What does differentiation focus mean?

Differentiation focus refers to a strategic approach where a company targets specific market segments by offering unique products or services tailored to meet the needs of those segments. This strategy allows businesses to stand out from competitors by highlighting distinct characteristics or qualities that appeal specifically to a niche audience. By concentrating on refining their offerings to meet the preferences of a particular group, businesses can build a loyal customer base and potentially command higher prices due to the perceived value of their specialized products.

This strategy contrasts with broader market approaches that may rely on cost leadership or standardization. While companies leveraging cost leadership focus on minimizing costs to appeal to a broad audience, or those that standardize products aim for consistency across different markets, differentiation focus emphasizes customization and unique selling propositions tailored to smaller segments. Therefore, the correct framework for understanding differentiation focus highlights its emphasis on niche markets and unique offerings.