A firm must have strong marketing capabilities and effective quality assurance. Advantages and Disadvantages of Product Differentiation. A focused cost leadership strategy requires Types of Strategies – Cost Leadership ,Differentiation , Focus. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). Product differentiation means that your product has one or more distinct attributes that separate it from competitors. Product differentiation occurs on two clear levels: vertical and horizontal. 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.. Please do the following, a) Discuss the advantages and disadvantages of all these different means to achieve diversification. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. 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. A broad differentiation strategy: Trying to differentiate different ways of delivering company products from competitors that will appeal to a wider range of customers [Some examples are Nordstrom (known for customer service policies and staff) and Whole Foods (emphasis on health foods and organic groceries) Starbucks serves a market that is defined by coffee drinkers. Q1. Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Please use the 5 elements of strategy to describe how your proposed blue ocean strategy will be implemented. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. 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. As mentioned above, Porter suggested either of the three strategies to survive in a competitive business. 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. 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. Cost leadership strategyis vulnerable to the risks, such as relying on scale or experience as entry barriers. Other firms may out differentiate the existing firms by introducing better unique products into the market. Each generic strategy offers advantages that firms can potentially leverage to enjoy strong performance, as well as disadvantages that may damage their performance. 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. One of the main criticisms to the Resource Based View of the Firm is that companies cannot obtain sustainable competitive advantages because of competitor’s reactions and attacks that erode advantages depending on the market cycle [slow or fast] that the company is competing. Each generic strategy offers advantages that firms can potentially leverage to enhance their success as well as disadvantages that may undermine their success. Given the information that you collected in questions 1 and 2, what can be a potential blue ocean strategy for the Coca Cola Company? If the achieved selling price can at least equal (o… A strategy directed toward creating something that is perceived as being unique. The idea here is simple. They are well-positioned in the market with a plentiful amount of easy to access stores. On the other hand, there are disadvantages to using broad differentiation strategy, such as not meeting customers' expectations of unique offerings or setting a premium price that is too high. Advantages and disadvantages of Coca cola joint ventures to achieve diversification Order 100% Plagiarism Free Paper Now. Pursuing a differentiation strategy requires a larger financial investment from the company, another weakness. Differentiation strategy 1. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. 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. Posted October 11th, 2020. Schultz’s strategy is to keep Starbucks’ partners happy and passionate about their work through compensation, benefits, and company culture. Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. Differentiation strategies have … 2. Starbucks offers their partners the opportunity to purchase company stock through payroll deductions. 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. https://www.coca-colacompany.com/company/coca-cola-system, https://investors.coca-colacompany.com/strategy, https://investors.coca-colacompany.com/financial-information. Based on this information. Continued innovation and quality improvement a… Additionally, a differentiation strategy relies on effective and productive human resources. Advantages and disadvantages of Coca cola joint ventures for diversification. Product differentiation is economically advantageous to a company. Cost declines with cumulative volume are by no means automatic, nor is reaping all available economies of scale achievable without significant attention. Advantages and disadvantages of Coca cola joint ventures for diversification. Competitive Advantage cannot be fully understood by considering an organisation in general. Cost leadership styles focus on resource organization. The focus strategy is one of three generic strategies that Professor Porter created at the time: cost leadership, focus, and differentiation. In this post I’m going to be focusing on differentiation, but it is important to understand why differentiation is a strategy and how it relates to competitive advantage. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. Starbucks has secured a competitive advantage with its unique, yet diversifying product offerings. Difficulty in the pricing of goods that are not new into the market. These categories are: Starbucks employs a broad differentiation strategy. One weakness of using a differentiation strategy involves the challenge of changing the customer perception. 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). Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. 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. Once again, please read the questions carefully and use wisely the information placed below in the other items as you need to even time yourself (about 30 minutes per answer). Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. The Disadvantages of Differentiated Marketing. 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. 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. A differentiation strategy offers important advantages and disadvantages for firms that adopt it. Your email address will not be published. Copyright © 2021 A+ Professional Essay Writing Services:- All rights reserved. b) Choose the most appropriate one to recommend for the Coca Cola Company. 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. Companies can engage in diversification efforts by different means [mergers, acquisitions, joint ventures, strategic alliances, or international expansion]. Why is cost leadership potentially so important? 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. The different factors on which the process is implemented include: As editors of the Wiley Encyclopedia of Management 3e, Vol. Required fields are marked *. Figure 5.10 image description: Executing a Differentiation Strategy. The advantages and disadvantages of the cost leadership styles show us that this process can be used to create a unique competitive advantage. The corporate strategy in these cases is about the basic direction of the firm as a whole. Most famously, Starbucks offers all part-time employees that work at least twenty hours health insurance benefits, a benefit implemented by CEO Howard Schultz who watched his father struggle as an employee of companies that did not offer such benefits. Starbucks target market is large enough to offer continued growth potential and attractive profits. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. Coleman camping equipment offers a good example. All of the six strategies designed by porter enlists the interaction between pr… A Cost Leader is where the company has … The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). 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. Some of thes… 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. Another weakness customer quality differentiation is devastating to this strategy, a ) please provide very! That all students are different and require varied teaching methods to be successful and effective quality assurance ways an can... In these cases is about the basic direction of the cost leadership is the first of two focus are... 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