Differentiation Strategy: The Successful Approach
Differentiation Strategy: The Successful Approach
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Home Page > Business > Strategic Planning > Differentiation Strategy: The Successful Approach
Differentiation Strategy: The Successful Approach
Posted: Nov 16, 2011 |Comments: 0
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When starting a small business you need to make sure that the business will take the right direction. Every business’s final goal is profit, enjoying high profit margins and attracting more customers than your competitors. The right strategy can provide a small business a competitive advantage over its competitors and finally to succeed in its goals. A differentiation strategy can provide such an advantage by differentiating your business from the competitors, offering a product that you competitors cannot offer and, at the same time, what your customers seek.
How to differentiate
A differentiation strategy will pursue a unique position among your competitors. The aim of the strategy is for the business to become unique in the minds of its customers. For this reason, a small businesses needs to create a product offering that is somehow unique. Uniqueness can be achieved through different factors like design or brand image, technology, customer service or other attractive features.
For example, you can offer a specific design that your competitors cannot offer and target a specific group of consumers. In a few words, find your niche. Advertising is a great way to increase brand image and exposure. A small business can create specific ad campaigns targeted at specific groups of consumers instead of pursuing mass media advertising campaign which are highly costly and not as efficient. Invest on technology to improve the way you work and be able to satisfy better your consumers. With the use of the internet, customer service can become more efficient for you and your customers, decreasing your costs and offering more information about your brand.
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The aim of differentiation strategy is to create brand loyalty, which in turn can create price inelasticity on the part of buyers. As a result, customers will be less sensitive on price decisions, and more sensitive on the actual product. In turn, it can erect competitive barriers to entry, higher margins and possibly mitigate the power of buyers who lack acceptable substitute products.
Spend more to get more
Taking risks is a great part of running a business and sometimes it may give good outcomes but in other times bad ones. Success will bring success; it’s a cycle which is hard to sustain but easy to break. Offering customers a high quality product is the best differentiation strategy any small business can use to succeed.
Such a strategy may bring future complementary strengths to a small business. Imagine a small business offering a high quality product to each customer. Satisfied customers will recommend the product to more customers and allow the business to increase its profit margins. Increased margins will allow the small business to use aggressive marketing and thus increase its market share. As the business grows, economies of scale can arise, providing a cost leadership for the business. My point is that you should thing long term, take risks and be patient.
Pursuing the exact opposite strategy, offering low quality products, will only decrease profit margins, market share, reduce the business resources and give a long term direction to the business that nobody wants. Implementing strategies is a great ability top business leaders have and thus learning more about leadership is vital if you want to create or run your own business.
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The Small-Business Course is designed to offer Business Knowledge to individuals that currently own or want to create a small business. The course is free and it will be updated constantly with free articles covering different topics like managing Peoples, Organisations and Marketing, and more topics like Differentiation Strategy. Visit the site now for more information.
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Article Tags:
ad campaigns, brand image and exposure, competitive advantage, customer service, differentiating your business, differentiation strategy, invest on technology, niche, profit, profit margins, small business, starting a small business, the successful approa
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The Small-Business Course is designed to offer Business Knowledge to individuals that currently own or want to create a small business. The course is free and it will be updated constantly with free articles covering different topics like managing Peoples, Organisations and Marketing, and more topics like Differentiation Strategy. Visit the site now for more information.
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