...DIFFERENTIATION-It is one of the generic marketing strategy approach under which a firm aims to develop and market unique products for different customer segments A firm differentiates itself from its competitors “when it provides something unique that is valuable to buyers beyond simply offering a low price.” Every firm has opportunities for differentiating its offering to customers, although the range of differentiation opportunities depends on the characteristics of the product. An automobile or a restaurant offers greater potential for differentiation than standardized products such as cement, wheat, or computer memory chips. These latter products are called “commodities” precisely because they lack physical differentiation. Yet, even commodity products can be differentiated in ways that create customer value: “Anything can be turned into a value-added product or service for a well-defined or newly created market,” Analyzing differentiation requires looking at both the firm (the supply side) and its customers (the demand side). While supply-side analysis identifies the firm’s potential to create uniqueness, the critical issue is whether such differentiation creates value for customers, and whether the value created exceeds the cost of the differentiation. By understanding what customers want, how they choose, and what motivates them, we can identify opportunities for profitable differentiation. Differentiation strategies are not about pursuing uniqueness for the sake of being...
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...Management Science II Dr. S.Bharadwaj MODULE 1 Products And Product Differentiation Agenda • Classification of products • Levels of a product • Product Differentiation • Product Life Cycle • Summary Classification of Products • How can products be classified? • On what bases? Classification of Products On the basis of nature of product • Goods Vs Services On the basis of type of consumer • Tangible Vs. Intangible • consumer Product Vs. Industrial (Business to Business Product) e.g. soap Vs. Printing Press On the basis of durability of goods • Durable Vs. Non-Durable • TV Set Vs. Toothpaste 1 Indian Institute of Technology Madras Management Science II Dr. S.Bharadwaj Shopping Habits Classification They can also be classified on the basis of shopping habits • Convenience goods, shopping goods, specialty goods and unsought goods • Let us have a look at these Convenience goods • Fairly Inexpensive Goods and services that consumers buy frequently, quickly, and with a minimum of effort • Further divided into staples, impulse goods and emergency goods Shopping Habits Classification • Staples: These include goods that consumers buy on a regular basis • Examples would be bread, rice, atta, toothpaste and so on • If you are a marketer of staples, what should you do? • Availability is important: hence distribution strength is a great advantage ...
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...A firm possesses a sustainable competitive advantage when it has value-creating processes and positions that cannot be duplicated or imitated by others, that lead to the production of above normal rents, in that it provides a long-term advantage that is not easily replicated. Sources of competitive advantage: Competitive advantage Competitive advantage Similar products at lower price Differentiation advantage Differentiation advantage Price premium from unique products Competitors’ gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of a business' activities are narrow versus broad and the extent to which a business seeks to differentiate its products. Question 3: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Cost leadership With this strategy, the objective is to become the lowest-cost producer in the industry. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. Why is cost leadership potentially so important...
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...Levels of Product Differentiation in the Global Mobile Phones Market The sixth product level called compliant product is a connecting element between the physical product characteristics and the strategy of the producer company Stanimir Andonov* The article discusses the differentiation among the product offers of companies working in the global markets, as well as the strategies which they use and could use in that respect. The main idea of the paper is that the principle “differentiate or die” (Jack Trout) has died. Today the global brands don’t strive to differ from their competitors in everything and at any cost. As an example, let’s have a global look at the business of mobile phones. In June 1998 Ericsson, Nokia, Motorola and Psion established their own International Strategic Alliance, a private independent company called “Symbian”. Symbian Ltd. is an independent, for-profit company whose mission is to establish Symbian OS as the world standard for mobile digital data systems, primarily for use in cellular telecoms. So, the three biggest mobile phone companies at that time and Psion, a mobile PC company, created a new way for competing and differentiating. Today Symbian Ltd. is owned by Ericsson, Nokia, Panasonic, Samsung, Siemens and Sony Ericsson. Figure 1 shows the percentage of shares of each shareholding company: Figure 1 Shareholding companies of Symbian and their percentage of shares Source: Symbian Ltd. – Company Ownership, http://www.symbian.com/about/ownership...
