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By VIGNESH.S 215112041 MBA 1st Year NIT Trichy.
repairability and style. Yet even here some differentiation is possible: Venky’s chicken. Physical products vary in their potential for differentiation. With this simple change. It can also be defined as the process of making your marketing mix uniquely different from other products or services competing for the same target audience. maildart. conformance quality. Design has become an increasingly important means of differentiation. commercial buildings. Rejoice shampoos each with a separate brand identity. The company has a fleet of aircrafts to provide cargo services a ground fleet of vehicles. So every player has to come up with some differentiation in their products to survive in the market. DIFFERENTIATION: To be branded products must be differentiated. shoptrack and imagedart. promotion. Otis has managed to turn every elevator into an 2 . durability. a leading player in the courier service industry in India. Head & Shoulders. performance quality. This differentiation may be in any of the 5P's of Marketing (product. customization.PRODUCT DIFFERENTIATION INTRODUCTION: The recent era of marketing is filled with large number of players in every segment leading to the heavy competition in the market. has become an important part of the supply chain of many companies by providing integrated services. and steel. furniture’s. this has led to the formation of the concept called “PRODUCT DIFFERENTIATION”. Now Otis has developed a "smart" elevator. reliablity. Bayer asprin and Tata steel have carved out distinct identities in their categories. price. At one extreme. you press the "up" button and take the first elevator that comes. with no idea how many stops there will be until you get to your floor. At the other end are products capable of high differentiation such as automobiles. You key in your floor on a centralized panel. large warehouse space and bonded warehouses in metro cities. Eg: BLUE DART: Blue Dart. features. trackdart. The company also provides economical packaging those faciliates customers sending documents at a price that includes door to door delivery service within India. packtrack. internetdart. we find products that allow little variation: chicken. Your elevator takes you right to your floor and races back to the lobby. Procter & Gamble makes Pantene. The company also provides advisory services to clients to develop solutions and distribution issues. The panel tells you which elevator is going to take you to your floor. aspirin. In service differentiation is often achieved through use of technology and by offering value-added services. In order to augment services the company uses several soft ware’s that enable clients to track and monitor shipment status these include cosmat II. OTIS ELEVATOR COMPANY: At a typical bank of elevators in an office building lobby. Product differentiation can define as the process carried out by the companies to obtain a competitive advantage over other companies in the market. place. people). Here the seller faces an abundance of differentiation possibilities including form.
This remarkable differentiator means a speedier ride and less groaning and sighing by riders. Buildings need fewer elevators for a given density of people.PRODUCT DIFFERENTIATION express. The major sources of product differentiation are as follows. DIFFERENTIATION STRATEGIES: Before developing the differentiation strategy marketers should have the answer to these questions: Is my brand the first in the category to claim this differentiating idea? If one of your competitors already owns that positioning your best bet is explore a different avenue. If management is not willing to allocate the necessary resources (which vary depending on the industry and level of competition) then your strategy will die in its infant stages. in particular. Vertical: based on a single characteristic and consumers are clear on its quality MARKETING MIX DIFFERENTIATION: Product / Service Differentiation Place Differentiation Price Differentiation Promotion Differentiation People Differentiation 3 . Does my differentiation idea translate into a meaningful benefit for the consumer? If the consumer is not willing to pay for it then you have to start from scratch. advertising Differences in availability (e. Will my company be able and willing to deliver on that competitive advantage over a long period of time? Brand building takes a long time. There are three types of product differentiation: 1. Differences in quality which are usually accompanied by differences in price Differences in functional features or design Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing Sales promotion activities of sellers and. Simple: based on a variety of characteristics 2. Horizontal: based on a single characteristic but consumers are not clear on quality 3. consistency and resources to build. timing and location). but it also has big benefits for builders.g. so builders can use the extra space for people rather than people conveyers.
