Differentiation Strategy

Strategic Management Project on

Differentiation Strategy

Done by:

Ranjeet Ramaswamy Iyer

[email protected]

Differentiation Strategy • Differentiation is aimed at the broad market that involves the creation of a product or services that is perceived throughout its industry as unique.

• The company or business unit may then charge a premium for its product.

• This specialty can be associated with design, brand image, technology, features, dealers, network, or customer service.

• Differentiation is a viable strategy for earning above average returns in a specific business because the resulting brand loyalty lowers customers' sensitivity to price.

• Increased costs can usually be passed on to the buyers. Buyer loyalty can also serve as an entry barrier.

• New firms must develop their own distinctive competence to differentiate their products in some way in order to compete successfully.

• Examples of the successful use of a differentiation strategy are Hero Honda, Asian Paints, HLL, Nike athletic shoes, Perstorp BioProducts, Apple Computer, and Mercedes-Benz automobiles.

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Research does suggest that a differentiation strategy is more likely to generate higher profits than is a low cost strategy because differentiation creates a better entry barrier.

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Market differentiation is the way in which the marketer makes his business or product appear more desirable to the customer than all other similar ones.

• The following are a few commonly seen features: 1. A product that nobody can get elsewhere.

2. Closer or more convenient access to a desired product

3. Better service.

4. Better price.

5. Better value.

• Differentiation strategy may be related to a product or service or to any marketing activity. But here the emphasis is on product differentiation. • Product differentiation: It involves “developing and promoting an awareness of difference between the advertisers’ product and other products”.

• When this is used, it enables a company to come out of price competition so that it may compete on a non-price basis, viz., that its product is different from or even better than the competitors’ products. • It is possible to differentiate on quality, design, brand or packaging. This works well in the case of standardized products like soaps, cigarettes etc. It is an attribution based differentiated strategy. • Differentiated segmentation. •

strategies

include

targeting,

positioning

and

A fairness cream for Males [Emami] can be taken as an example. It is a beauty product in the personal care category. The brand is targeted at males in the age group of 20-35 and is positioned as a ‘male fairness cream’, which can bring fairness to the male skin. This is a clear case where all the three strategies of targeting, positioning and segmenting are successfully involved and utilized.

• Titan watches, Priya pickles, Raymond’s clothing, Wills cigarettes are some of the classic examples of differentiation based on positioning. These products have been positioned in the minds of customers as being uniquely different from others, owing to their intense focus on their life style achieved through presentations of visual imagery. It is thus evident that in this era of hyper competition, differentiation is the panacea for survival and the key to successful marketing.

• Targeting is the exact focusing of the product on test units, i.e., for whom the product is more suitable. • Positioning is all about a customers’ perception about the brand as being different from other brands of specific dimensions including product attributes. • It being a customer driven strategy, it is related to consumers’ perception, where as product differentiation is related to the way the marketer differentiates the offer based on certain product attributes. Therefore product differentiation is an attribution based differentiated strategy, while positioning is a customer led perceived differentiation created by the marketer through its marketing program.

• It is all about how the marketer persuades the prospective customer to perceive the greatest possible differentiation. So the marketer must be smart enough in differentiating his product on various attributes so as to reach the customer in time. • Non price competition is one among the few differentiating strategies which has tapped customers’ acceptance in a larger way. In this strategy price is kept constant and differentiation can be created through various novel promotional ways like ‘buy one get one/two, 25% extra for the same price, free samples etc… The launching of some of the FMCG products like tooth Pastes, Talcum powders, Shampoos, Beverages, Soft drinks, Toilet soaps will stand testimony to this strategy. • Various examples of differentiation is listed under:

o Differentiation through multiple sources: 

Eureka Forbes through its ‘personal selling’ concept through which it reached the customers.

 Reva through its electric car.  Garden Silk through design.  IBM through its technology and services.  Hero Honda Motors captured the market for motorcycles in India, by offering an affordable 4-stroke, 100 CC motorcycles, which was extremely fuel efficient.

o Differentiation based on ingredients:



HUL through Close-up in which it added glycerin stating that it coats the teeth white while other use calcium carbonate.

 TTK group launched its Prestige range of non-stick frying pans.  Balsara’s Promise toothpaste with clove oil which acts as n herbal remedy for tooth and gum pains.  Nerolac with its latest lead-free paints stating that inhaling ‘lead’ is not good for health.

o Differentiation through additional features:  Godrej with its 300 ltrs and 390 ltrs refrigerators targeting high lifestyle people.  Aristrocrat suitcases with ‘wheels’ which was a unique convenience to users.  Dunlop’s Olympus car tyres studied various cars and designed tyres separately for each car. For e.g. Extra rubber to take care of the weight of Ambassador, special wheel for Maruti for front wheel driving.

o Differentiation by packaging:  Frooti in tetra-pack.  Brylcreem in handy tube.  Hit for cockroaches with sleek nozzle for hidden areas.

o Differentiation by design:  Kinetic Honda with electronic ignition, to avoid kickstart.  Titan watches with gold studded gem, diamonds, and precious metals.

o Differentiation by positioning: 

Dominos Pizza with their ‘30 minutes home delivery or free’ concept.

 Maggi with their ‘2 mins noodles’ 

Dove is positioned as moisturizing beauty bar which is neutral i.e. neither too acidic nor too alkaline.

Bibiliography:

1. Informations through various presentations in pdfcoke.

2. Through many books, newspapers.

I’m grateful to all those whose project I have referred to make this topic more interesting in a simplified manner and straight forward manner. If I have left out any names for giving credit, please pardon me.