Product differentiation:

Product differentiation is the incorporation of attributes, such as quality or price, into a product to encourage the intended customers to perceive it as different and desirable. Differentiation is what characteristics you are promoting to the consumer that makes your product different and/or of higher value than your competitors products offerings. Product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own products. Differentiation can be a source of competitive advantage. Although research in a niche market may result in changing a product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued by buyers .The term unique selling proposition refers to advertising to communicate a product's differentiation. The

brand differences are usually minor; they can be merely a difference in packaging or an advertising theme. The physical product need not change, but it could. Differentiation is due to buyers perceiving a difference; hence, causes of differentiation may be functional aspects of the product or service, how it is distributed and marketed, or who buys it. The major sources of product differentiation are as follows. Differences in quality which are usually accompanied by differences in price Differences in functional features or design Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing Sales promotion activities of sellers and, in particular, advertising Differences in availability (e.g. timing and location). The objective of differentiation is to develop a position that potential customers see as unique. Differentiation primarily impacts performance through reducing directness of competition: As the product becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its competition. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables). Most people would say that the implication of differentiation is the possibility of charging a price premium; however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects of competing offers; price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features.

Nestl is offering following Product lines in Pakistan This product line differentiate with others. Baby food (Cerelac), Beverages (Necscafe liquid, MILO, Buddy, Orange juice, Nestea), Breakfast cereals, Chocolate and confectionery (KitKat), Dairy Products (Milkpak, NIDO, EveryDay,), Prepared food (Maggi noodles), Bottled Water (Nestl Pure Life)

For example, Tapal private limited is offering 9 different types of brands in tea market named as DANEDAR, GULABAHAR, MEZBAN, TAPAL SAFARI, FAMILY MIX, TEZDUM, CHAINAK etc on the basis of price differentiation. There are two types of product differentiation. The first is tangible differentiation where there is a physical difference in the given product compared to all others. Some of these attributes might be taste, color, speed, storage capacity, or durability. Customers might value some physical feature of the product that is not present in any other similar product.

The second type of product differentiation is intangible. Intangible differentiation occurs based on customer perceptions. Creating a brand name is intangible differentiation. Products that seem to meet societal concerns is intangible differentiation.

Product Positioning:
Positioning is how you provide your product or service brand identification as you go to market. It is the next step after you have determined how to differentiate your product or service. Positioning generally comes next and relates to the position in the market your are targeting. i.e. low cost, middle ground or higher end price brackets. basically who in the market your product will be targeted at. (segmentation) positioning is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. Re-positioning involves changing the identity of a product, relative to the identity of competing products. De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product. The original work on positioning was consumer marketing oriented, and was not as much focused on the question relative to competitive products as on cutting through the ambient "noise" and establishing a moment of real contact with the intended recipient. In the classic Positioning is also defined as the way by which the marketers create an impression in the customers mind. Positioning is a concept in marketing which was first introduced by Jack Trout ( "Industrial Marketing" Magazine- June/1969) and then popularized by Al Ries and Jack Trout in their bestseller book "Positioning - The Battle for Your Mind." (McGraw-Hill 1981) This differs slightly from the context in which the term was first published in 1969 by Jack Trout in the paper "Positioning" is a game people play in todays me-too market place" in the publication Industrial Marketing, in which the case is made that the typical consumer is overwhelmed with unwanted advertising, and has a natural tendency to discard all information that does not immediately find a comfortable (and empty) slot in the consumers mind. It was then expanded into their ground-breaking first book, "Positioning: The Battle for Your Mind," in which they define Positioning as "an organized system for finding a window in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances" (p. 19 of 2001 paperback edition). What most will agree on is that Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive about the ongoing process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions. A company, a product or a brand must have positioning concept in order to survive in the competitive marketplace. Many individuals confuse a core idea concept with a positioning concept. A Core Idea Concept simply describes the product or service. Its purpose is merely to determine whether the idea has any interest to the end buyer. In contrast, a Positioning Concept attempts to sell the benefits of the product or service to a potential buyer. The positioning concepts focus on the rational or emotional benefits that buyer will receive or feel by using the