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...pinpoint what functions of the firm have resources or capabilities that can potentially explain the performance (or competitive advantage) of the firm * Building Blocks of Competitive Advantage (another way of identifying resources and capabilities): * Does the firm have resources or capabilities that explain one of the following building blocks? * Superior Efficiency * Superior Innovation * Superior Quality * Superior Customer Responsiveness * If so, then they are distinctive and create a COMPETITIVE ADVANTAGE (either differentiation or low cost) * Quality divided into two components: excellence & reliability * Quality as excellence - features, functions or services that support the "excellence" perception * Quality as reliable - rarely breaks down and performs intended function This Week's Lecture: Chapter 5 NOTE: product offering--> can refer to actual product, advertising, features, quality, etc. * Economies of Scale - producing more units reduces unit costs * Driven from fixed costs and division of labour (more specialized --> efficient at performing their tasks) * Unit Cost = (Variable Costs + FC) / Total # of products * Learning Effect (very different from Economies of Scale) * Process innovation drives the learning effect * As workers become more experienced at producing a product, they learn/identify a better way of producing the product ...
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...Experience as a Means of Brand Differentiation Key Words: customer experience, branding, differentiation, experiential platform. Esma Cavusoglu Postal Address: Kure İletisim Grubu Elmadag, Cumhuriyet Cad. Pegasus Evi 48/3B Taksim 34367 Istanbul / Turkey Customer Experience as a Means of Brand Differentiation Abstract In today’s customer–dominated business world, there exists the “brand indifferentiation” problem that concerns the difficulty of the customers to perceive the differences between a certain brand and its competitors. This situation calls for a close look at the relationship between the consumer behaviour, branding and differentiation. Taking into consideration the proliferation of products, increasing information flow through digital technologies, fast commoditization and competition in today’s world, differentiation and brand positioning relying on traditional frame, have no longer been resulting the expected performance. Constitution of brand differentiation in the minds/hearts of customers entails to re-evaluate the meaning of consumption for consumers, how consumers make their choices, what the brand the consumer prefered means to him, and what can make a brand different than the others for a customer. In this paper, these issues are examined and the solution to indifferentiation is linked with the concepts of “experience” and “experiential marketing”. Key Words: customer experience, branding, differentiation, experiential platform. ...
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...Cost and Differentiation Strategies A.Cost Reduction as competitive advantage Cost Advantage (=> cost efficiency => cost cutting : restructuring, outsourcing, lean production…)is normally considered as the primary basis for competitive advantage in an industry. The Key to cost-cutting is the study of the 8 factors that determine a firm’s cost position : 1. Economies of scale Economies of scale exist wherever an increase in the amount of inputs employed in a production process results in a greater increase in total output. As the scale of production increases, the unit cost fall. 3 principal sources : 1. Technical input-output relationships : increases in output do not require proportionate increases in inputs. Ex 5l bottle of water not cost 5times 1l 2. Indivisibilities : Inputs unavailable in small sizes offer economies of scale as long as the company is able to spread the costs to these items over larger volumes of output. 3. Specialization : Mass production involves breaking down the production process into a series of separate tasks to be performed by specialized workers using specialized equipment. Other Scale than scale production : packaged consumer (12packs of cigarettes…), scale in marketing (distribution industry). Limits to scale economies : 3 reasons for not choosing scale economies 1. Differentiation : higher prices for niche market outweighs higher cost of the small volume production 2. Flexibility : Adapt rapidly to new...
