Chapter 4: Business-Level Strategy 127used by most stores. Apple Pay has been slow to be adopted
by retailers because they need to pay switching costs for
new equipment to process transactions through Apple Pay. It
remains to be seen whether Samsung will be able to maintain
its differentiation relative to Apple’s luxury branded products
and the challengers on the low end such as Xiaomi, Lenovo,
and Micromax.
Sources: J. Cheng, 2015, Samsung unveils Galaxy S6 to answer iPhone 6, Wall
Street Journal, http://www.wsj.com, March 1; E. Dou, 2015, Lenovo’s smartphone chal-
lenge: Battling Apple, Xiaomi in China with Motorola, Wall Street Journal, http://www.
wsj.com, February 4; A. Fitzpatrick, 2015, Apple might finally be beating Samsungin smartphone sales, Time, http://www.time.com, February 3; R. Flannery, 2015, China’s
smartphone sensation Xiaomi says sells triple in ‘14: Eyes int’l growth, Forbes, http://www.
forbes.com, January 3; V. Govindarajan & G. Bagla, 2015, Can Indians innovate
in India?, Business Today, 24(4): 120–121; S. Grobart, 2015, Samsung’s fancy new
Galaxy S6 Edge phones, Bloomberg BusinessWeek, http://www.bloomberg.com, March 1;
S. Y. Lee & H. T. Wolde, 2015, Samsung unveils sleek new Galaxy phones to battle
Apple, Reuters, http://www.reuters.com, March 2; P. Olson, 2015, Apple’s U.S. iPhone sells
surpass Android for first time in years, Forbes, http://www.forbes.com, February 4;
M. Reardon, 2015, Samsung answers Apple with curvy Galaxy S6 phones, Samsung
Pay, CNET, http://www.cnet.com, March 1; T. Bajarin, 2014, How tiny tech firms are dis-
rupting the giants, PC Magazine, December, 36–38. B. Einhorn, B. Shrivastava, &
J. Lee, 2014, Samsung’s China problems come to India, Bloomberg BusinessWeek,
October 27, 44–45; D. Reisinger, 2014, Xiaomi sours while Samsung sinks in Gartner
smartphone market study, eWeek, http://www.eweek.com, December 16.in the Strategic Focus, where low-end smartphone producers, Xiaomi and Micromax in
China and India, respectively, are having success competing against Samsung smartphones.^87
A third risk of the differentiation strategy is that experience can narrow customers’ per-
ceptions of the value of a product’s differentiated features. For example, customers having
positive experiences with generic tissues may decide that the differentiated features of the
Kleenex product are not worth the extra cost. To counter this risk, firms must continue to
meaningfully differentiate their product (e.g., through innovation) for customers at a price
they are willing to pay.^88
Counterfeiting is the differentiation strategy’s fourth risk. Counterfeits are products
which are labeled with a trademark or logo that is identical to or indistinguishable from
a legal logo owned by another party, thus infringing the rights of the legal owner. When
a consumer purchases such a product and discovers the deception, regret creates distrust
of the branded product and reduces differentiation.^89 Companies such as Dell must take
actions to deal with the problems counterfeit goods create for them when their rights are
infringed upon.
4-3c Focus Strategies
The focus strategy is an integrated set of actions taken to produce goods or services
that serve the needs of a particular competitive segment. Thus, firms use a focus strategy
when they utilize their core competencies to serve the needs of a particular industry seg-
ment or niche to the exclusion of others. Examples of specific market segments that can
be targeted by a focus strategy include- a particular buyer group (e.g., youths or senior citizens),
- a different segment of a product line (e.g., products for professional painters or the
do-it-yourself group), or - a different geographic market (e.g., northern or southern Italy by using a foreign
subsidiary).^90
There are many specific customer needs firms can serve by using a focus strategy. For
example, Goya Foods, Inc. is the largest Hispanic-owned food company in the United
States. Segmenting the Hispanic market into unique groups, Goya offers more than 2,200
products to consumers. The firm is a leading authority on Hispanic food and seeks “to
be the premier source for authentic Latin cuisine.”^91 By successfully using a focus strategy,
firms such as Goya gain a competitive advantage in specific market niches or segments,
even though they do not possess an industry-wide competitive advantage.
The focus strategy is an
integrated set of actions
taken to produce goods or
services that serve the needs
of a particular competitive
segment.