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A strategy thrust (also known as generic business strategy, strategic theme or strategic orientation) is an umbrella concept that explains broad business approaches of a firm targeted at obtaining an SCA in the group of business with a common strategic theme.
Successful differentiation strategies have three characteristics:
Generate Customer Value: The strategy must add value for the customer. The differentiation strategy should be designed from the customer’s perspective rather than the firm’s perspective. Market research plays important role in understanding the customers’ perspectives.
Provide Perceived Value: The added value must be communicated to the customers and they should effectively perceive it. Creating brand value is the most effective method for communicating the differentiating features of a product, service or a company.
Sustainable: The differentiation factors projected by the firm should not be easy to copy by the competitors. The synergy and the preemptive move generate strong sustainability of the differentiation strategy.
The quality option approach is one of the strong and sustainable differentiation strategies.
This approach focuses on developing a reputation for good quality and promise to deliver superior quality products or services to customers.
Under this approach, the firm should project its brand as the premium brand associated with enhanced customer benefits, premium price, and ownership values.
Quality perception of a product is dynamic and is liable to change due to competitors’ actions, introduction of superior technology, change in customers’ taste and preferences, and many other market forces.
This approach is implemented with two major focuses:
1. Total Quality Management: The TQM calls for quality-focused management systems where the whole process, people and systems within the firm have one objective – produce and deliver superior quality products and services to the customers.
2. The Customer Focus: It requires the grooming of an organization culture and programs directed at developing long-term and sustainable relationship with the customers. The top management should have personal contact with the customers; a system where employee performance are to be judged by creating and retaining satisfied customers; and developing an in-depth understanding of customers’ motivations, choice and satisfaction.
The most enduring and sustainable asset of a firm is brand loyalty.
Brand loyalty is the resistance to brand switching by customers.
Brand loyalty reduces marketing costs, presents high entry barriers to competitors, enhances brand image, provides for launching related products under the same brand name, and provides ample time to respond to competitors’ attacking moves.
Strategic: Positioning should be strategic not tactical. It should be guided by a desire to have long-term advantage over the competitors and their products.
Under the Control of the Firm: The firm should have full control on the strategic position. It should not be left in the hand of customers. The positioning strategy should reflect the business strategy.
Different from Competitors: The strategic position should amply and critically differentiate the firm and its product from the competitors and their products.
Meaningful to Customers: The strategic position should be able to create important value to the customers and should reflect to their key motivations.
The lowering of costs in relations to the experience is attributable to the process of:
Learning: people tend to do their tasks faster and more efficiently and repeatedly through the learning process.
Technological Improvement: Experience provides opportunity to improve the firm’s production and operations through installation of more efficient machinery, human resources and operations in full capacity.
Product Redesign: Experience helps a firm to redesign their product make it more simple and inexpensive.
Avoids dilution or distraction: The focus strategy has a specific target (product or market) set for which all functional strategies are designed. The implementation can be more effective that can generate more SCA.
Compete with limited resources: It can generate more impact with fewer resources as the target is more focused and the firm will be able to compete more effectively.
Bypass competitors’ assets and competencies: When the product-market is more focused the firm may be able to bypass strong competitors through niche marketing.
Provide position strategy: A firm with narrow product line and small market segment can develop and implement effective positioning strategy.
Reduce competitive pressures: Small market segments attract very few competitors as it has lower level of profit potential. Moreover, focus strategy also help build high entry barriers.
The focus strategy is implemented through three approaches:
Focus on the Product Line: This can help develop the firm a technical expertise and achieve superiority over its competitors. The firm can also develop innovative ideas in the product line and be the leader in innovations.
Targeting a Segment: This can help the firm to design appropriate marketing strategy perfectly tailored to the target market segment.
Limit to a Geographical Area: Limiting the operation to a geographical area and developing local brands can provide effective SCA to the firm in terms of cost-effectiveness. However, this approach may be risky when a superior national brand is introduced to the target geographical area.
Alliances: Synergy can be obtained through strategic alliances – forming partnerships with other firms in production, distribution, and promotion of products and services.
Core Assets and Competencies: A firm's core asset or competency can be used for obtaining synergistic advantage. The advantage must be in the core product, technology, management skills that are sustainable.
Capabilities-Based Competition: Strategy development must identify the most important business process within the organization, such as shorter product development process, dynamic product innovations and so on.
Synergistic effects are obtained when the firm competes in the key process of the organization, and obtains the competitive advantage in that aspect where the firm is capable.