Few examples of companies which came out with products differentiated in terms of form: POWER SOAPS: When all the soap manufacturing companies in India were going with the regular rectangular shapes power soaps was the first to manufacture soaps in different shapes like “Nature Power Papaya” soaps in the shape of papaya. which had 48 mega pixel cameras. TVS: TVS motors introduced scooty with the concept of TVS99 where their product scooty is available in 99 shades of colour. Consider the many possible forms taken by products such as aspirin. high. Companies must also think in terms of feature bundles or packages. shape. No chemicals present and they also priced higher than their competitors. it can be differentiated by dosage size. coating. Eg: HIMALAYA: They came up with the concept of 100% natural with natural herbs. Each company must decide whether to offer feature customization at a higher cost or a few standard packages at a lower cost." This lowers manufacturing and inventory costs. or action time. how long it would take to introduce each feature. SONY: Recently Sony came with size zero concept where they differentiated their products by means of size. The manufacturer must design a performance 4 . shape. NOKIA: NOKIA recently launched mobile phones having high clarity cameras named NOKIA PURE VIEW. Auto companies often manufacture cars at several "trim levels. PERFORMANCE QUALITY: Most products are established at one of four performance levels: low. and whether competitors could easily copy the feature. The company should also consider how many people want each feature. or superior. FEATURES: Most products can be offered with varying features that supplements its basic function. Firms should not necessarily design the highest performance level possible. Although aspirin is essentially a commodity.PRODUCT DIFFERENTIATION PRODUCT DIFFERENTIATION: FORM: Many products can be differentiated in form—the size. in which they differentiated their product b y means of introducing gesture controls. MICROMAX: Micromax introduced a model named A85. Here product differentiation is brought in terms of colour. Performance quality is the level at which the product's primary characteristics operate. or physical structure of a product. A company can identify and select appropriate new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature. color. average.
Before its entry it is believed that only foreign based engine designs are good but with its entry swift proved its quality and promised to fulfill its expectations. They don’t have any fancy range shoes. a measure of the product's expected operating life under natural or stressful conditions. is a valued attribute for certain products. They entered Indian market and differentiated their product by showing the quality. CONFORMANCE QUALITY: Buyers expect products to have a high conformance quality. Continuously improving the product can produce the high returns and market share.PRODUCT DIFFERENTIATION level appropriate to the target market and competitors' performance levels. as is the case with personal computers and video cameras Eg: AMBUJA CEMENTS: Ambuja cements are a Maharashtra based company which gain advantage over other companies in the market by highlighting the durability of the product. A company must also manage performance quality through time. which is the degree to which all the produced units are identical and meet the promised specifications. However. If every Porsche 944 coming off the assembly line does this. this rule is subject to some qualifications. The problem with low conformance quality is that the product will disappoint some buyers. Suppose a Porsche 944 is designed to accelerate to 60 miles per hour within 10 seconds. Eg: SARAVANA BHAVAN: Chennai based multinational company which continuously provides quality foods to their consumers. Their tag line is “Giant compressive strength” which indirectly induces durability in the consumer minds 5 . Customers enter the hotel expecting a good food and clean environment and the company continuously satisfy its consumers. Buyers will generally pay more for vehicles and kitchen appliances that have a reputation for being long lasting. MARUTHI SWIFT: It is the first fully Indian engineered car in the Indian market. Furthermore. the product must not be subject to rapid technological obsolescence. inspite they manufactured shoes with high quality. The extra price must not be excessive. the model is said to have high conformance quality. Eg: BATA: It is a Switzerland based shoe manufacturing company. Lowering quality in an attempt to cut costs often has dire consequences. DURABILITY Durability.
