Industrial organizationmatilde machado product differentiation 4 4. Strategic management chapter 5 product differentiation. Product differentiation a source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. In 1980 porter introduced a model of generic strategies that has.
Product differentiation free download as powerpoint presentation. A companys positioning is the result of whatever the company does. Corporate social responsibility, product differentiation. A companys offer has to be distinct from those of its competitors and should fulfill the requirements of the customers of its target markets. New dosage forms, fixed drug combinations and new indications are the most exploited differentiation strategies. Marketing mix is the most tangible and the most flexible. This involves differentiating it from competitors products as well as a firms own products.
This involves detailing the characteristics that are valued by customers that make it unique. Rebranding is a marketing strategy in which a new name, term, symbol, design, or combination thereof is created for an established brand with the intention of developing a new, differentiated identity in the minds of consumers, investors, competitors, and other stakeholders product differentiation strategy pdf. Product differentiation and the strategic marketing process. It entails development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service. When utilized successfully, product differentiation creates a competitive advantage as customers view your product as superior. Differentiation strategy a firm seeking to be unique in its industry along some dimensions of its product michael porters generic strategies 3 focus or niche strategy here we focus on a particular buyer group, product segment, or geographical market. This differentiation strategy does not mean to compete with generic or lowpriced products, but rather provide customers with the best overall value out of all your product competition. Levels of product differentiation in the global market kindle edition by andonov, stanimir. Product differentiation and operations strategy in a capacitated environment. For that purpose, a differentiation strategy is chosen as the topic for the thesis. They are available to any consumers as long as the items are online.
A strategic perspective on product differentiation. Its all about customer value if you beat competitors at the customer value game, your products will win. Product differentiation monopoly perfect competition. Product differentiation is a marketing process that showcases the differences between products. Product differentiation and pricing strategy in the market for antibodies by christina gramatikova master of business administration san diego state university, 20 the market for research antibodies is extremely competitive and fragmented, thus costleadership, differentiation and niche focus strategies are very difficult to examine and. Policy monopolistic competition a market structure characterized by many firms selling differentiated products in an industry in which there is free entry and exit characteristics of monopolistic competition. The company is well known for its innovative products such as macintosh line computers, the ipod. It is also concerned with innovative software such as mac operating system, x operating. A differentiation strategy involves the firm creating a product service, which is considered unique in some aspect that the customer values because the customers needs are. Your products can be differentiated by design, by creating your brand, by your customer service and sales model, or even by your unique technologies.
Market segmentation, product differentiation, and marketing strategy. Companies with greater reliance on the service part of their business reportedly achieve better return on sales and improve their value fang et al. Product differentiation an overview sciencedirect topics. A study of product differentiation strategy in mobile devices specifically in smartphones about smartphones features article pdf available april 2018 with 6,516 reads how we measure reads. Corporate social responsibility, product differentiation strategy and export performance abstract this paper argues that corporate social responsibility csr may contribute to product differentiation in export markets and thus improve export performance. Segmentation is concerned with where a firm competes in terms of customer groups, localities and product types. A differentiation strategy involves the firm creating a productservice, which is considered unique in some aspect that the customer values because the customers needs are.
Use features like bookmarks, note taking and highlighting while reading levels of product differentiation in the global market. Although product differentiation has helped large pharmaceutical companies to replenish their drying product pipeline, it has also immensely benefited drug delivery companies that were, till now, fringe players. Competitive advantage through service differentiation by. Your ability to create a viable business growth strategy through differentiation is limited by the product itself. Levels of product differentiation in the global market. Porter assets that there are risks to the differentiation strategy. The key factor affecting prices and the relative profitability of the different market organizations is the degree of product differentiation among the downstream firms, because it affects the intensity of competition among upstream suppliers. Consider using promotions to increase valuebased differentiation. When developing your product differentiation plan, assess whether or not the following can be unique and whether or not that uniqueness is a competitive advantage. Product differentiation being the most commonly used one of these two strategic typologies spencer, joiner, and salmon, 2009. A lowcost strategy then produces competitive advantage when the firm can earn a higher profit margin than results from selling products at current market prices. Summary of strategic management and competitive advantage, chapter 5 by jay b. In many cases, firms attempting to execute lowcost strategies aim to sell a product that appeal to an average customer in a.
Product differentiation up to now we have assumed that goods, produced by different firms, are homogenous, that is perfect substitutes. The influence of product differentiation strategy on operational performance at small and medium enterprises smes in south sulawesi, indonesia article pdf available march 2016 with 1,903 reads. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. The product strategy playbook from mckinsey alum free. Background product differentiation is a positioning strategy that many firms use to distinguish their products from those of competitors. Product differentiation, petroleum, effimax, profitability, industry. Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. Author links open overlay panel sachin jayaswal a elizabeth. In a strategy of differentiation, your company needs to have a unique product perceived by the market with superiority. Pdf the influence of product differentiation strategy on. Difference between market segmentation and product differentiation market segmentation is a market oriented strategy. Market segmentation, product differentiation, and marketing strategy 7. Download it once and read it on your kindle device, pc, phones or tablets.
Differentiation looks to make a product more attractive by. Product differentiation any marketing strategy that seeks to highlight differences between products. Starbucks differentiation strategy free pdf ebooks. Apple is an american corporation that designs, manufactures and sells electronics, computer hardware and software, and personal computers. Product variation refers to any change that alters the physical characteristics of a product or the conditions under which it is sold like changing the colour of a toothpaste tube. Thanks to ecommerce, goods and services have become more mobile and digitalized.
Product differentiation and operations strategy in a. In many cases, firms attempting to execute lowcost strategies aim to sell a product that appeal to an average customer in a broad target market. Despite the pervasive use of the terms market segmentation and product differentiation, there has been and continues to be considerable misunderstanding about their meaning and use. In each extreme of the beach, there is an icecream post. We show that vertical foreclosure is not an equilibrium strategy. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Pdf a study of product differentiation strategy in. Product differentiation financial definition of product. Although the company has a multibrand approach, several brands have failed to take off in india. Product diff erentiation one of two or many ways business gains competitive advantage. Start studying strategic management chapter 5 product differentiation. Product differentiation examples of horizontal product differentiation. The authors attempt to lessen the confusion by the use of traditional and contemporary economic theory and product preference maps.
In economics and marketing, product differentiation or simply differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. Cocacola finally recognized heterogeneity in demand with its new segmentbased product differentiation strategy. In this article we will discuss about the sources and importance of product differentiation. The product roadmap the output of a product strategy is a product roadmap to create killer products.
On the other hand starbucks has implemented a product differentiation strategy. Pdf market segmentation, product differentiation, and. Figure 5 demand function modification of a market segment. Now we will relax this assumption and allow firms to produce differentiated goods. The cost differential between lowcost competitors and the differentiated firm becomes too great for differentiation to hold brand loyalty. Chapter 6 identified product differentiation, product proliferation, and cost leadership as the best strategies to use in indias highgrowth markets. It is concerned with subdividing a market and then forming a suitable marketing mix to reach the target market. Difference between market segmentation and product. The new entries come mainly from the rapidly evolving nature of strategy as reflected in the content of popular textbooks on strategy and new approaches to strategic leadership advocated in. That is, in addition to advertising the lowest price for a product, a company may differentiate. The companys brands are top heavy in the premium segment and need to use the positive benefits. Product differentiation is the process of distinguishing a product or service from others. Product differentiation matilde machado industrial organizationmatilde machado product differentiation 2 4. The concept was proposed by edward chamberlin in his 1933 the theory of monopolistic competition.