BROAD DIFFERENTIATION: MAINTAINING THE CONSUMER'S MARKET

Large companies usually adapt this kind of strategy-Broad differentiation when the competition gets tough. Broad differentiation range from products to services. According to Michael Porter , in order to avoid being “stuck in the middle” company should select one strategy out of three generic strategies (Cost Leadership, Differentiation and Focus) which he had mentioned in his book, Competitive Strategy.

Why company needs to differentiate?

“Differentiation is a unique qualities, perceived or real, of a good or service that distinguish it from a competing good or service..." -Your Dictionary.com-

The need to be distinctive and competitive are the reasons why the company needs to differentiate their products or services. Broad Differentiation Strategy is common in big firms that want to maintain and cover the whole market in the business world. The catch in differentiating a product and or services are:

• a.) the company could set premium price of the product/services; and
• b.) increase sales and gain loyalty from the consumers or costumers because what they offer is unique thus, gave value to their money.

ADVANTAGES:

• The differentiation would act as barrier to business entrant;
• The company could set a higher price to suppliers; and
• Reducing the bargaining power of the buyer because differentiated products can’t be easily copied.

When you differentiate products/services in a broad differentiation strategy, It doesn't mean you should focus on one brand for the entire market segment but also thinking and producing differentiated products that would fit to each market segment.

DRAWBACKS OF BROAD DIFFERENTIATION

Below are the disadvantages or risks of the broad differentiation strategy:

• Differentiating on an unimportant product feature that doesn't result in providing best value to the customer;
• Too much differentiating the product like products' features exceed the customers’ needs;
• Charging a price premium that buyers perceive as too high;
• Ignoring need to signal value; and
• Not identifying what customers consider valuable

Whatever the economic conditions that the market would experience the company with differentiated products could still survive and flourish. We have to remember that bad economic conditions to some company is an opportunity for growth. Therefore, the company’s long existence is dependent on the strategy they implemented which are proven and tested.