Differentiation involves creating unique value for customers beyond low price by appealing to tangible characteristics like size and performance or intangible attributes related to image and identity. Successful differentiation requires consistency across all customer touchpoints and integrity between product features and customer objectives. Firms can identify opportunities for differentiation throughout their value chain in areas like technology, human resources, operations, logistics, marketing, and service.
Differentiation involves creating unique value for customers beyond low price by appealing to tangible characteristics like size and performance or intangible attributes related to image and identity. Successful differentiation requires consistency across all customer touchpoints and integrity between product features and customer objectives. Firms can identify opportunities for differentiation throughout their value chain in areas like technology, human resources, operations, logistics, marketing, and service.
Differentiation involves creating unique value for customers beyond low price by appealing to tangible characteristics like size and performance or intangible attributes related to image and identity. Successful differentiation requires consistency across all customer touchpoints and integrity between product features and customer objectives. Firms can identify opportunities for differentiation throughout their value chain in areas like technology, human resources, operations, logistics, marketing, and service.
Differentiation involves creating unique value for customers beyond low price by appealing to tangible characteristics like size and performance or intangible attributes related to image and identity. Successful differentiation requires consistency across all customer touchpoints and integrity between product features and customer objectives. Firms can identify opportunities for differentiation throughout their value chain in areas like technology, human resources, operations, logistics, marketing, and service.
DEFINITION: “Providing something unique that is valuable to the
buyer beyond simply offering a low price.” (M. Porter) THE KEY IS TO CREATE VALUE FOR THE CUSTOMER
TANGIBLE DIFFERENTATION INTANGIBLE
Observable product characteristics: DIFFERENTATION • size, color, materials, etc. Unobservable and subjective • performance characteristics that appeal to • packaging customer’s image, status, • complementary services identity, and desire for exclusivity
TOTAL CUSTOMER RESPONSIVENESS
Differentiation not just about the product, it embraces the whole relationship between the supplier and the customer. Differentiation and Segmentation
DIFFERENTIATION: is concerned with how a firm distinguishes
its offerings from those of its competitors (i.e. How the firm competes) SEGMENTATION: is concerned with which customers, needs, localities a firm targets (i.e. Where the firm competes)
DOES DIFFERENTIATION IMPLY SEGMENTATION?
—Not necessarily, depends upon the differentiation strategy: BROAD SCOPE DIFFERENTIATION Appealing to what is common between different customers (McDonalds, Honda, Gillette) FOCUSED DIFFERENTIATION Appealing to what distinguishes different customer groups (MTV Harley-Davidson, Ralph Lauren) Consistency of Differentiation Strategy: Product Integrity
Key to successful differentiation is consistency of all
aspects of the firm’s relationship with its customers.
Product Integrity: the total balance of product features
• Internal integrity: consistency between function and structure • External integrity: fit between the product and the customers’ objectives, values, lifestyle etc. THE VALUE CHAIN AND DIFFERENTIATION STRATEGY
General Management
R&D, Product Development
Purchase: Commercial
Manufacturing, Engineering, Marketing,
Logistics, Materials Management Customer Support Using the Value Chain to Identify Differentiation Potential on the Supply Side MIS that supports Training to support Unique product features. fast response customer service Fast new product capabilities excellence development
FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT
INBOUND OPERATIONS OUTBOUND MARKETING SERVICE
LOGISTICS LOGISTICS & SALES Customer technical support. Consumer credit. Availability of Quality of Defect free Fast delivery. Building brand spares components & products. Efficient order reputation materials Wide variety processing • What are the threats/risks to a differentiation strategy?