Strategic management DIFFERENTIATION PREPARED BY TUSHAR ANKIT MOHANIA ANKIT ARORA KAMLESH GAURAV PANDEY

DIFFERENRENTIATION “a Strategic tool” DIFFERENRENTIATION “a Strategic tool”

DIFFERENRENTIATION STRATEGIES Generally the customers needs, tastes and preferences varies and thus the same can be satisfied by producing the product with different attributes. To adopt differentiation as a strategy, an extensive study is required in terms of buying and consumption behavior, consumers tastes, competitors offerings and then stepping in the market accordingly.

Value creation Creating Value for product differentiation through various measures including: Technology Development – contributing to product variations. Humana Resource- capability to produce new/different products. Flat Organization Structure- that provides freedom to employees to think and develop different products, procure quality inputs and the like.

PROPER SCANNED COPY WILL BE PUT

Customer loyalty WILL PAY HIGH PRICE ONLY WHEN PRODUCT DESIGN CONFIGURATION AND THE SERVICES ASSOCIATED WITH THE PRODUCT ARE OF THEIR CHOICE. BRAND LOYALTY SENSITIVITY TO THE PRICE INCREASES THIS RELATIONSHIP BETWEEN BRAND LOYALTY AND PRICE SENSITIVITY INSULATES A FIRM FROM COMPETITORS RIVALRY CUSTOMERS BUYING THE PRODUCT AT LOWEST PRICES

WILLINGNESS TO PAY PREMIUM PRICE For the differentiated product based on quality, convenience and prestige. For E.g. : Indian Railways differentiate services like A.C. Two Tier, A.C. Three Tier, Tatkal, Sleeper Class and the Ordinary class as the upper income group passengers are willing to pay as high as 20 times to that of the ordinary class fares.

Differentiation elements Bargaining Power of Suppliers: FARMERS UNORGANISED MARKET SUPER MARKET HIGH QUALITY PRODUCE FURTHER CHARGE HIGH PRICES

DIFFERENTIATION ELEMENTS Potential Entrants: The risk of potential entrants would normally be comparatively less as it needs heavy investment and also it would rather difficult to produce differentiated and high quality products in the long run. Substitute Products: Bears the risk of substitutes. Hence needs to continuously improve the product through further differentiation. Example: Titan

ITC before entering the biscuit segment conducted extensive market research which helped in develop a understanding about the Indian consumers who according to the companies findings that the Indian consumers wished to taste new and innovative products (something competition had ignored). The company used DIFFERENTIATION as its USP in 2003, and launched Sunfeast with 6 ranges. I.T.C. Ltd.

H.U.L. HOME FOOD AND BEVERAGES CRORES GROWTH STRATEGY PRODUCT LINE PRUNING MARKETING 110 BRANDS IN POWER BRANDS SCALE AND POTENTIAL DIVESTED OR TRANSFFERED NON CORE BUSINESS

This has helped H.U.L. to achieve product differentiation and improvement in Sales by concentrating on the brands which constitutes the business and evolving constant innovation in the same. h.u.l.

Situations suitable for differentiation strategy

Where there are many ways to differentiate the product/services and most of the customers feel these differences as valuable. Where the customers’ taste, preferences, needs and uses of the item are diverse. Where a few competitors follow differentiation strategy.

Situations suitable for differentiation strategy Where the differentiation strategies are least subject to quick or inexpensive imitation by the competitors. In other words, it should be difficult to the competitors to copy quickly and profitably. Where the differentiation is based on : technical superiority, quality, more customer supportive services, and more value for the money.

Differentiation with innovation

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Competitive differentiation

THE KEY TO LIFE IS NO KEY

Advantages of efficient differentiation

The product commands a premium price for the producer. More no. of units is sold as additional customers are won over by the differentiating features. The product gains greater customer loyalty to its brand. Differentiation enhances the profitability when the cost of the differentiation is less than the extra price of the product.

Approaches to differentiation

QUALITY MUSIC WIDER CHOICE & DURABILITY DEVELOPING U.S.P.’s

TECHNOLOGY PRICE DEVELOPING U.S.P.’s

Approaches to differentiation Differentiation may take several forms. Important among them are: A different taste Special features Superior service Spare parts availability Overall value to the customer Engineering design and performance

Approaches to differentiation Product reliability Quality manufacturer Technological leadership A full range of services Complete line of products Top-of-the-line image and reputation

MARKET WANTED SOMETHING HATT KE– “SANTOSH TYAGI” Mx CORN- NOW OPERATING IN 43 CITIES IN INDIA

CREATING A NEW CATEGORY OFFERING YOGURT BASED ICE CREAMS

IT IS DIFFERENT !! ROCK N ROLL IN YOUR KITCHEN WITH MUZIPLAY

VIDEO OF GODREJ MUZIPLAY GXc

Need for differentiation

Differentiation provides some buffer against the rival’s strategies, as customers become loyal to the brand or model they like most and often like to pay a higher price. Differentiation erects entry barriers in the form of customer loyalty and uniqueness the newcomers find hard to overcome. Differentiation mitigates the bargaining power of major customers as the competitors products are less attractive to them.

Need for differentiation Differentiation helps a company fend off threats from substitutes. Efficient differentiation creates lines of defence for dealing with competitive forces as it provides, a price advantage and thereby a higher profit margin.

Limitations of a differentiation strategy

Buyers may perceive a little value in uniqueness of the product. A significantly low cost strategy may defeat a differentiation strategy. Trying to differentiate on the basis of something that does not lowers a customer cost or enhance a customer's well being ( as perceived by the customers).

Limitations of a differentiation strategy Over differentiating results in high cost and high price compared to that of the competition or product quality or service levels exceed the customers needs. Trying to charge too high a price premium. Sometimes not understanding or identifying what customers consider as value.

FAILURE

EXPLAINING WHY VISTA FAILED WILL BE EXPLAINED BY THE PRESENTER /microsoft-admits-vista-failure