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...TITLE PAGE PRODUCT DIFFERENTIATION AND ITS CONSEQUENCES ON THE MARKETING OF CONSUMER GOODS IN NIGERIA, (A CASE STUDY OF NIGERIAN TOBACCO COMPANY PLC. KANO) BY DAVID GARGADI (PGS/SMS/04/2840 BEING A RESEARCH WORK SUBMITTED TO THE DEPARTMENT OF BUSINESS ADMINISTRATION, BAYERO UNIVERSITY, KANO AS PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION (MBA) JULY, 2007 APPROVAL SHEET The Dean School of Post Graduate Studies Bayero University, Kano Kano SUBMISSION OF RESEARCH PROJECT This is to certify that DAVID GARAGADI (PGS/SMS/05/3737) have successfully completed this research work on the subject; The Consequences of product differentiation on the marketing of consumer goods in Nigeria, (A case study of Nigeria tobacco company plc.Kano) under my supervision. -------------------------------------------- Dr. Ado K/Mata ----------------------------------------------- Prof. A.R Mohammed (The Dean School of Post Graduate Studies) CERTIFICATION I certify that this dissertation entitled: THE CONSEQUENCES OF PRODUCT DIFFERENTIATION IN THE MARKETING OF CONSUMER GOODS IN NIGERIA (A CASE STUDY OF NIGERIAN TOBACCO COMPANY PLC, KANO). Written by: DAVID GARGADI (PGS/SMS/04/3737) meets the requirement governing the award of Master...
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...Competitive Advantage Creating and Sustaining Superior Performance Author: Michael E. Porter Michael E. Porter's Competitive Advantage explores the underpinnings of competitive advantage in the individual firm. Porter's groundbreaking concept of the value chain disaggregates a company into "activities," or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Giving readers a comprehensive understanding of business strategy and how to create a sustainable competitive advantage for their organization, Porter explores how a firm can put the generic strategies of cost leadership, differentiation and focus into practice. This essay will explore Competitive Advantage and the underlining theory that to compete in any industry, companies must perform a wide array of discrete activities that are narrower than traditional functions. It will analyze the real core of the book which is to determine whether companies profit from creating value for customers, or whether that value is competed away. INTRODUCTION “Competitive Advantage is at the heart of a firm’s performance in competitive markets. After several decades of vigorous expansion and prosperity, however, many firms lost sight of competitive advantage in their scramble for growth and pursuit of diversification. Today the importance of competitive advantage could hardly be greater. Firms throughout the world face slower growth as well as domestic and...
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...1. What is adidas corporate strategy? Was there... 1. What is adidas corporate strategy? Was there a common strategic approach utilied in managing the company's lineup of sporting goods businesses prior to its 2005-2006 restructuring? 2. Did the restructuring undertaken in 2005 and 2006 make sense? Does it appear that the acquisition of Reebok International will produce higher returns for shareholder? What strategic actions should adidas's top management initiate ti improve the company's financial and market performance now that restructuring is complete? Expert Answer Thanks for the question. Adidas' corporate strategy now focuses on basketball, football, running, and training and keeps their product line to style and performance. Prior to restructuring in 2005-2006, Adidas had branched out into too many areas and gave less focus on product specialization. Competitors such as Nike gained market on Adidas as a result. The restructuring in 2005 did make sense because it enabled Adidas to sell certain business divisions that were not profitable. This coupled with Adidas' acquisition of Reebok and the return to it's core focuses has allowed shareholders to see positive results as well as Adidas gaing market share back from Nike. The strategic actions that Adidas' top management should emplement now are to continue the core competencies approach and focus on what works for them as opposed to branching out into other areas. ...
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...STATION. TOURISM MANAGEMENT: GMN269. JULY 4 2015. DIFFERENTIATION STRATEGY VERSUS COST-LEADERSHIP STRATEGY A VIEW OF ASSOCIATED RISK. DIFFERENTIATION STRATEGY VERSUS COST-LEADERSHIP STRATEGY A VIEW OF ASSOCIATED RISK. ACKNOWLEDGEMENTS. Any accomplishment requires work and effort of many people. This project is no different. I am grateful to God without whom life would not be possible. And also the Delta State government for making this vision possible. OBJECTIVE OF PAPER The purpose of this paper is show the risks concerned with the differentiation strategy and compare them to those of the cost-leadership strategy. The amount of profit made by a firm is determined by the attractiveness of the industry in which it operates and the quality of its opposition within the industry. Even though an industry may have below average profitability, a firm that is optimally positioned can generate superior returns. Michael Porter argued that if a firm leverages its strengths in either a narrow or broad scope, three generic strategies result; cost-leadership, differentiation, and focus strategies. He said that these strategies are not firm or industry dependent. (Porter, 1999-2010). What is differentiation Strategy Differentiation strategy can be seen as a strategy employed by businesses or firms to increase...
