Fundamentals of Business

To maintain differentiation strategy

To maintain differentiation strategy the enterprise should have:

. strong research and development skills
. strong product engineering skills
. strong creativity skills
. good cooperation with distribution channels
. strong marketing skills
. incentives based on subjective measures
. be able to communicate the importance of the differentiating product characteristics
. stress continuous improvement and innovation
. attract highly skilled, creative people

Segmentation (niche, focus) Strategy

In this strategy the firm concentrates on a select few target markets. It is also called a focus strategy or niche strategy. It is hoped that by focusing your marketing efforts on one or two narrow market segments and tailoring your marketing mix to these specialized markets, you can better meet the needs of that target market. The firm typically looks to gain a competitive advantage through effectiveness rather than efficiency. It is most suitable for relatively small firms but can be used by any company. As a focus strategy it may be used to select targets that are less vulnerable to substitutes or where a competition is weakest to earn above average return on investments.

Note:
It is impossible to achive economies of scale in services, and therefore, you can't use cost leadership as a competitive strategy.