Differentiation Business Strategy

A Differentiation Business Strategy is a business strategy focused on creating unique customer value through differentiated value creation (instead of cost leadership).

• Context:
  • It can (typically) require significant investment in understanding Customer Needs, Product Design, Brand Building and Proprietary Capability.
  • It can involve Product Differentiation along dimensions like Product Performance, Product Design, Product Quality, Product Durability, Product Reliability, Brand Reputation, or Customer Service.
  • It can require having hard-to-imitate Sources of Uniqueness that can be sustained over time.
  • It can charge Premium Pricing based on the higher perceived Value created for Customers.
• Example(s):
  • an Exceptional User Experience Business Strategy, such as: Apple's Exceptional User Experience Business Strategy.
  • an Engineering Excellence Strategy, such as: Mercedes Benz' Engineering Excellence Strategy.
  • a Iconic Brand Business Strategy, such as: Coca Cola's Iconic Brand Business Strategy.
  • …
• Counter-Example(s):
  • a Cost Leadership Business Strategy/Low-Cost Business Strategy, such as: a Southwest Airlines Low Fare Strategy.
  • A Operational Excellence Business Strategy such as: a Walmart Supply Chain Efficiency Strategy.
• See: Competitive Advantage, Value Proposition, Brand Management.

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References

1985

• (Porter, 1985) ⇒ M. Porter. (1985). “Competitive Advantage. “New York: Free Press.
  • NOTE: Outlines cost leadership and differentiation as two basic types of competitive advantage that can be pursued through strategic positioning.

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