They also have many retail outlets in Chennai. Many computer hardware and software companies offer technical support over the phone. its Liquid engineering” this phrase has been used to make the product reliable among the consumers. On the negative side. Some products include a diagnostic feature that allows service people to correct a problem over the telephone or advise the user how to correct it. denim. PUMA: They brought in style to the shoes. They implement latest technology and constant innovation. protection and integrity. They do not involve many technologies and are easily repairable by local mechanics. Car buyers pay a premium for Jaguars because of their extraordinary look. has an outstanding reputation for creating reliable appliances.PRODUCT DIFFERENTIATION DURABLE CHROME FACTORY: It is one of the leading manufacturers of leather goods. They introduced style without compromising quality. They manufactured sports shoes with high interest in style and quality. They introduced variety of stylish watches like hiphop. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period. They also have wide spread service stations all over the country. RELIABILITY: Buyers normally will pay a premium for more reliable products. CASTROL: “its more than just oil. Synonymous with trust. Eg: GODREJ: Godrej locks have strong reliability among the people. Style has the advantage of creating distinctiveness that is difficult to copy. REPAIRABILITY: Repairability is a measure of the ease of fixing a product when it malfunctions or fails. Because of stylish products they also priced their products high compared to their competitors. or by fax or e-mail. Eg: FASTRACK: In Indian market fastrack is only watch manufacturing company which has targeted young people in terms of style. STYLE: Style describes the product's look and feel to the buyer. WOODLANDS: As we all know woodland products are strong and it stands for strength. A car may look sensational but spend a lot of time in the repair shop. biker. Eg: HERO HONDA: All the bikes manufactured by hero honda are easily repairable. Shoes are also available in different colour combinations. Ideal repairability would exist if users could fix the product themselves with little cost in money or time. which manufactures major home appliances. sports etc. As the name implies they differentiate their product in terms of durability. 6 . strong style does not always mean high performance. They price their products very high compared to their competitors showcasing the durability. They are also rough and tough for use. Maytag. army.
SERVICES DIFFERENTIATION When the physical product cannot easily be differentiated. Products have shorter life cycles and consumers gravitate towards what’s new. customer training. the key to competitive success may lie in adding valued services and improving their quality. and care attending the delivery process. at a lower price. installation. It has a wide variety of products which can be ordered at just one click. film developed in one hour. The “demanding consumer” danger. Baxter Healthcare has eased the ordering process by supplying hospitals with computer terminals through which they send orders directly to Baxter. CHALLENGES OF PRODUCT-BASED DIFFERENTIATION: The “me-too” danger. RAYMONDS: It is one of the India’s largest branded fabric and fashion clothing manufacturer. Eg: FLIP KART: It is an Indian based company which has got its importance because of the ease at which order can be placed. Over the years many competitors entered the market but still Raymond’s is maintaining its status among the local customers. The “lower price” danger. delivery. and maintenance and repair. ORDERING EASE: Ordering ease refers to how easy it is for the customer to place an order with the company. 7 . Today's customers have grown to expect delivery speed: pizza delivered in one-half hour. customer consulting. Your company needs to be one step ahead of the curve and invest in improving and perfecting the product. Priced high to maintain exclusivity. cars lubricated in 15 minutes. It includes speed. Regarded as status symbols. There is always the threat that a competitor might launch a product with the same features. Eg: ROLEX: Globally treated as one of the most valuable brand. In order to remain competitive you need to keep up with the latest trends and technologies. Product features and characteristics can be easily copied. Affluent Consumers. DELIVERY: Delivery refers to how well the product or service is delivered to the customer. Luxury Product. otherwise it will quickly become obsolete. When a company obtains such a status among the consumers their pricing increases compared to their competitors. Many banks now provide home banking software to help customers get information and do transactions more efficiently. Consumers are now able to order and receive groceries without going to the supermarket.PRODUCT DIFFERENTIATION STATUS: Some companies gain advantage over other companies by obtaining status in the market. Globalization brings a lot of benefits but also many challenges. The main service differentiators are: ordering ease. or your target audience will switch to competitive offerings. Catering to Upper classes. They create a brand image in the market and make the consumers to feel pride for holding their products. It also has the option of net banking. eyeglasses made in one hour. cash on delivery to ease the process of ordering. accuracy.
