FOCUS DIFFERENTIATION

STRATEGY

Noor Ahmed Brohi

PBS1331452
Mohamad Asyraf bin Mohamad Sobri
PBS1331388

INTRODUCTION
Definition

of Focus Differentiation

Strategy
Porter Generic Strategies Diagram
Advantages of Focus Differentiation
Disadvantages of Focus Differentiation
Case Study

Mercedez-Benz
Kopi Luwak- Coffee

Value

Chain Analysis

DEFINITION

FOCUS
DIFFERENTIATION

Focus
Niche Market, Small
Target, Specific Target

Differentiation
Uniqueness in
Innovation,
Functionality,
Features, Customer
Services, Designs

PORTER GENERIC
STRATEGIES

Focus differentiation
Strategy

ADVANTAGES

Customer Loyalty

High Margins

Able to charge with premium prices as customers are usually

willing to pay because of the extra value they perceive with
in the brand and products.

Limited Competition

By providing products with attributes most valued by this

niche market segment, you establish a reputation of quality,
service and excellence based on the needs of that group.
This can generate strong customer loyalty.

Able to serve the needs of a specific customer group better

than competitors that go after a broader market.
With high customer loyalty, it is difficult for other players to
compete in the same niche market.

Customer Awareness

It is much easier for a focused company to address smallmarket needs efficiently than for a company targeting a
larger market to learn and react to needs of each customer
segment.

DISADVANTAGES
Limited

Demand

A firm could find its growth ambitions stymied.

Once its target market is being well served,
expansion to other markets might be the only
way to expand, and this often requires
developing a new set of skills.
The niche could disappear or be taken over by
larger competitors.

EXAMPLE 1

The dedication of Mercedes-Benz to cuttingedge technology, styling, and safety innovations

has made the firms vehicles prized by those
who are rich enough to afford them. This appeal
has existing for many decades. In 1970, acidrocker Janis Joplin recorded a song called
Mercedes
Benz
that
highlighted
the
automakers allure. Since then Mercedes-Benz
has used the song in several television
commercials, including during the 2011 Super
Bowl.

EXAMPLE 2

When it comes to uniqueness, few offerings can top Kopi

Luwak coffee beans. High-quality coffee beans often sell for
$10 to $15 a pound. In contrast, Kopi Luwak coffee beans
sell for hundreds of dollars per pound. This price is driven
by the rarity of the beans and their rather bizarre nature.
As noted in a 2010 article in theNew York Times, these
beans are found in the droppings of the civet, a nocturnal,
furry, long-tailed catlike animal that prowls Southeast Asias
coffee-growing lands for the tastiest, ripest coffee cherries.
The civet eventually excretes the hard, indigestible innards
of the fruitessentially, incipient coffee beansthough only
after they have been fermented in the animals stomach
acids and enzymes to produce a brew described as smooth,
chocolaty and devoid of any bitter aftertaste.

VALUE CHAIN ANALYSIS

Market
Segmentation

Four Strategy Growth Areas

Primary Activities

(involve the purchase of materials into products and

delivery of products to customers)

Inbound Logistic
Involve relationships with suppliers and include all the
activities required to receive, store, and disseminate
inputs
Operations
All activities required to transform inputs into outputs
(Products and Services)
Outbound Logistic
Include all the activities required to collect, store, and
distribute the output
Marketing and Sales
Activities inform buyers about products and services,
include buyers to purchase them, and facilitate their
purchase
Services
Includes all activities required to keep the product or
service working effectively for the buyer after is sold and

Support Activities

(support primary activities and can play a role in each

primary activity. It may also support each other within
support activities)

Procurement
This is what the company does to get the resources it needs to
operate. This include finding vendors and negotiating best prices
Technology Development
These activities relate to manage and processing information, as
well as protecting a companys knowledge base. Minimizing
information technology costs, staying current with technological
advances, and maintaining technical excellence are sources of
value creation
Human Resource Management
This is how well a company recruits, hires, trains, motivates,
rewards, and retains its workers. People are a significant source of
value, so businesses can create a clear advantage with good
practices
Firms Infrastructure
These are a companys support systems, and the functions that
allow it to maintain daily operations. Accounting, legal,
administrative, and general management are examples of
necessary infrastructure that businesses can use to their
advantage

Inbound Logistic

Mercedes-Benz has for many years focused on the use of

natural materials. The key advantage of natural raw
materials lies in its high environmental compatibility from
production right through to disposal
Mercedes-Benz is also the first automotive manufacturer to
use renewable raw materials both for the exterior and
interior
Integrating a logistics management system from the
reception of the vehicle until its return or delivery, including
tracking and service status while the vehicle is in the garage.
The management of IT and Communications had to optimise
the response time, priority based workflow and general
productivity.

Operations

The graduated testing and commissioning phase at the state-of-theart facility is already well underway, and the first automated fuel cell
stack was produced on June 7, 2012. Following the optimization of
processes, it is expected that full-series production will commence
shortly. In addition, another important parallel mandate of the new
location will be continued research that is focused on the
development of future generations of fuel cell stacks.
The strategic decision to locate the manufacturing plant in Burnaby
was announced last year to ensure close proximity to the fuel cell
stack development at Automotive Fuel Cell Cooperation (AFCC) and
the industrial fuel cell cluster located in the Greater Vancouver Area.
This concentration has developed due to the numerous related
companies and the significant activities in the field of fuel cell
technology at the various institutes and universities, creating a very
positive technological environment and the required infrastructure
necessary for the further development of fuel cell stacks.

Outbound Logistic
PTKrakatauSteelCollecting,storing

and

distributingthe producttobuyers,
Outputof the production processin the
factory,amotor vehicleproductready
to be sentto the buyerwho has
bookedproduct first

Marketing and Sales

Promote

in the car shows in Paris,

London, Las Vegas, New York and Detroit
attract masses and it is the best
showcase to expose the goods.
Advertise in TV or magazine such as
Mens Health , Popular Mechanics, Time
and etc
Sponsor in major sport tournaments
such as tennis grand slam

Services
Mercedes

Benz really care for on

valuable investment.
Every Mercedes-Benz original part is
subjected to the strictest quality control
measures to ensures the greater
possible reliability and safety, and the
vehicle retains its value.

Market Segmentation
E-Class

key targeted to the upper class

on wealthy market
Sporty but glamorous with many
customization options to personalize it
to the customer taste

Human Resource
Management
Variety

of activities in deciding what

staffing need to have or whether to use
independent contractors or hire
employees to fill the needs
Recruiting and training best employees
to ensure high performance to deal with
performance issue
Ensure personnel and management
practices conform to various
regulations

Technology Development

NGT
The flexible drive system based on natural-gas or petrol
operation
BlueTec
The clean diesel
BlueEFFICIENCY Measure
Test and analyze all vehicle components for increase
efficiency
Hybrid Intelligent Combination of petrol engine and electric
motor
Help to reduce fuel consumption
BlueTec Hybrid
Clean diesel with electric drive
F-Cell
Key to driving without fossil fuels such as diesel or petrol

Four Strategic Growth

Areas

Strengthening the core business

Renew and expand model range, effectively develop the
brand and taking measure to increase efficiency and
competitiveness in all business
Growing in new markets
Aim to expand in other regions such as Brazil, Russia,
India, China and so-called BRIC countries
Leading with green technology
Make sure mobility safe and sustainable
Shape mobility concepts and services
Able to meets expectation and needs of customer
especially in the city that want accessibility online at any
time