Be different and you’ll be recognised

Porter’s (1980, 1985) generic strategies -cost leadership, differentiation and focus- are considered a prevailing paradigm within the business strategy literature (Charles 1988).

Within these strategies, differentiation, in particular, has been seen as a “fundamental” approach within the global market landscape (Robinson 1933, Sharp and Dawes 2001). A differentiation strategy happens when an organisation gains an unparalleled position within the sector or industry it operates. It is a concept related to uniqueness; its main aim is to make a difference through an approach that can allow firms to command higher than average prices (Porter, 1985; Sumer and A. Bayraktar, 2012; Dess and David, 1984). The idea of being different is shared by many researchers (Thompson and Strickland 1999; Venu 2001). In addition, Wheelen and Hunger (2000) argued that most differentiation strategies are characterized not only by the idea of being different but by a specific “focus” on a particular product, segment market or consumer group. The strategy’s focus can be extent to several dimensions such as brand image, reputation, innovativeness and quality. Grant (2016) claimed that a good differentiation strategy needs specific organizational requirements to be put in place, such as good marketing abilities, creativity, product engineering skills, cross-functional coordination, research capability and incentives linked to qualitative organisational goals. Here one can establish a direct relationship between Wheelen and Hunger’s dimensions and the organizational requirements mentioned by Grant.

To successfully gain differentiation, one must develop a strategy in a way that can be challenging for firms to implement. Differentiation further places itself as a concept capable of helping companies grow customer loyalty (Allen & Helms 2002), able of responding to customer needs (Morshett et al., 2006) and effective in awakening human creativity to strive for high-quality and innovative products/services that can achieve greater economic growth (Baum et al., 2001).

Strengths and weaknesses

Having defined the idea, one may add that the strengths of differentiation rely on the concept’s ability to communicate the need for exclusivity (Porter 1990). It needs a distinct perception when it comes to products and service offerings. Many researchers agree that a firm sustaining the differentiation aspect has fewer competition possibilities (Porter 1985; Chege 2018) and can easily enjoy the concept’s strengths. The advantage of differentiation rests in the perceived quality that acts as a separation trigger helping companies to distinguish themselves from external risks and from any of the five forces determined the competition in an industry. Organisations using the differentiation strategy perceive an internal strength with a high R&D capability and a robust corporate reputation for quality and innovation. Rothschild (1984) argues that differentiation can be a costly strategy hard to enter and or follow and it can play a significant role in prolonging the life cycle of any business. In addition, Grant (2013) stated that its solidity goes beyond the “physical characteristics” of a product and or service; and it adds to the relationship-building factor between a company and its customers as a solid determinant of a sustainable relationship. He argues the secure basis on which differentiation stands when building sustainable competitive advantage and states that companies enjoying this approach earn an above-average return through quality, branding and innovation. Differentiation has also been considered as a must-try strategy for small and medium enterprises and start-ups. It helps them get noticed, boost profit margin, stand out within crowded markets, and gain competitive advantage by distinguishing from rivals (Brenes et al., 2014; Pelham, 2000). Another strength linked to differentiation is its capacity to force organizations to respect the integrity of the product/service. Clark and Fujimoto (1990) showed that the achievement of integrity within the differentiation approach responds to a company’s ability to have a stretch “cross-functional” and “intimate” relationship with their customers. Grant (2013) has then linked the integrity of a product/service as a response to customers’ social and psychological needs, indicating that differentiation can also positively respond to the customer’s hierarchy of human needs argued by Maslow (1943). Other studies claimed that differentiation could play an essential role in performance export (Delacroix, 1984). Hsieh et al. (2019) further argued that it is a strategy that magnifies “internationalization” and, therefore, an excellent approach to rely on when considering international expansion.

On the other hand, differentiation has also been criticized and referred to as an “inconsistent” strategy capable of having adverse effects if companies fail to understand the correct ways to differentiate (for example, demand perspective and supply perspective). Porter (1985) argues that differentiation is not a “risk-free” strategy. And although it is a helpful approach when it comes to sustaining competitive advantage, the differentiation aspect of products and services can be easily copied by competitors. Here, the first risk of differentiation can then be defined as “imitation risk”. Within this constrain, one may add that new differentiated products or services can quickly become more or less critical to customers’ taste or needs and can also be considered a risk source of value. In support of this view, Peter (1987) argued that “anything can be turned into a value-added product or service”. In addition, Grant (2013) stated that the price a customer is willing to pay for the differentiated product or service can be below or could not exceed the cost of creating the differentiation in the first place, thus a significant risk to consider when balancing differentiation cost vs price.

Additionally, differentiation is not unlimited. It has limits and edges varying across different products and services, with the differentiation potential greatly influenced by them. The risks associated with differentiation strategy are also bounded by the standards and complexity of technical factors and customer needs (market factors). Products offering a low degree of technical standards (toys and sugar), for example, offer a greater differentiation opportunity than those heavily rested in technical complexities (aeroplanes), (Dickson and Ginter 1987). 

An extra added risk associated with differentiation is the lack of understanding of the innovative and unique aspects of the product or service surrounding the idea. Dance companies that take differentiation on board seem to spend a considerable number of resources on identifying and developing products that can meet the specificities of buyers’ needs (audiencess). Thus, Knight et al. (2020) considered this a vital piece in the foundation for successful differentiation.

In resume, differentiation’s main strength rests on the concept’s power to allow other factors rather than price to come to the front end. It is an approach built through authenticity and uniqueness, allowing many companies to gain higher profit margins and some degree of competitive advantage. Diversely, its weaknesses rest on the fact that as a strategy, it can be volatile and unpredictable, where perception is critical, and resources demand can be highly difficult to maintain, making the shelf life of the strategy an extremely short one (Geoffrey and Kibet, 2018).

How can the concept be applied to dance companies?… To be continued

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