IT has number of branches all over the country.PRODUCT DIFFERENTIATION Eg: CEMEX: CEMEX. It is the only outlets in Chennai were you can use the demo model and you can buy the product. Eg: TANISHQ: It is a branded jeweler retail outlet from TATA groups. Ease of installation becomes a true selling point. for two weeks. Main reason for the growth of the company is that you can see the demo of the mobile you are willing to buy. especially when the target market is technology novices. They will also suggest you with the various models available. McDonald’s:McDonald's requires its new franchisees to attend Hamburger University in Oak Brook. etc. It has been started recently and grown bigger because of its quality of services they provide. PRICE: Price is the main criteria which many companies choose to differentiate their product. Illinois. CEMEX is able to promise that if your load is more than 10 minutes late. has transformed the cement business by promising to deliver concrete faster than pizza. vessels shop. General Electric not only sells and installs expensive X-ray equipment in hospitals. information systems. super markets. CUSTOMER TRAINING: Customer training refers to training the customer's employees to use the vendor's equipment properly and efficiently. It is a Chennai based company. They also make the installations free. Buyers of heavy equipment expect good installation service. They carry out customer relationship programs to all their employees to train them to make interactions with customers. 8 . a giant cement company based in Mexico. By making a phone call official arrives with the product and installation is made and connection is given. to learn how to manage the franchise properly. PROFESSIONAL COURIERS: Professional courier u grown and placed itself as one of the important courier industry in India with an experience of 24 years. They take the full responsibility for the product until it is installed. Eg: UNIVER CELL: UniverCell is a mobile showroom in India. INSTALLATION: Installation refers to the work done to make a product operational in its planned location. Their main reason for the growth is their timely delivery of goods. Eg: SUN DTH: It is a DTH company from sun groups. and advice services that the seller offers to  buyers . various features available in a particular model. They also had the option for their customers to keep tracking their products. When a product is differentiated with their competitors by price then it easily reaches the customers. DON RACKS: It is a Chennai based company manufacturing steel racks for retail outlets like textile stores. so many companies opt for price differentiation to obtain an advantage over their competitors. it also gives extensive training to users of this equipment. Differentiating at this point in the consumption chain is particularly important for companies with complex products. CEMEX equips every truck with a global positioning system (GPS) so that its real-time location is known and full information is available to drivers and dispatchers. CUSTOMER CONSULTING: Customer consulting refers to data. Their main policy is to accept the full payment after installing the racks. It is achieved either by increasing the price to show the increase in quality or by reducing the price to attract the people. you get a 20 percent discount.
It may be an off-the-wall promotion offer that will make you stand out in the mind of your target audience. Currently they are running 80 retail outlets over 9 countries. ENTHIRAN(ROBOT): Enthiran is highest budget film ever released in Indian industry. Eg: JOY ALUKKAS: Joy alukkas is a Kerala based jewellery retail outlet started in 1957.shoes.They have variety of products ranging from jwellery. or over the Internet. which became very popular among the customers. Starts at 1. It was produced by SUN pictures with a budget of 132 cr.23 lacks onwards. PLACE: Place may be making the product or service more readily available through multiple locations.PRODUCT DIFFERENTIATION Eg: TATA NANO: Cheapest car in the world. For some market segments. product or service. Or they may prefer a full-service reseller instead of a self-service reseller. Main target customers are lower middle class group." Eg: VODAFONE: When Vodafone entered Indian market they faced huge competition from local players so they thought of gaining advantage by advertising it through media.textiles. It may be using a totally different advertising medium than your competitors that will better reach a specific market segment that you want to "own. Since it is a high budget heavy promotion is done regain the profit. SARAVANA STORES: It is one of the big retail outlets in tamilnadu. Main aim is to transfer the people from two wheelers to four wheelers. KFC: KFC is an American based food supplier. Star cast involved in 9 . They have got a brand image by providing goods with low price. Seeing the requirement for jewels all over the world they expanded their business internationally. longer hours of operation.electronics etc. Now more than 14000 outlets are available thought the world. As a promotion process they kept audio launch at Singapore. exclusive distribution is preferred because the upscale target customer wants uniqueness or distinctiveness (a potential segmenting dimension) in the products or services they buy. So they created advertisements using a character called “ZOO ZOO”. PROMOTION: Promotion is utilizing unique and breakthrough advertising to project the desired image of your company. When they started they were monopoly in the market. They made their goods readily available to their customers. This wide expansion is also one of the reasons for their growth. They mainly supply fried chicken.From the day they established the shop they have been famous for lowest price in the city. So they thought of making it readily available to the entire world. They provided quality with large variety of jewels to their customers.
