A firm must have strong marketing capabilities and effective quality assurance. There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. His expectations in return are to retain employees (reducing training and turnover expenses) and generate revenue (through customer satisfaction). These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). Starbucks has made the organization well-known for tailoring to broad customers’ needs by preparing orders to meet customers’ wishes, no matter how detailed they are. Cost Leader. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. Corporate level strategy implies the notion of creating value by deciding in which businesses a company may compete. https://www.coca-colacompany.com/company/coca-cola-system, https://investors.coca-colacompany.com/strategy, https://investors.coca-colacompany.com/financial-information. Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. Businesses looking to build a broad or focused differentiation strategy will need to produce or design extremely unique or distinctive products or services that create increased value for the consumer. Why is cost leadership potentially so important? Differentiation is the educational practice of modifying or adapting instruction, school materials, subject content, class projects, and assessment methods to better meet the needs of diverse learners. Schultz’s strategy is to keep Starbucks’ partners happy and passionate about their work through compensation, benefits, and company culture. Your email address will not be published. Starbucks has secured a competitive advantage with its unique, yet diversifying product offerings. Differentiation strategy 1. Remember, I have offered this set of essays for several years and I have been able to get a consistent perspective on what I am looking in the answers and with the rubric that I use, it is possible to assign a grade in about 10-15 minutes. advantages and disadvantages of differentiation strategy pdf. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. Advantages and Disadvantages of Product Differentiation. Posted October 11th, 2020. Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Difficulty in the pricing of goods that are not new into the market. a) Please provide a very detailed analysis of the Coca Cola company’s resources and capabilities. Please do the following, a) Discuss all the General Segments of the Environment and the Five Forces Model to analyze the external conditions affecting the Coca Cola Co in the US market. Copyright © 2021 A+ Professional Essay Writing Services:- All rights reserved. Starbucks strategy, combined with its unwillingness to compromise quality in any circumstances and passionate leadership under the direction of Howard Schultz, CEO, has Starbucks well positioned to remain profitable and a leader in this market niche. Types of Strategies – Cost Leadership ,Differentiation , Focus. This strategy is concentrated on a broader segment of the total market. Advantages Of Product Differentiation. The different factors on which the process is implemented include: Below we illustrated a few examples in relation to an often differentiated product – women’s handbag. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Examples of Firms Pursuing a Differentiation Strategy ... strategy means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market (Porter, 1980). Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. The corporate strategy in these cases is about the basic direction of the firm as a whole. Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. There are essentially two factors that identify competitive strategies. NRS 451VN Week 1 Assignment: Professional Resume and Cover Letter, NR510 Week 1: Barriers to Practice Discussion, Economic Growth and Education Level in China. These categories are: Starbucks employs a broad differentiation strategy. Companies can engage in diversification efforts by different means [mergers, acquisitions, joint ventures, strategic alliances, or international expansion]. The advantages and disadvantages of the cost leadership styles show us that this process can be used to create a unique competitive advantage. differentiation strategy A business strategy in which a company tries to gain a competitive advantage by providing a unique product or service, or providing a unique brand of customer service. This will help the company to survive and minimize the risk, but if the company does not choose one of three competitive strategies, then there would be a loss of resources. Advantages and disadvantages of Coca cola joint ventures to achieve diversification Order 100% Plagiarism Free Paper Now. Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Q1. Consider cereal. A Cost Leader is where the company has … Diversification is a form of corporate strategy designed to improve opportunities for growth and profitability. b) Use the key criteria [rare, valuable, costly to imitate, and non-substitutable] to determine if Coca Cola has competitive parity or temporary competitive advantage in the soft drink industry. The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. Please do the following, a) Discuss the advantages and disadvantages of all these different means to achieve diversification. Cost leadership strategyis vulnerable to the risks, such as relying on scale or experience as entry barriers. The company must use only one out of three competitive strategies. Advantages and Disadvantages of Differentiation. Coleman camping equipment offers a good example. There are several ways an organization can create a differentiation-based competitive advantage for a single product or the company as a whole. broad across-the-board: broad in scope or content; "across-the-board pay increases"; "an all-embracing definition";… They accommodate what their buyers view as valuable and are able to create demand at a profitable price. The Cons of Differentiated Instruction. Starbucks is also well known for quality products, with stringent guidelines outlining how their coffees are to be prepared, as detailed as espresso must be served within twenty-three seconds of brewing. Product differentiation is economically advantageous to a company. Despite the stagnant growth in the industry, its leading brand, Coke, remains the market leader and it can be considere8i9d as a cash cow for the company. They have done the trusty old SWOT analysis and listed their strengths and weaknesses. Pursuing a differentiation strategy requires a larger financial investment from the company, another weakness. Focused cost leadership is the first of two focus strategies. Q3. 