Strategic Managment - Differenciation

How is product differentiation defined?

Making a product or service stand out from others so that customers see it as special or better in some way.

There are generally three main types of product differentiation:

1. Product-Based Differentiation– like adding new features, better quality, or a unique design.

2. Service-Based Differentiation – like offering faster delivery or better customer support.

3. Brand-Based Differentiation– so people trust or feel good about the product, even if it's similar to others.

What is the key idea behind product differentiation?

Perceived value is more important than actual features.

What are the five common types of product differentiation?

1. Brand Differentiation – Harley Davidson
   

2. Design Differentiation – Titan Watches with Diamonds
   

3. Positioning Differentiation – Domino’s “30-minute delivery”
   

4. Technology Differentiation – Apple
   

5. Innovation Differentiation – 3M

What are six bases for product differentiation?

Product features – Porsche
Product complexity – Mont Blanc vs. BIC
Location – Disneyland
Customization – SAP, EasyJet
Reputation – Pokémon
Marketing – Mountain Dew

What does product differentiation allow firms to do?

Charge higher prices and reduce the impact of competition.

Which competitive forces does differentiation protect against?

• Rivalry

• Substitutes

• Supplier power

• Buyer power

• New entrants

What’s the difference between temporary and sustained competitive advantage?

Temporary: Easy to copy
Sustained: Hard to copy

Can a company combine cost leadership and differentiation?

Yes, but only if its structure supports both.

What are the two axes of the resource appraisal matrix?

Strategic Importance (X-axis), Relative Strength (Y-axis)

What is a Key Strength?

A capability that is both strategically important and relatively strong compared to competitors.

What is a Key Weakness?

A capability that is strategically important but relatively weak compared to competitors.

What is a Superfluous Strength?

A capability that is strong but not strategically important.

What is the Zone of Irrelevance?

A capability that is neither strong nor strategically important.

How does VW use its strengths strategically?

It uses engineering for tech and safety differentiation, and political ties to expand in emerging markets.

What is the key lesson about using strengths?

Strengths only help if they are used in strategy.

What are two ways to manage key weaknesses?

Fix them internally or outsource them.

What should firms do with superfluous strengths?

Reduce investment or redirect them to more important areas.

What strategic advantage does strong branding provide?

Emotional loyalty, premium pricing, and protection from imitation.

How does design differentiation go beyond functionality?

It adds style, prestige, and self-expression to the product.

What are the key elements used in design differentiation?

Visual appeal, craftsmanship, and symbolic value.

What type of customers are targeted through design differentiation?

Customers who want their products to reflect status, beauty, or personality.

What is Domino’s key differentiator in its positioning strategy?

“30-minute delivery” – fast and reliable service.

What makes Apple’s technology differentiation hard to copy?

They control their entire platform and continuously innovate.

What are examples of Apple’s ecosystem components?

MacBook, iPhone, iCloud.

What is the key to innovation differentiation ?

Being first-to-market and solving problems customers didn’t know they had.

What is the true power of innovation in strategy?

Not just invention, but commercializing useful ideas consistently.