Product differentiation attenuates rivalry for Allen Edmonds because competition for customers is minimized due to customers’ self selected segmentation Threat of Substitutes customers will find the focal firm’s products and services substantially more attractive than substitute products (i. First. the rivalry is generally lower among firms competing in a market of differentiated products.Most models have thick leather soles that conform comfortably to the foot. a firm that enjoys the strong preference of customers will usually have more bargaining power with suppliers compared to competitors that do not have differentiated products and services. Offering better customer service. some prefer Allen Edmonds and once the customer decides on a preference. there is little competition remaining between Cole Hahn and Allen Edmonds. to some extent. maybe you can differentiate your company by using a consultive approach to selling. service after the sale or making fewer mistakes than your competition can generate repeat business. customers are less inclined to even try the substitute product and the focal firm is therefore insulated from the threat of the substitute) Example: Printing digital photographs on a personal printer at homemay be viewed as a substitute for professional printing at a photoshop.Second. They even created hike for the film by releasing making videos. he tends to be very loyal to the brand. Here is a brief description of how product differentiation can neutralize the threats of the forces mentioned in the Five Forces Model along with an example of each one. PEOPLE DIFFERENTIATION: It is putting better. Finally movie made collection of about 255 cr. If the focal firm’s product differentiation strategy is effective: Threat of Entry would-be entrants face the costs of overcoming customers’ preferences for the focal firm’s products and/or services Example: Toyota was protected from Hyundai’s entry into the U. Cole Hahn is a competitor at the high end of the market.market because Hyundai had to enter at a low price and advertise heavily to attract customers away from Toyota’s wellestablished Corolla.e. Eg: SINGAPORE AIRLINES: Singapore Airlines enjoys an excellent reputation in large part because of its flight attendants. Doing business with nice people is a segmenting dimension for some customers . Example: Allen Edmonds men’s dress shoes sell for around $300.PRODUCT DIFFERENTIATION the film is itself a great promotion for the film.S. Thus. It has been said that you "get the business on quality and price. Threat of Suppliers the power of suppliers may be mitigated in two ways. built largely on the customer relations skills of its flight attendants. VALUE OF DIFFERENTIATION Neutralizing Threats.. the focal firm will likely be able to pass supplier price increases along to customers who have a preference for the focal firm’s differentiated product (customers with a preference for a differentiated product tend not to be price sensitive). Becoming a Singapore Airlines flight attendant is not easy company requirements are strict. Some people prefer Cole Hahn. segmented themselves based on their preferences for the products of the several competing firms in a market. Threat of Rivalry customers have." Perhaps it's simply being “more friendly” in customer contacts. Shops that successfully convince customers that their product is superior are insulated from the competitive pressure of the in-home substitute. If all your competitors do a feature benefit sell. Photo shops that advertise that their digital prints are superior to what can be printed at home are attempting to create a preference for their product. But Singapore Airlines has a worldwide reputation for excellent service. teasers before the movie release. 10 . you keep the business on service. Once a customer wears Allen Edmonds shoes. more qualified people in contact with the customer than your competitors.
