in ways that buyers consider valuable and worth paying for Successful differentiation allows a firm to (1) command a premium price for its product, (2) increase unit sales (because additional buyers are won over by the differentiating features), or (3) gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). Differentiation strategies work best in markets with diverse buyer preferences where there are big windows of opportunity to strongly differentiate a company's product offering from those of rival brands, in situations where few other rivals are pursuing a similar differentiation approach, and in circumstances where technological change is fast-paced and competition centers on rapidly evolving product features. A differentiation strategy is doomed when competitors can quickly copy most or all the appealing product attributes a company comes up with, when a company's differentiation efforts meet with a ho-hum or so-what market reception, or when a company erodes profitability by overspending on efforts to differentiate its product offering. The goal of this exercise is to help you gain command of the major avenues for achieving a competitive advantage based on differentiation. Answer the assignment questions for this exercise after reading about Broad Differentiation Strategies in Chapter 5 and exploring Kendra Scott's website at http://www.kendrascott.com Is there reason to believe that Kendra Scott's differentiation strategy has been successful in producing a competitive advantage? Why or why not?

Answer 1

Yes we can say that the differentiation strategy has posed a competitive advantage for the product because of some of the reasons.

Firstly, it determining the prices that will allow to increase the profit level of the company keeping in mind the competitive price in the market. Thus it allows for better products to enter the market. Secondly, new customers are attracted towards the product thus allowing for better preference and alternative for customers.Thirdly, new varied products allow for loyalty of customers for the product and as well as for the company.

At the same time certain precautions should be maintained while designing the product since copying the product design can lead to loss of monopoly for the company but this differentiation strategy works well for products as they are newly introduced in the market.