Differentiation Strategy

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The next option is a broad differentiation strategy providing products or services that offer benefits different from those of competitors and that are widely valued by buyers. The aim is to achieve competitive advantage by offering better products or services at the same price or enhancing margins by pricing slightly higher.

Differentiation may be achieved in a number of ways. The product may incorporate a more innovative design, may be produced using advanced materials or quality processes, or may be sold and serviced in some special way. Often, customers will pay a higher price if the product or service offers a distinctive or special value. Differentiation strategies offer high profitability when the price premium exceeds the costs of distinguishing the product or service. There are some companies that have successfully pursued differentiation strategies, such as Mercedes and BMW in automobiles, American express in travel services, Bose in stereo speakers,

Along with cost leadership, IKEA also offers some differentiated features that appeal to its target customers, including Numerous ways in which differentiation can be achieved:
Product Features
It is a way in which firms can attempt to influence customer perceptions. It is to modify the objective properties of the products or services they sell. IKEA target is to designing beautiful products that are inexpensive and functional. * Apple: It incorporates superior design in all its products so that these stand out from its competitors’ products. Apple’s design philosophy is based on minimalism. It removes clutter both from its products’ outward appearance as well as from their user interface. It is no coincidence that Apple users rave about the exceptional user interface of their iPads, iPods or iPhones. In addition, Apple tries to exert control over the users’ experience with its products. So, apart from the hardware, the company also develops the software so that the user has the best possible experience. Service

* In-store playrooms for childrenWheelchairs for customer use * Extended hours, normally opened until 9pm
* Restaurant & Café: It can provide shoppers a breather and encourage them to keep going * Stores outside those in the home country have “Swede Shops” that sell Swedish food. IKEA believes that these services and products are uniquely aligned with the needs of its customers, who are young, not wealthy, likely to have children, and because they work for a living, need to shop outside of regular hours. * McDonald’s strove to meet a customer wait time at no more than five minute in line and 30 seconds at the counter. * Free wifi in store: Starbucks

7-Eleven (formerly Southland Corporation) has practiced differentiation to avoid direct competition with large supermarket chains. It offers consumers greater convenience in the form of nearby location, shorter shopping time, and quicker checkout. It achieves these benefits by designing a business system within the value chain that is different from that of supermarket chains in several key respects: smaller stores, more store locations, and narrower product line. Its approach is higher cost than that of supermarket chains, so 7-Eleven must ordinarily charge higher prices to achieve profitability. Shopping experience

IKEA customers are actively involved in the shopping experience. The IKEA concept relies on customers to choose, collect, transport and assemble IKEA products themselves. Customer involvement contributes to IKEA low prices. That is the idea behind:“You do your part. We do our part. Together we save money”. Reputation

IKEA had been successful in almost all countries, because of public awareness of the IKEA brand. IKEA is far more than a furniture merchant. It sells a lifestyle that customers around the world embrace as a signal that they have arrived, that they have good taste and recognize value. IKEA also operates with a few companies such as trade unions,...
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