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. Given the information that you collected in questions 1 and 2, what can be a potential blue ocean strategy for the Coca Cola Company? Then they cheerfully accept their strengths as differentiators. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. Sara Lee’s Cookie Crumbles – 2 Business Units Survive, Starbucks – Pursues a Broad Differentiation Strategy. By definition, the differentiation strategy is focused on a higher margin, smaller market share. In a differentiated classroom, teachers recognize that all students are different and require varied teaching methods to be successful. Buyer loyalty is … The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. 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. Some of thes… Each generic strategy offers advantages that firms can potentially leverage to enjoy strong performance, as well as disadvantages that may damage their performance. Q4. Cost leadership styles focus on resource organization. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. AVOID buying essays online or even googling for Coca Cola SWOT\’s or other blogs/strategic aspects as the worst thing that you can do is get a fail score in this comprehensive exam. 3. Product differentiation means that your product has one or more distinct attributes that separate it from competitors. Based on this information. They are able to hook customers with the quality and service provided in their coffee shops which leads to customers’ purchases of other Starbucks labeled items such as bottled coffees in grocery stores or Starbucks brand liqueur at the liquor store. The differentiation strategy is closel Losing the perceived customer quality differentiation is devastating to this strategy. Broad Differentiation Strategy . By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Advantages and disadvantages of Coca cola joint ventures for diversification. 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; The Disadvantages of Differentiated Marketing. Vertical differentiation refers to products that fall on a scale from best to worst, highest to lowest, impacting the overall functionality of the item. I am providing the latest information from the Coca Cola Co. One weakness of using a differentiation strategy involves the challenge of changing the customer perception. Product differentiation occurs on two clear levels: vertical and horizontal. In 2007, department store Dillard’s stopped carrying men’s sportswear made by Nautica because the seafaring theme of Nautica’s brand had lost much of its cache among many men. Figure 5.10 image description: Executing a Differentiation Strategy. Please use the 5 elements of strategy to describe how your proposed blue ocean strategy will be implemented. Competitive Advantage cannot be fully understood by considering an organisation in general. Q2. If the achieved selling price can at least equal (o… They are well-positioned in the market with a plentiful amount of easy to access stores. As mentioned above, Porter suggested either of the three strategies to survive in a competitive business. Advantages and disadvantages of Coca cola joint ventures for diversification. To successfully employ this strategy, Starbucks provides differentiated quality and service in the coffee sales and shop industry while diversifying their offerings to include: a variety of coffee product sales outside their stores through partnership with PepsiCo, Starbucks brand liqueur through partnership with Jim Beam, food and merchandise sales, and other acquisitions such as Tazo tea. The idea here is simple. Starbucks target market is large enough to offer continued growth potential and attractive profits. I feel that you do not need more than this company information and your reading from the book to properly answer the questions. Q1. These categories are: Starbucks employs a broad differentiation strategy. Continued innovation and quality improvement a… Cost leadershipimposes severe burdens on the firm to keep up its position, which means reinvesting in modern equipment, ruthlessly scrapping obsolete assets, avoiding product line proliferation and being alert for technological improvements. With this strategy, the objective is to become the lowest-cost producer in the industry. Perhaps Starbucks most impactful strategy is the time, effort, and financial resources that are invested into its employees – or partners as Starbucks has eliminated the word employees from its vocabulary. As a product remains in the market for longer consumers become smarter about the prices and thus the premium charges being charged can no longer be sustained. A strategy directed toward creating something that is perceived as being unique. b) Provide a summary of potential opportunities and threats to the Coca Cola Company as the current CEO will use your analysis to develop a new strategic management process for the company’s operations in the US. 1. Competitive Strategy is about applying offensive or alternatively defensive actions to create a advantageous position within marketplace, with a purpose to deal with issues effectively with competitive forces in addition to come up with a much better return on investment.. A differentiation strategy offers important advantages and disadvantages for firms that adopt it. Cost Leadership and Differentiation. 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