June 2015 Q2 (b)

At the moment the company seems to offer four main product. For example, jewellery, food, clothing, ornaments.

A niche strategy could be concentrating efforts on only one or a couple of these. As the answer says “A focused or niche strategy takes place when a firm concentrates its attention on one or more market segments or niches.”

A focus strategy allows a company to become really good at fewer products rather than spreading its efforts too widely. There is still the choice as to whether to be a cost leadership focus suppliers or a differentiation focus supplier.

Part (a) of the question suggests that cost leadership has not been achieved (hard when you are a smallish producer), so differentiation must be their option for competitive advantage.

The question is not completely clear about how distinctive the company’s products are – all other suppliers might also talk about local production too. Differentiation requires a company to provide distinct products that will command higher prices. The answer simply concluded that specialising in one segment (eg food) where products are strongly branded and benefits form the concentration of expertise might be to best solution.