No discussion of low cost leadership would be complete without mentioning Southwest Airlines. Very fast gate turnarounds and high utilization rates. Quick response to changing conditions and new opportunities. Differentiation Differentiation is the strategy of offering features, options, policies, products and services that are unique, premium priced and attractive to buyers. Differentiators earn above average profits because of their ability to engage in premium pricing.
Differentiation tends to insulate a firm against competitive rivalry because of brand loyalty.
The ability to respond to customer needs. Consider the airline industry as an example of the potential that differentiation offers. If one flies on a regular basis, the dreary sameness of American Airlines, United, Delta, TWA and others is a common complaint. Virgin Atlantic captured a major share of the Trans-Atlantic market in short order and was able to charge slight price premiums on a regular basis. American Airlines, to its credit, has apparently considered customer complaints about seating and has begun to remove rows of seating in coach to accommodate passenger comfort.