What does focused differentiation involve?

Focused differentiation involves offering unique features that cater specifically to a niche market. This strategy is about creating products or services that stand out from competitors by providing additional value, which often appeals to a specific group of consumers with particular preferences or needs. Companies that adopt a focused differentiation strategy aim to carve out a distinct segment in the market where they can charge premium prices due to their unique offerings, thus enhancing customer loyalty and brand prestige.

While other strategies like high volume, low-cost production and mass production of standard products target broader market segments with a focus on efficiency and cost-effectiveness, focused differentiation deliberately narrows the target audience, allowing firms to develop specialized products that may not be available from mass-market competitors. Additionally, economies of scale generally pertain to reducing costs through large-scale production, which contrasts sharply with the aim of focused differentiation to create unique, specialized offerings.