Kendra Scott and Differentiation Strategy

Read the overview below and complete the activities that follow.

Early in the process of crafting a strategy, company managers must decide which of the five basic competitive strategies to employ: overall low cost, broad differentiation, focused low cost, focused differentiation, or best-cost provider. Broad differentiation strategies seek to produce a competitive edge by incorporating attributes and features that set a company's product/service offering apart from rivals in ways that buyers consider valuable and worth paying for. Successful differentiation allows a firm to (1) command a premium price for its product, (2) increase unit sales (because additional buyers are won over by the differentiating features), or (3) gain buyer loyalty to its brand (because some buyers are strongly attracted to the differentiating features and bond with the company and its products). Differentiation strategies work best in markets with diverse buyer preferences where there are big windows of opportunity to strongly differentiate a company's product offering from those of rival brands, in situations where few other rivals are pursuing a similar differentiation approach, and in circumstances where technological change is fast-paced and competition centers on rapidly evolving product features. A differentiation strategy is doomed when competitors can quickly copy most or all the appealing product attributes a company comes up with, when a company's differentiation efforts meet with a ho-hum or so-what market reception, or when a company erodes profitability by overspending on efforts to differentiate its product offering.

The goal of this exercise is to help you gain command of the major avenues for achieving a competitive advantage based on differentiation.

Before completing this exercise, be sure to review Chapter 5, "The Five Generic Competitive Strategies," in particular, the section entitled "Broad Differentiation Strategies."You will also need to access Kendra Scott's website at http://www.kendrascott.com.

Identify at least three ways in which Kendra Scott sought to differentiate itself from rival jewelry firms.

Multiple Choice

A) Full range of services, being an online-only retailer, and appeals to customers' unique tastes.

B) Co-creation of value through a "Design Your Own" process for customers, complete line of products, and superior service.

C) Quality of products, multiple features, and wide selection (one-stop shopping).

D) Superior service perceived as luxurious and prestigious, and product reliability.

E) Co-creation of value through "Design Your Own" process for customers, being an online-only retailer, and product reliability.