Question

1.Name examples of entrepreneurial firms who found opportunities in declining industries. Take any one of those firms to explain as to how it went about its business?Give at least two examples of firms that use focus strategies to help to define their market niches. What makes their market niches attractive and why?

Answer 1

Diamond Resort International and Housing.com are examples of entrepreneurship companies that
found opportunities and eventually great success in declining industries. Stephan Cloobeck, founder of
Diamond Resort International, started this company by buying a publicly traded company Sunterra
Corporation which was on verge of bankruptcy. Hospitality is a saturated industry and luxury hotel and
vacations are controlled by few very large business houses such as Marriott International Corporation.
Mr Cloobeck started buying resorts which were on verge of closure and revamped those resorts to make
them holiday destinations following a set Diamond International standard. It helped me buy otherwise
very expensive properties at a very low price and quickly expand its resorts around the globe.
The strategy of Diamond Resorts was to provide unforgettable vacation experience for the middle class
at an affordable price point yet give a luxurious experience by maintaining a uniform standard across its
resorts. Stephan Cloobeck focused on a very niche segment of middle-class vacationers but a number
large enough to give Diamond Resorts a big growing clientele and successfully beat the competition of
larger hospitality industry juggernauts. It helped Stephan Cloobeck develop Diamond Resorts into a
global brand valued at $2.2 billion and was sold to Apollo Global for $2.27 billion in 2016.
While a differentiation strategy involves offering unique features that
appeal to a variety of customers, the need to satisfy the desires of a narrow
market, firms use a focused differentiation strategy. Thus the unique
features provided by firms following a focused differentiation strategy are
often specialized.

A focus strategy is usually employed where the company knows its segment and has products to
competitively satisfy its needs. Focus strategy is one of three generic marketing strategies

The use of speciality market knowledge – the key to this niche strategy is the
continuous and detailed monitoring and research of market and customer
needs. The enterprise maintains its pre-eminence within the niche by its
complete understanding of the market and its willingness to respond quickly to
changes in segment need.

In some cases, the target market is defined by demographics. Claire’s, for
example seeks to appeal to young women by selling inexpensive jewellery,
accessories, and ear piercings. Claire’s use of a focused cost leadership
strategy has been very successful; the firm has more than three thousand
locations and has stores in 95 percent of US shopping malls.

In other cases, the target market is defined by the sales channel used to
reach customers. Most pizza shops offer sit-down service, delivery, or both.
But companies like Papa Murphy’s sells pizzas that customers cook at
home. Because these inexpensive pizzas are baked at home rather than in
the store, the law allows Papa Murphy’s to accept food stamps as payment.
This allows Papa Murphy’s to attract customers that might not otherwise be
able to afford a prepared pizza. In contrast to most fast-food restaurants,
Checkers Drive In is a drive-through- only operation. To serve customers
quickly, each store has two drive-through lanes: one on either side of the
building. Checkers save money in a variety of ways by not offering indoor
seating to its customers—Checkers’ buildings are cheaper to construct, its
utility costs are lower, and fewer employees are needed. These savings
allow the firm to offer large burgers at very low prices and still remain
profitable.

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