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...company highly selective about what we sell, dedicated to our core values and stringent quality standards and committed to sustainable agriculture” as stated by the companies CEO John Mackey. Whole Foods states its purpose as a corporation is helping support the health, well-being, and healing of people, team members, and business organizations in general, and the planet. This is Made known by the company motto “Whole Foods, Whole People, and Whole Planet” (Whole Foods). (Fig.1) Whole Foods Market Motto (Fig.1) Whole Foods | Whole People | Whole Planet | * Highest quality * Least processed * Most flavorful * Natural foods NoArtificial: * Additives * Sweeteners * Colorings * Preservatives | People are their companyPassionate employeesMotivated employees | -Whole Planet Foundation-support food banks -Sponsor neighborhood events -Donate to local non-profit groups-Support of organic farming and sustainable agriculture | (Fig.2) Whole Foods Market’s Core Value | Selling the highest quality natural and organic products | Satisfying and delighting costumers | Team members happiness and excellence | Create Wealth Through Profits & Growth | We Practice and Advance Environmental Stewardship | Create Ongoing Win-Win Partnerships with Our Suppliers | We Promote the Health of Our Stakeholders Through Healthy Eating Education | Whole Foods operates mostly off of a focused differentiation strategy. Differentiation strategy is where a firm aims...
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... 2. Concurrent and parallel processing 3. Postponement/delayed differentiation By packaging the product so that more products can be shipped and stored more efficiently will lower transportation costs and storage costs. Concurrent and parallel processing focuses on modification of the manufacturing process with the desired out come of shorter lead times, improved forecasting and reduction of safety stock requirements. Design for delayed differentiation can be used to address the uncertainty in final demand, even if forecasts cannot be improved. What is delayed differentiation and can Hewlett-Packard use delay differentiation to address the problem described in the case? The Institute of Supply Management’s glossary of key supply management terms defines delayed differentiation as: The strategy of producing and shipping generic products as far down the supply chain as possible before customer-required customization is added. This process would help lessen lead time and the amount of safety stock required by the European DC. By shipping a generic product and allowing the DC to assemble the appropriate power supply module and package it with the working printer and manual in appropriate language, would allow the European DC to have the appropriate inventory for wherever demand was greatest. How can the advantages of delayed differentiation be quantified? The advantages of delayed differentiation can be quantified by using aggregate demand information. According...
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...restaurants so they can demand lower prices. o The bargaining power of suppliers for locally owned pizza restaurants is high because they do not buy in large quantities. • All things considered, Porter‟s Five Forces are high so the industry may not be as profitable or attractive. However, in any case, the techniques implemented by successful, market players after provide them with an opportunity to leverage their business processes and compete favorably in the business. Since the establishment of Papa John's International, the company has grown up from a small pizza shop selling Pizza to tavern's customers to an international establishment having franchisees in key international arena. All this are as a result of well though differentiation strategy, thanks to the visionary leadership of John Schnatter. Papa...
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...Department of Commerce, Voorhees College, Vellore - 632001. 9443489937. Brand Asset ValuatorYoung & Rubicam’s BrandAsset Valuator(BAV®) model Tool Kit Abstract “A product is something made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.” Stephen King (WPP Group, London) The main objective of this study is to measure the brand equity of a product, with the help of a Brand Asset Valuator. Successful Brand-Building today is the fact that: "A World of Brands" even more than it is a competition within categories. Consumers find it not only possible, but desirable, to select among all meaningful options. Brands without meaning" will behave like commodities and be limited to commodity-like pricing, where price is determined not by the owner of the brand, but by every other producer in the category. A Company’s overall mission is to increase the value of shareholder’s investment. It does this through sales growth, cost controls and wise investment of resources. It believes that the company’s commercial success depends upon offering quality and value to consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to investors while adhering to the highest standards of integrity...
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