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. Cost leadership styles focus on resource organization. These diversification strategy pros and cons show that when properly implemented, a fairly consistent return can be achieved. Used by businesses and private investors alike, this strategy acts as a form of insurance against large losses. 2. These customers are attracted to the brand and are normally loyal, repeat purchasers. It may take years before a company achieves a strong brand image that sets it apart. 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. Digital marketing makes it easy to focus marketing efforts on a very specific niche. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. Generic strategies apply to not-for-profit organizations too. Unless you can back this up with proof of things that people can confirm, you will not get clients from this differentiation. 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; Pros & Cons of Differentiation Strategy Pro: Easy to Focus Marketing Efforts. 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? The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. Here are the key points to consider. Pros. Loose-Leaf Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (18th Edition) Edit edition. It brings expertise into the products or services. The Disadvantages of Differentiated Marketing. Cost leadership strategy and differentiation strategy share one important characteristic: both are used to attract customers in general. When there are a hundred other companies in your community that do what you do, all trying to get the attention of your customer, trying to stand out from the crowd can be difficult. 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 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. 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 ). 1) What are the pros and cons of in pursuing a broad differentiation strategy? Explain what a company has to do to achieve this advantage? What are the pitfalls in pursuing a low-cost provider strategy? Product quality, features, and/or services are viewed by customers and end-users as being significantly different than the competition. Describe a multi-domestic strategy, a global strategy and transnational strategy and give the pros and cons of each strategy. 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. Dec. 30, 2020. Target market niche is big enough to be profitable. Thus a differentiation strategy helps create barriers to entry that protect the firm and its industry from new competition. Perhaps your program accomplishes the same results or more but does so spending less time in the gym. 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. 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. A concern with a product differentiation strategy is the investment you typically have to make to produce or acquire a top-notch product. Differentiation effective for both high-ability students and those with a disability. 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 preview shows page 1 - 3 out of 97 pages. When you differentiate yourself and successfully solve a client's problem or fulfill their need, you have very happy clients. Problem 76SAQ from Chapter 5S5.3: What are the pros and cons of a broad differentiation strategy? Engagement in learning tends to be stronger because it addresses the children as equal individuals Pros and cons of differentiated instruction. There are pros and cons to both strategies. 2. Some pros of differentiation strategy are the ability to charge more for products and development of consumer loyalty. Find answers and explanations to over 1.2 million textbook exercises. Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. Consider cereal. The Pros of a Diversification Strategy. Product innovation is the key point in this intensive strategy. Industry leaders choose not to compete in the niche 3. BA3103 Final Presntation. Walmart provides cheap if not, What type of competitive advantage does a best-cost provider strategy aim at, achieving? Product development used to be Harley-Davidson’s primary intensive strategy for business growth. Children take on more of the responsibility for learning. A differentiation strategy in retail can be supported by … Your program still works for any other person wanting better walks with her dog, but this niche gives your marketing a bigger emotional tie. This can put a burden on research and development teams, product manufacturers, and even your profit margins. What, Striving to achieve lower overall costs compared to rivals. Also, the differentiation generic strategy empowers Harley-Davidson to penetrate current markets.   Privacy 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. Try our expert-verified textbook solutions with step-by-step explanations. The broad focus strategy concentrates on developing products that are unique and of low cost for a broad market. DRAWBACKS OF BROAD DIFFERENTIATION. Time Constraints One weakness of using a differentiation strategy involves the challenge of changing the customer perception. Give. In contrast, a company with more than 100 flavors of ice cream can be known for having a flavor for everyone. Give an example/s of a company/companies who have both pros and cons? This contrasts with a more universal, mass market approach, in which the same product is … Give an examples of a company/companies that use this strategy and explain their both pros and cons Prezi’s Big Ideas 2021: Expert advice for the new year 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. Give, an example/s of a company/companies who have, What market conditions and circumstances make a low-cost provider strategy, attractive? 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. E.g. 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. • Broad differentiation strategy: targets a broad cross-section of the market; wide selection of products with differentiating features. The policies to appeal to broad markets can be contrasted with strategies that target a relatively narrower niche of potential customers. As with any business strategy, there are pros and cons to consider before you spend valuable resources on implementation. For example, you may have an off-leash, dog-training program that can help anyone enjoy more time outdoors with the family dog. By differentiating yourself from the competition, you solve very specific problems. The Cons of Differentiated Instruction. 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. … What are the pros and cons of in pursuing a broad differentiation strategy? A successful cost leadership strategy involves offering products and/or services that have: Satisfactory quality Cost leadership strategy. 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? 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? You need to differentiate yourself, because consumers might already be bored with "another training program that's copying XYZ studio." When you get too specific about how you are different you might exclude a large demographic. These strategies are known as focus strategies and they are applicable to both cost leadership and differentiation. 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. CHAPTER 5 1) What are the pros and cons of in pursuing a broad differentiation strategy? Course Hero, Inc. 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. 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. 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. 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. Plus they can test alternate tactics of their own making, as opposed to the more controlled process outlined in the exercise below. Course Hero is not sponsored or endorsed by any college or university. Overall, there are pros and cons to differentiating your products. This is not an easy thing to accomplish due to competition and customer requirements. 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. Broad Differentiation Strategy is quite unique and brings about many Examples. Implementing a differentiation strategy is costly. When not writing, Kimberlee enjoys chasing waterfalls with her son in Hawaii. But more important and effective than this is how Nike makes its customers feel. Product Development. Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. Midterm204StudySheetchapt1.2.3.4Fall2017.docx, Minnesota State University, Mankato • MGMT 499, University of Houston, Victoria • MGMT 6352, BADM 204 - Introduction to Strategic ManagementMidterm.docx, Copyright © 2021. In the case of focus differentiation, one advantage is that very high prices can be charged. 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. When people have specific problems they are often very excited to see them solved, so they can tell everyone about them. Blog. 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. 1. A cost leadership strategy is when a company actively pursues the cost leadership position in a broad market. As indicated, a differentiation strategy serves a broad market. A negative aspect of differentiation happens when business leaders take it too far. I'd be remiss in jumping into the pros and cons of differentiated instruction without first establishing some common ground about what differentiation is. approach in which a firm purposes to establish and market an exclusive product for various consumer segments Explain your answer. Pros Cons 1. This creates more … A broad focus strategy is applied industry wide and it refers to the cost leadership and differentiation strategy. 1. Participants who struggle through on their own are more likely to retain lessons learned from the practice rounds. Give an example/s of a company/companies who have both pros and cons? Give an example/s of a company/companies who have both pros and cons? This could create raving fans who prefer to be at home or out enjoying life, rather than working out for several hours every day. 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