REASONS: When the differentiated product does fulfill the demand created by its previous version. then the firm is the only firm in that market that can offer that particular product. When the existing product is doing well in the market chances for failure of the product is more. Main reason for its failure is there was actually no need of a new product as old was running good. NEW COKE 11 . There are a limited number of the cars being built. FAILURES OF PRODUCT DIFFERENTIATION: It is not each and every time when a company comes with a differentiation in their product it gets success. Lured by the success of frooti among kids it came up with yo! Frooti by changing it packaging to attract youth. EXAMPLES OF FEW PRODUCTS WHICH FAILED IN THE MARKET: FROOTI – FRESH N JUICY: Frooti is the first tetrapak fruit juice in India.But it did move as expected and the company stopped producing it. When the differentiated product does not reach the target audience. Frooti still holds a dominant position in the Rs.McDonald’s.000) that dealers are able to tack onto the price of the car.99 burger a thing of the past. Threat of Buyers the power of buyers is reduced because the focal firm enjoys a quasimonopoly. if a firm has a highly differentiated product. Initially it was targeted to kids alone. So it was treated as substitutes to cola drinks. By definition. There are many products which when differentiated got failed. Frooti over the years has carved out niche for itself in the market. thus reducing the power of buyers. The car is different from other cars and a set of customers has a strong preference for the car. So within a short span of time company got huge success. mainly between 16-21 age grouped people .300 cr tetrapak fruit juice market. Customers with a preference for the focal firm’s products and services must buy from the focal firm. When there is no demand for differentiated product. Wendy’s. These factors serve to greatly reduce the power of buyers of the Crossfire. and Burger King’s customers are more sensitive to price increases that make the $. Eg: Daimler-Chrysler’s Crossfire sports car has allowed dealers to enjoy aquasi-monopoly as evidenced by the “local market adjustment” (of about $5. Then it was accepted as healthy drink by mothers.PRODUCT DIFFERENTIATION Example: Recent spikes in the price of beef are easily passed on tocustomers of high-end steak houses like Ruth’s Chris and Spencer’s .
The $17. play music and take photos — feats achieved comfortably by a $1000 laptop sitting on a kitchen bench next to an unconnected $2000 family-sized fridge. even while you were grabbing a half-time drink from the fridge? Well . 12 . LG-WEB ENABLED REFRIGERATOR: During the soccer World Cup when endless advertising for LG's internet refrigerator offered seamless internet access.. given that the appliance could access the internet. To remain number one spot coke executives decided to cease the production of classic coke in favour of new coke.000 price tag didn't help either. the internet fridge faded swiftly from the Australian landscape. that particular future never happened.PRODUCT DIFFERENTIATION In early 1970’s coke faced tough competition from its competitors.. because rather than dragging technology into the kitchen. The public outraged and coca-cola was forced to get back to its original formula immediately.
13th edition (P 289).com. http://www.in 8.com/?s=Differentiation+Strategy%3A+How+to+Gain+Competitive+Advantage+Th rough+Product+Leadership 5.smh.aspx 7. Failures occur rarely when the customer and his needs are not read properly. http://branduniq. REFERENCES: Kotler. 2009. 2009. 2. To introduce a product every company takes huge efforts to make it a success.wikipedia. 4. 3.com/doc/87664485/Product-Differentiation. 2009. 6. Kotler. Marketing Management. Kotler. Hence if customer needs are well read and marketing mix is applied rightly success is certain. 13th edition (P 313. To break into a new path in an existing field requires strenuous efforts which is nothing but bringing a differentiation in the product which is always proved to be successful. 2009. Marketing Management.karnatakaspider. Marketing Management. www. 13th edition (P 314-316).html 1. 10.kfc.PRODUCT DIFFERENTIATION CONCLUSION: Innovation and hard work always get paid well. http://en.org/wiki/Enthiran 9.com/?s=differentiatin+strategies Kotler.au/digital-life/digital-life-news/failure-to-launch-20100120-mk8g. Marketing Management.co. 11. http://www. 13th edition (P 319).314).scribd.com/business/4335-Joy-Alukkas-Jewellery-Bangalore-M-G-Road. 13 . http://branduniq. http://www.
PRODUCT DIFFERENTIATION 14 .
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