What is Focus Differentiation Strategy? How to Implement It, Examples 

Businesses and companies employ various strategies in order to gain a competitive edge in the market. When it comes to attracting the attention of customers and gaining a competitive edge; some strategies could deliver you to required results, but they can be risky and cost inefficient. Today, we’ll discuss what is focus differentiation strategy; how to implement it, its advantages, disadvantages, and examples.

It is possible that the niche of your product is non-existent unless you develop a special offer. In such a case, you should have a clear understanding of your target audience and effective marketing strategies. While targeting the specific target customer market, you have the opportunity to become the market leader and enjoy the monopoly.

What is Focus Differentiation Strategy? 

The focus differentiation strategy is a strategic technique that focuses on targeting a small group of customer markets with a unique product or service offer. The focus differentiation strategy (FDS) also goes by the name of product specialization, niche differentiation, and niche marketing. However, the purpose of FDS is to narrow down marketing efforts and specify market segmentation. It points out the significance of delivering innovative and more valuable products than competitors.

Businesses and companies employ FDS either to target a specific demographic group or to pay heed to the precise sale media channel. They select a particular market segment or group of segments and implement their strategy while excluding other areas of the market. However, the success and effectiveness of the strategy are reliant on how the company is offering balanced prices and benefits to the customers as compared to the competitors.

Focus differentiation strategy is a type of focus strategy by Michael Porter. The other three generic strategies of Michael Porter’s are cost leadership, differentiation, and cost focus. However, the focus of cost leadership and differentiation strategies is on the total market. Whereas, the differentiation focus and cost focus revolves around the niche market.

How to Implement Focus Differentiation Strategy 

Some of the main steps on how to implement the focus differentiation strategy are as follows;

Recognize Goals & Objectives

First of all, you have to define the goals and objectives like what your business plans to achieve with the business plan. Some of the main objectives are;

  • Improving customer loyalty and building a community around them
  • Offering additional services to sell complementary products
  • Developing new marketing channels to launch new products or features
  • Charging higher prices and earning profit from it
  • Amplifying the revenue stream by increasing the sale and conversion rate

Conducting Research

After analyzing the strengths and weaknesses of your company; you should keep in mind the state, size, and niche of your market and the type of product or service you’re offering. It is important to study the offers of competitors and customer reviews. Finally, you should analyze your company’s resources relevant to the budget. The market research would offer you a deep insight into the needs and wants of customers.

Creating Differentiators

The company’s analysis would highlight some of the key features that offer you a competitive edge. Instead of concentrating on one feature; your emphasis should be on various characteristics like distribution, service level, innovation, and quality. After starting with the broad differentiating factors, you should narrow it down to small categories and detailed segments. It is significant that you should select customer-focused differentiators like;

  • Launching a memorable marketing campaign
  • Marketing focused attributes
  • Unique and innovative features of the product
  • Excellent customer service

Value Proposition

After recognizing the main differentiating factors, it is time to write and craft the value proposition. In the value proposition statement, you should highlight the key features and the value your product would deliver to the customers. Some of the things you should include are;

  • Benefits of your product
  • How it addresses the pain points of customers
  • Give them a reason to prefer your product over competitors

Establishing Brand Image

In order to differentiate your company from competitors, you should establish a brand image. It comprises emotions, concepts, and ideas relevant to your brand. While developing the brand image, you should find your brand personality, the heart of your brand, the beliefs of your team, and the things you want to implement in the future.

One of the main elements of branding is the brand identity that your customers could relate to it. Brand identity comprises various components like brand name, brand image, visual identity, and verbal identity.

Advantages of Focus Differentiation Strategy 

Some of the main benefits of a focus differentiation strategy are as follows;

  • Offers the opportunity to create a value
  • Targeting a small group of people with specific offers with a better offer than competitors
  • Allows companies to create USPs and charge the premium price from customers
  • Has the capability to avoid price competition
  • Develops a reputation for providing a great customer service

Disadvantages of Focus Differentiation Strategy 

Some of the main challenges of implementing the FDS are as follows;

  • Requires the allocation of a great number of resources in order to produce the niche product or service
  • Difficult to trace and communicate with the market niche of your product or service
  • Needs a significant amount of investment for product development, marketing capabilities, branding, and new product features

Examples of Focus Differentiation Strategy 

Mercedes Benz

Mercedes Benz is a luxury automobile manufacturing company. The company is following the focus differentiating strategy by proving its commitment to innovation, safety features, style, and cutting-edge technology. All of the features combined have created the company as a premium and status symbol brand for rich and powerful people.

Apple

Apple is one of the world’s leading tech giant companies. The brand has achieved the status of a premium product with its unique style and cutting-edge technology. Wealthy people buy Apple smartphones and computers to show offer their status.

Conclusion: What is Focus Differentiation Strategy? How to Implement It, Examples 

After an in-depth study of what is focus differentiation strategy; its advantages, disadvantages, examples, and how to implement it; we have realized that FDS could help your business to gain a competitive edge. If you’re planning to implement FDS, then you should keep in mind the abovementioned tips and guidelines.