Page 193 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes If you wish, you may think of a focus or niche strategy as an extreme case of differentiation,
meaning the product is differentiated so much that nobody else wants it, except for a very small
segment.
Focus Strategies tend to prove advantageous when each of the following criterion are in place.
1. The cost is too high for existing competitors to serve the niche market.
2. It is difficult for existing competitors to adequately serve the niche market.

3. When no other companies currently specialize in serving the niche segment.
4. A company does not have adequate financial resources to complete for a large segment of
the marketplace.

5. When the total market or industry is so diverse in terms of size, growth, characteristics,
wants, interests, needs, desires and profitability.
To be successful, a focus or niche strategy msut be large enough to yield a reasonable profit and
must have room for growth. In addition, the company exploring this type of strategy must have
the necessary skills to adequately serve the focussed segment.

Organizations employing this competitive strategy usually experience a loyal customer base.
Furthermore, businesses can focus more attention on the needs of a specific market segment by
offering products and services only that segment desires.
The risk associated with a focus or niche strategy is threefold. (1) unfocused competitors may
develop productive methods to duplicate the focussed company by meeting the needs of the
small market segment. (2) the needs, wants, interests, and/or desires of the focussed group may
switch toward the mainstream of the entire market; thus, eliminating the need for the focussed
product or service altogether. (3) if the focus or niche segment becomes extremely profitable,
then many rivals may decide to enter the segment - many competitors fight for a very small
segment proves disastrous for several smaller firms.
It is important for you to determine which competitive strategy will form the foundation of
your company. If you cannot isolate your competitive advantage, then it will be extremely
difficult to convince consumer to choose your product or service over competitors. Let us review
J&B Incorporated’s strategy statement to isolate their selected Competitive Strategy(ies).

Note What sets a focus strategy apart is concentrated attention on a narrow piece of the
total market.

Self Assessment

State whether the following statements are true or false:

1. Price setting is a common task for any retail buyer; it is a really massive topic to cover.
2. Branded products prices are usually suggested or imposed by the vendor.
3. A competitive strategy is what allows your business to successfully compete against other
rivals within the industry.
4. A low cost producer strategy tends to operate well in industries where consumers are
sensitive to prices.

5. A firm contemplating this strategy must not dramatically sacrifice the quality of the
product in an attempt to reduce their manufacturing costs.

188 LOVELY PROFESSIONAL UNIVERSITY