Page 192 - DMGT550_RETAIL_MANAGEMENT

Unit 11: Retail Pricing and Communication Mix

Other differentiating examples would include; better training, faster service, warranties, offering Notes
extended credit terms, better price, customer service, outstanding technical support, higher
quality, cleaner facilities, offering free coffee, friendly and courteous staff, money back guarantees,
offer products in different colors, adding one or more features to a product or service, and the
list goes on and on.
A computer keyboard manufacturer, for example, may decide to differentiate its keyboard from
all other competitors by attaching a wrist support mechanism. If a demand is present and if there
is a strong consumer need for the wrist support, retailers are more likely to place the keyboards
on their shelves. If customers perceive the product to be more valuable, then a premium price
may be charged by all channels.
The risk of differentiating is realized when the customer sees no value in the differentiation. For
instance, customers being served by the two pizza shops may see little or no value in the 30
minute delivery guarantee. As a result, they feel the guarantee is not worth paying extra. At the
same token, retailers or end customers, targeted by the keyboard manufacturer, may not see the
need for a wrist support. Therefore, companies basing their strategy on differentiation, must
conduct valuable research to determine if the differentiated feature or attribute is desired by
consumers, and if so, what perceived value do they attach to it.

11.2.3 Focus or Niche Strategy

A business employing a focus strategy targets (focuses on) a small segment of the marketplace
that is not well served by existing businesses. A focus or niche company produces or supplies the
narrow segment with products and services that meet their needs, wants, interests, and desires.
The philosophy behind the focus strategy is to serve a narrow group especially well, rather then
targeting a wide market and serving them only adequately or inadequately. Do not be confused
with the word niche - it simply means a small or narrow segment of the market.
Manufacturing an automobile to accommodate people who are four feet tall is an example of a
focus or niche strategy. Such an automobile, however, may not prove profitable since few
consumers are four feet tall and own a valid driver’s licence. Developing wide shoes for people
with extra wide feet or supplying clothing for extremely petite women are examples of focus or
niche strategies.
The focus strategy does not necessarily require an alternation in a product or service. For
instance, locating an electronics shop in your home town can be an example of a focus or niche
strategy, if and only if:
1. Other electronics shops are not present in the area (residents are required to travel an hour
for such electronic products or services);
2. The market is not adequately serviced by existing suppliers.
Another example of a niche business would be a video store that rents only “martial art”
movies. The business would be different from rival movie rental businesses since it targets only
one specific group or segment or the marketplace. In addition, the movie rental store will most
likely have a much larger selection of martial art movies, a greater knowledge of martial art
movies, and a more specialized approach to serving its customers compared to a full scale
movie renting competitor. Also, the martial art rental store may have less inventory, less
overhead and lower operating costs compared to other competitors within the movie rental
industry.
The focus or niche strategy is often confused with the differentiation strategy. The main difference
is that a differentiated product or service interests a broad segment of the marketplace, while a
focus or niche product or service appeals only to a narrow or small segment of the marketplace.

LOVELY PROFESSIONAL UNIVERSITY 187