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Product Differentiation (Theory (The bases of differentiation (Product…

- - - - Exploiting the actual product
      - Product features + complexity
      - Timing of product introduction (first mover or if opportunity is there)
      - Usually the most common form of differentiation
    - - Exploiting relationships with customers
      - Production customisation
      - Consumer marketing
      - Product reputation
    - - Exploiting relationships within the firm and/or relationships with other firms
      - Product mix
      - Distribution channels, service and support
    - - Help establish what are the actual base of differentiation
      - Calculated with regressions
- - - - Repositioning to be responsive to the internet of things
      - Provide data services, reduce costs and improve performance
      - Approaching $1bn in revenues from this
      - Operational Technology (OT) was changing
    - - Risk of its hardware becoming commodities for other information based companies
      - New demand and expectation from existing customers
      - Economics of running an industrial cloud-data market place were more realistic
    - - West Coast location
      - $1bn investment, not separate company + P&L
      - Change of culture, new approach
      - Recuiting
        
        New approach internally
        
        Rewrite rules
        
        Passive candidates who fit profile
    - - Reliability + security of cloud, issues with commitment
      - Moving from old technology to new
      - Leaps of faith, swift failure and learning
      - Resolutions
        
        Start with easier firms, the rest followed
        
        Strong commitment from CEO + set right priorities
        
        Cooperation between employees
    - - Data and analytics key to differentiation, a source of competitive advantage
      - Predix (2012) was the product, real time data. Predix 2.0 in 2015
      - Combined previous resources (machines) with new to create even more powerful advantages
      - Outcomes
        
        Are now using other companies hardware as a commodity for their digital offering
        
        Open source platform allows companies to use it and tailor to their needs
        
        Transform recruitment, sales and maintenance process
        
        Risk for reward, performance based
      - Speed of scale and access to customers a key advantage
- - - - GE- Previous manufacturing rivals do not have the same capability. It firms do not have the data or customers
      - High cost to overcome customer preferences
      - Differentiation makes competitors offer more to enter and compete
    - - Threat from rivals is lessened with differentiated products
      - Customers have already segmented themselves
      - GE- As first movers GE have few direct rivals in this space. Some from Silicone Valley but they are much stronger
    - - Customers tend not to be price sensitive, hence focal firms can pass supplier price rises on
      - Customer preference from differentiation have higher bargaining power with suppliers
      - GE maintain a "full stream" service, the suppliers are the data producers now who are also their own buyers. A very dominant position
    - - The more the differentiation the more of a monopoly a firm has- quasi monopoly
      - If customers have a preference then they will only buy from that firm, limiting power of buyer
      - GE- Already have an existing customer base, tricky to convince and create new buyers but seen with firms coming in to get them only for data analysis
    - - Again by definition a highly differentiates product causes directly reduces the possibility of substitutes being avilable
      - GE- Currently the substitutes are few though some companies are having to club together to respond