Product Differentiation

Alfred Sumit Kujur MBA 2nd SEM

What is Product Differentiation?

Product Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offering from competitor’s offering.

The number of differentiation opportunities varies with the type of industry.’The Boston Consulting Group’ has distinguished four types of industry based on the number of available competitive advantages and their size.

1.VOLUME INDUSTRY- Volume industry is the one in which companies can gain only a few,but rather large,competitive advantages.In the construction equipment industry,a company can strive for low cost position or the highly differentiated position and win big on either basis.Profitability is co-related with company size and market share.

2.Stalemated Industry– Stalemated Industry is the one in which there are few potential competitive advantages and each in small.In the steel industry,it’s hard to differentiate the product or decrease the manufacturing cost.Companies can try to hire better salesperson,entertain more lavishly,but these are small advantages.Profitability is unrelated to company market share.

3.Fragmanted Industry- Fragmanted Industry is the is the one in which companies face many opportunities for differentiation,but each opportunity for competitive advantage is small.A restaurant can differentiate in many ways but end up not gaining a large market share.Both small and large restaurants can be profitable or unprofitable.

4.Specialized Industry- Specialized industry is one in which companies face many differentiation opportunities,and each differentiation can have a high payoff.Among companies making specialized machinery for selected market segments,some small companies can be as profitable as some large companies.

A Product can be differentiated on the basis of form,features,customization,preformance quality,conformance quality,durability,reliability,repairability,style and design.

1.On the basis of form:-Many products can be differentiated in form, the size, shape or physical structure of a product .Consider the many possible forms taken by products such as aspirin. Although aspirin is essentially a commodity,it can be differentiated by dosage,size,shape,color,coating or action time.

2.On the basis of Features.

Most products can be offered with varying features that supplement their basic function.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.The Zen-Estilo Vxi model has airbags which is not provided in LX and LXi models,also while Lxi model is equipped with an electronic power steering,the Lx model does not have this feature.

3.On the basis of Customization.

Marketers can differentiate products by making them customized to an individual. Mass customization is the ability of a company to meet each customer’s requirements. Levi’s and Lands’ End were among the first clothing manufacturers to introduce custom jeans,other players have introduced mass customization into other markets.Lego has embraced mass customization from the start.

4.On the basis of Performance Quality.

Most products are established at one of four performance levels : low ,average ,high ,or superior. Performance quality is the level at which the product’s primary characteristics operate. Quality is becoming an increasingly important dimension for differentiation as companies adopt a value model and provide higher quality for less money. The manufacturer must design a performance level appropriate to the target market and competitors performance levels.

5.On the basis of Conformance Quality.

Buyers expect products to have high conformance quality ,which is the degree to which all the produced units are identical and meet the promised specifications. Suppose a Porsche 911 is designed to accelerate to 60 miles per hour within 10 seconds . If every Porsche 911 coming off the assembly line does this ,the model is said to have high conformance quality .The problem with low conformance quality is that the product will disappoint some buyers.

6.On the basis of DURABILITY.

Durability , a measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute for certain products .Duracell advertises itself as a long lasting battery and the brand commands a premium price. Nokia phones are also known for their durability. Buyers will generally pay more for vehicles and kitchen appliances that have a reputation for being long lasting.

7.On the basis of RELIABILITY.

Buyers normally will pay a premium for more reliable products. Reliability is a measure of the profitability that a product will not malfunction or fail within a specified time period.”Breakthrough Marketing: Toyota ”describes how that company has excelled at making and selling high quality , dependable automobiles.

8.On the basis of REPAIRABILITY.

Reparability is a measure of the ease of fixing a product when it malfunctions or fails. Ideal reparability would exists if users could fix the product themselves with little cost in money or time.

9.On the basis of STYLE.

Style describes the product’s look and feel to the buyer. Style has the advantage of creating distinctiveness that is difficult to copy .On the negative side ,strong style does not always mean high performance. A car may look sensational but spend a lot of time in the repair shop.

10.On the basis of DESIGN.

As competition intensifies ,design offers a potent way to differentiate and position a company’s products and services . Design is the totality of features that affect how a product looks ,feels ,and functions in terms of customer requirements.

CONCLUSION

Product differentiation is a vital tool for a company to survive in this global market, as product differentiation explores specific ways a company can effectively differentiate and position its offering in order to achieve greater competitive advantage throughout the product’s life cycle.

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