Differentiation strategy
A differentiation strategy seeks competitive advantage through attributes that target customers value and perceive as distinct. These may involve product performance, service, design, convenience, brand or another relevant benefit. The resulting price premium or customer loyalty must justify the additional costs. Being different in a way customers do not value is not a sufficient advantage, and successful features may need protection or continuing improvement as competitors imitate them.
Worked example
A maintenance company offers guaranteed two-hour response supported by nearby engineers and spare parts. Customers with costly downtime pay a premium. The company checks that this additional revenue exceeds the cost of delivering the promise.
Common mistake
Differentiation does not mean adding every possible feature or automatically charging a premium. Test customer value and the cost of delivery.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBL | Direct | September 2026–June 2027 |