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Week 14 - Coggle Diagram

- - - - (Grant, 2019)differentiation’ is the unique value of the product or service which a firm offers The uniqueness originates in quality (e.g. Audi cars), reliability (e.g. DHL parcel services), innovation (e.g. Apple products and services) and other characteristics making a product or a service distinct from those of rivals. Managing brands and communicating elements of uniqueness are essential in helping customers to perceive the differentiation.
      - differentiation to take place in parallel with segmentation (Grant, 2019). This can happen when differentiation involves a firm specifically focusing on a particular market segment, but does not always target a particular market
      - 1.3 Types of differentiation
        
        Tangible: observable characteristics of a product or service that are relevant to customers’ preferences and choice processes, for example size, shape, color, weight, design, material, and performance attributes such as reliability, consistency, taste, speed, durability, and safety. Tangible differentiation also extends to products and services that complement the product in question:
        delivery, after-sales services, and accessories.
        (Grant, 2016, p. 189)
        
        Examples: ingredients, unique service, unique complementsThe design of a product is a tangible element of differentiation – it is something observable and readily identifiable by customers.
        monitored by the Institute of Customer Service and compared with several other retailers, producing a ranking. It is a tangible element of differentiation of the retailer developed probably by specific training of its workforce and well-structured procedures to serve clients (e.g., handling of returns, management of complaints).
        
        Intangible differentiation relates to features of a product that are not directly observable or objective attributes of performance. The characteristics of the intangible differentiation include the social, emotional, psychological and aesthetic perceptions of customers about a product or service or the organisation which offers it.
        (elaborated from Grant, 2016, p. 189)
        
        Intangible differentiation appeals to customer motivations such as the desire for status, uniqueness, exclusivity, individuality, security and belongingness. A product or a service may meet complex customer needs, and, in this case, the intangible differentiation involves not only the product or service itself, but also the image of its producer.
        
        A product or a service may meet complex customers’ needs, and, in this case, the intangible differentiation
        Brands such as Moleskine aim to use an intangible form of differentiation based on the perception created by their products which reconnects to the value of creativity and the status of feeling like an artist
        
        2 Ways to differentiate
        Along with the two types of differentiation discussed so far, there are also two ‘ways’ to differentiate: these are separated by the demand and supply sides. Exploring differentiation strategies from the demand perspective allows us to better understand customer preferences, and the willingness to pay a premium for differentiation. By contrast, looking at differentiation strategies from the supply side helps to define the activities and the resources that firms need to be able to differentiate their product or service.
        
        What are the criteria which customers use to select a product among competing alternatives?
        What motivates customers to select and purchase a product among competing alternatives?
        The demand analysis aims to develop an understanding of customer perceptions of a product or service. It starts with market research whereby data about customer perceptions is collected. The data can be collected from existing publications (e.g. reports and articles in magazines). Alternatively, it can also be collected for the first time by using interviews and surveys with potential customers. Then, this collected data is used to perform an analysis by applying three techniques ‒ namely, multidimensional scaling, conjoint analysis and hedonic price analysis. You can read more about these in the additional resources at the end of the week.
        
        2.1 Ways to differentiate: the demand side
        
        A differentiation strategy should include the analysis of customer demand, focusing on two questions.
        
        What are customer preferences?
        
        Do customers want to pay a premium price for differentiation?
        
        The customer demand analysis cuts across two broad dimensions:
        
        customer dimension
        
        product dimension
        
        2.2 Techniques to analyse customer preferences
        
        2.3 Ways to differentiate:Grant (2019)
        
        creating uniqueness
        
        developing product (or service) integrity
        
        signalling and reputation
        
        branding.