Broad Differentiation Strategy: Definition & Examples Video

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  • 0:03 Setting Yourself Apart
  • 0:42 Broad Differentiation Strategy
  • 2:35 Examples
  • 4:10 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Broad differentiation strategy is pursued by companies seeking to stand out as unique. In this lesson, you'll learn more about the strategy and some businesses using it successfully.

Setting Yourself Apart

Have a look at this image. Which apple stands out? Which is unique among the others? Is there one you're more drawn to? If you had to pick one to eat, which one would you choose?

Differentiation strategy is about setting yourself apart from the competition.

Very likely, you'd choose the colorful red apple because it is different and unique among the other apples in the photo. In doing so, you've gained a small amount of insight into one of Harvard business professor Michael Porter's generic strategies about how companies use competitive advantages to get a leg up on the competition. Among these are cost leadership strategy, focus strategy and differentiation strategy, the focus today's lesson.

Broad Differentiation Strategy

A differentiation strategy employed by a brand or business is designed to set that brand or business apart. They do that by developing products that offer unique attributes that customers want, creating products or services that consumers view as superior to or different than the competitors' products. Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers.

It's a strategy that works better for larger companies than smaller ones. It's particularly useful in a competitive industry or marketplace. For example, it works well in markets with a broad range of consumer preferences. In these markets, there may be opportunities to set the products apart from competitors. Brands can also try to be first to introduce the next generation of products.

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
  • Increased customer loyalty because of the 'unique' product or service offering
  • Better sales because consumers are wowed by the product being offered
  • Discouraging new businesses from entering the marketplace for fear of the ability to compete

With any competitive strategy, however, there are drawbacks or disadvantages, and differentiation is no different. Consider the following possible problems:

  • Charging a premium price could be perceived as too expensive
  • Consumer preferences change
  • There could be an inability to understand what customers need or want in a 'valuable' product
  • A possible focus on differentiating, but unimportant product features
  • Competitors might be able to mimic product attributes at a cheaper cost
  • Differentiation efforts may not be well-received by consumers
  • Spending too much setting a product apart, only to not be able to recoup the investment

Examples

There are many well-known brands and businesses implementing the broad differentiation strategy effectively. Let's look at a few.

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