There are pros and cons to both strategies. DRAWBACKS OF BROAD DIFFERENTIATION. To be successful in using broad-differentiation strategies the firm should have adequate adaptive advantages that would allow it to continuously innovate or be able to leverage economies of scale (that comes with selling to the masses) to create sustainable differentiation. With more than 15 years of small business ownership including owning a State Farm agency in Southern California, Kimberlee understands the needs of business owners first hand. Pursuing a differentiation strategy means a lot of time, energy, resources will be spent to develop a product that sets itself apart from the competition. One weakness of using a differentiation strategy involves the challenge of changing the customer perception. Indeed, these firms often price their wares far above what is charged by firms following a differentiation strategy (Figure 5.10 Figure 5.10 Executing a Focus Strategy ). It brings expertise into the products or services. This creates more … Problem 76SAQ from Chapter 5S5.3: What are the pros and cons of a broad differentiation strategy? An understanding of the generic strategies such as the broad low cost provider, broad differentiation strategy, and narrow focus strategies on cost and differentiation being deployed by competitors can provide opportunities for existing and potential competitors by trying to achieve a lower cost or better differentiation by rivals. Pros and cons of differentiated instruction. This could create raving fans who prefer to be at home or out enjoying life, rather than working out for several hours every day. Explain what a company has to do to achieve this advantage? Also, the differentiation generic strategy empowers Harley-Davidson to penetrate current markets. Here are the key points to consider. Dec. 30, 2020. A differentiation strategy in retail can be supported by … 2. Then, by achieving the lowest possible cost, the leader can place their team or organization into a position where the lowest price in the market is charged for needed goods or services. Thus a differentiation strategy helps create barriers to entry that protect the firm and its industry from new competition. Course Hero is not sponsored or endorsed by any college or university. However, there are cons as well, including higher costs and the risk of … Perhaps your program accomplishes the same results or more but does so spending less time in the gym. Give, an example/s of a company/companies who have, What market conditions and circumstances make a low-cost provider strategy, attractive? These strategies are known as focus strategies and they are applicable to both cost leadership and differentiation. While it is likely to have a lower market sharethan a firm following a cost leadership strategy, profits are high due to the perceived product and service differences among customers. When you differentiate yourself and successfully solve a client's problem or fulfill their need, you have very happy clients. Give an example/s of a company/companies who have both pros and cons? A broad focus strategy is applied industry wide and it refers to the cost leadership and differentiation strategy. You've differentiated yourself but have done so in a way that consumers have a tough time believing, based on their existing experience in the market. This means you have created something that is off the wall, and that consumers either don't believe that it is true or they don't understand the benefit. By differentiating yourself from the competition, you solve very specific problems. True commodities, like milk powder, steel, meat, wool, oil and forestry products, ride the currents of supply and demand, going up and down in response to market forces with little or no ability to differentiate and no margin beyond that provided through volatility. What are the pros and cons of in pursuing a broad differentiation strategy? For example, a senior care advisor who differentiates himself by saying he is the "Baby Boomers' answer to long-term care" could be missing other generations who need senior care, not just long-term care. Explain your answer. Give an examples of a company/companies that use this strategy and explain their both pros and cons I'd be remiss in jumping into the pros and cons of differentiated instruction without first establishing some common ground about what differentiation is. Participants who struggle through on their own are more likely to retain lessons learned from the practice rounds. Unless you can back this up with proof of things that people can confirm, you will not get clients from this differentiation. A concern with a product differentiation strategy is the investment you typically have to make to produce or acquire a top-notch product. Broad Differentiation Strategy is quite unique and brings about many Examples. A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for its income, while one pursuing a Differentiation strategy will be committed to the very best outcomes, even if the volume of work it does, as a result, is smaller. Of course, from a marketing point of view, commodities are the anti-thesis of the value-added products and services that marketers today are tasked with building. Midterm204StudySheetchapt18.104.22.168Fall2017.docx, Minnesota State University, Mankato • MGMT 499, University of Houston, Victoria • MGMT 6352, BADM 204 - Introduction to Strategic ManagementMidterm.docx, Copyright © 2021. Badm 204 FINAL EXAM.docx - 1 What are the pros and cons of in pursuing a broad differentiation strategy Give an example\/s of a company\/companies who, 11 out of 14 people found this document helpful, What are the pros and cons of in pursuing a broad differentiation strategy? Business Models & Organizational Structure, The Importance of Demographics to Marketing, University of Minnesota: 5.4 Differentiation, Entrepreneur: 5 Ways Entrepreneurs Can Gain a Competitive Advantage, How to Retain Clients for a Nutritional Weight Loss Business, Examples of Market Needs in a Marketing Plan, "On Competition"; Michael E. Porter; January 1998. Product Development. However, if you were to focus your niche on families with children between the ages of five and 12, you could differentiate yourself as the dog-training program that teaches kids to be better dog owners. Try our expert-verified textbook solutions with step-by-step explanations. Now, you are appealing to the parents' desire to have a child who is more responsible and who also want to keep the dog safe and happy. A cost leadership strategy is when a company actively pursues the cost leadership position in a broad market. Course Hero, Inc. This is not an easy thing to accomplish due to competition and customer requirements. If the niche market is strong enough, and large enough to support this level of niche differentiation, then the advisor might still be meeting with people to his calendar capacity. This is where differentiation strategies help craft messages to consumers, which convey that you can fulfill their needs in a way that's better than what everyone else out there can do for you. Terms. Some pros of differentiation strategy are the ability to charge more for products and development of consumer loyalty. E.g. You need to differentiate yourself, because consumers might already be bored with "another training program that's copying XYZ studio." Give an example/s of a company/companies who have both pros and cons? To create the best possible products or services for … The Cons of Differentiated Instruction. Differentiation effective for both high-ability students and those with a disability. A successful cost leadership strategy involves offering products and/or services that have: Satisfactory quality Cost leadership strategy. Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. Product innovation is the key point in this intensive strategy. Give an example/s of a company/companies who have both pros and cons? Privacy Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. For example, you may have an off-leash, dog-training program that can help anyone enjoy more time outdoors with the family dog. Pros. Give. Prezi’s Big Ideas 2021: Expert advice for the new year In this scenario, it might be wise to test various differentiation strategies to see if one message resonates with one demographic while another brings leads in from a totally different demographic. 1. 1) What are the pros and cons of in pursuing a broad differentiation strategy? Overall, there are pros and cons to differentiating your products. When you get too specific about how you are different you might exclude a large demographic. Your program still works for any other person wanting better walks with her dog, but this niche gives your marketing a bigger emotional tie. 1. Digital marketing makes it easy to focus marketing efforts on a very specific niche. 2. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. When not writing, Kimberlee enjoys chasing waterfalls with her son in Hawaii. These customers are attracted to the brand and are normally loyal, repeat purchasers. Target market niche is big enough to be profitable. These diversification strategy pros and cons show that when properly implemented, a fairly consistent return can be achieved. Cost leadership strategy and differentiation strategy share one important characteristic: both are used to attract customers in general. Product quality, features, and/or services are viewed by customers and end-users as being significantly different than the competition. Used by businesses and private investors alike, this strategy acts as a form of insurance against large losses. Plus they can test alternate tactics of their own making, as opposed to the more controlled process outlined in the exercise below. Blog. A negative aspect of differentiation happens when business leaders take it too far. In contrast, a company with more than 100 flavors of ice cream can be known for having a flavor for everyone. It is costly or difficulty for multi segment competitors to meet the specialized needs of niche buyers. Pro: Create Raving Fans. For example, you may have a new boot-camp exercise program, but there are 50 other fitness trainers and studios already established in this market in your area. The Pros of a Diversification Strategy. Walmart provides cheap if not, What type of competitive advantage does a best-cost provider strategy aim at, achieving? Time Constraints Describe a multi-domestic strategy, a global strategy and transnational strategy and give the pros and cons of each strategy. Loose-Leaf Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (18th Edition) Edit edition. Find answers and explanations to over 1.2 million textbook exercises. The policies to appeal to broad markets can be contrasted with strategies that target a relatively narrower niche of potential customers. Implementing a differentiation strategy is costly. If you have a weight-loss program and you differentiate yourself by saying that clients will lose 20 pounds overnight without missing a meal or doing exercises, this is a tough statement to believe. As with any business strategy, there are pros and cons to consider before you spend valuable resources on implementation. This contrasts with a more universal, mass market approach, in which the same product is … Industry leaders choose not to compete in the niche 3. Pros Cons 1. Pros & Cons of Differentiation Strategy Pro: Easy to Focus Marketing Efforts. Tougher Work Load for Teachers Working with each individual according to his learning style means more work for the teacher, more time taken for each lesson and each child. As indicated, a differentiation strategy serves a broad market. Engagement in learning tends to be stronger because it addresses the children as equal individuals CHAPTER 5 1) What are the pros and cons of in pursuing a broad differentiation strategy? A company that produces only chocolate ice cream but is well known for having the highest-quality, and best-tasting chocolate ice cream has its own realm of appeal. The big risk when using a differentiation strategy is that customers will not be willing to pay extra to obtain the unique features that a firm is trying to build its strategy around. In the case of focus differentiation, one advantage is that very high prices can be charged. BA3103 Final Presntation. Children take on more of the responsibility for learning. Generic strategies apply to not-for-profit organizations too. What are the pros and cons of in pursuing a broad differentiation strategy? approach in which a firm purposes to establish and market an exclusive product for various consumer segments However, if he is only busy 50 percent of the time, it might be the result of differentiating himself too much. Here are some of the benefits for companies using a broad differentiation strategy: Ability to apply premium pricing to products or services deemed by consumers as different Product development used to be Harley-Davidson’s primary intensive strategy for business growth. The broad focus strategy concentrates on developing products that are unique and of low cost for a broad market. One of the big dangers in crafting a competitive strategy is that managers,torn between the pros and cons of the various generic strategies,will opt for "stuck in the middle" strategies that represent compromises between lower costs and greater differentiation,and between broad and narrow market appeal.True or false? Cost leadership styles focus on resource organization. This can put a burden on research and development teams, product manufacturers, and even your profit margins. This preview shows page 1 - 3 out of 97 pages. Below are the disadvantages or risks of the broad differentiation strategy: Differentiating on an unimportant product feature that doesn't result in providing the best value to the customer; Too much differentiating the product like products' features exceed the customers’ needs; What, Striving to achieve lower overall costs compared to rivals. Consider cereal. What are the pitfalls in pursuing a low-cost provider strategy? • Broad differentiation strategy: targets a broad cross-section of the market; wide selection of products with differentiating features. The Disadvantages of Differentiated Marketing. It may take years before a company achieves a strong brand image that sets it apart. But more important and effective than this is how Nike makes its customers feel. 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