product/service. A successful positioning concept must be developed and qualified before a "positioning statement" can be created. The positioning concept is shared with the target audience for feedback and optimization; the Positioning Statement (as defined below) is a business person's articulation of the target audience qualified idea that would be used to develop a creative brief for an agency to develop advertising or a communications strategy. Example: free home delivery and now PIZZA HUT is the only pizza brand in Pakistan which actually serves pizza to home in real means of oven hot. BRAND POSITIONING OF UNILEVER: As we all are aware of the fact that the best positioning is the one which is based on culture, beliefs and benefits of a product. Therefore we would position our product on this line Tough on Stains, Light on Clothes and Daag Pay Jaandar, Kaproon Pay Shandaar. As we hardly have any competitor in the market, therefore our primary focus would be to develop product awareness in essence to its features in addition to its association with Unilever; a pioneer in FMCG products in Pakistani consumer markets. Huge brand equity of Unilever combined with All Out product features with regards to clean-ability, accessibility, disposability, and portability, these rational appeals would be There would be a gap of at least 3 months from product launch associated with our primary positioning and then moving onto emotional targeting of consumer base. These efforts would enhance our products equity and help us capture a relatively huge market share that would be faithful to our brand after consideration to both rational and emotional advantages of our product. PRODUCT POSITIONING OF UNILEVER: All Out Stain Remover would serve as your companion whenever you are away from home, as they would help you to keep your clothes clean at all times when you are on a move. Its attractive features are mentioned below: Disposable Portable Easy to use Highly effective on stains Removes stains within 4 seconds that too without damaging your cloth. Positioning Statement: A positioning statement is a short sentence or phrase that conveys the essence of the differentiation and positioning strategies and is developed after these have been set. This statement is used as a marketing tool by which to judge all marketing materials to see if they are in keeping with the strategies. A positioning statement for the seat belt manufacturer might be, "On-time delivery and flawless manufacturing." This statement can, though it does not have to, appear in all of the seat belt manufacturer's marketing materials. Rather, it is often used as a check to make sure all marketing materials produced convey the essence of how the product is differentiated and positioned against competitors. Product differentiation, positioning and positioning statements go together one after the other. Once you have decided how best to differentiate your product based on customer needs and

wants, the next step is to determine how to position it in the marketplace. The positioning statement then follows the positioning strategy.

Integration:
Business integration strategies are used to cross-train management and employees, reduce ineffective communication and cut supplier costs. As you analyze your company operations, think of the different ways you can integrate processes to save the company time and money. Integration helps to streamline your operations and can reduce overhead as well as personnel costs by reducing the need for additional staff and the resources they use. Types of Integration: Vertical Integration: Vertical integration is when the company owns one or more parts of the supply chain that gets the product to the end user,. Having control of the manufacturing and assembly of products but leaving the distribution and sales to others is known as backward integration. Leaving the manufacturing to others but having control of the assembly of products and distribution to the end use is known as forward integration. The advantage of vertical integration is that the company has control over quality and costs at the most important segments of its product manufacturing and distribution model. The downside of vertical integration is that it goes outside a company's core competency and can be expensive to administer. For example, a company that assembles and packages products may not be proficient as a product distribution organization. It is not what they do best. To administer the distribution, it must spend money on personnel and equipment to get the job done. Vertical integration needs to be carefully monitored and planned to be beneficial to a company. EXAMPLE: For example, Shell adopt a vertically integrated structure which means that they are active along the entire supply chain from locating deposits, drilling and extracting crude oil, transporting it around the world, refining it into petroleum products for sale to consumers. Data Integration: Data integration occurs when companies bring in new systems to replace the old ones or when companies merge and must integrate their computer networks. Data integration can be time consuming and expensive if it is not planned carefully and if the proper experts and equipment are not used. Inefficient data integration can cause communication between the different departments to become clouded and slow. It can drag down efficiency, and it can have an effect on customer service. For example, when two companies merge, the resulting company will need to integrate the two billing systems to make sure customers are still billed and accounts receivables are still charted. When data integration is done improperly, these two platforms will have difficulty communicating, and customer service will suffer. Create a comprehensive plan designed and administered by an experienced data integration firm to make sure it is done properly. Horizontal integration: which is a consolidation of many firms that handle the same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g., growing raw materials, manufacturing, transporting, marketing, and/or retailing) EXAMPLE:

For example, Unilever having Rafhan foods and Walls having Polka A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and other car companies in the 1920s, who sought to minimize costs by integrating the production of cars and car parts as exemplified in the Ford River Rouge Complex. A company tends toward forward vertical integration when it controls distribution centers and retailers where its products are sold. One of the earliest, largest and most famous examples of vertical integration was the Carnegie Steel company. The company controlled not only the mills where the steel was made, but also the mines where the iron ore was extracted, the coal mines that supplied the coal, the ships that transported the iron ore and the railroads that transported the coal to the factory, the coke ovens where the coal was cooked, etc. The company also focused heavily on developing talent internally from the bottom up, rather than importing it from other companies.[2] Later on, Carnegie even established an institute of higher learning to teach the steel processes to the next generation. . Niche market: A niche market is group of consumers or businesses that all have a very specific need or want. For example, lets say you sell fancy and fairly expensive parrot cages. Your niche market consists of people who own parrots, and particularly people who own parrots and earn an income large enough that they can afford to buy your fancy parrot cages. On the other hand, if you decide to market your fancy parrot cages to everybody in the Britain who owns a bird, you are marketing to a fairly large general market and the money you spend on marketing will be wasted because nearly all of the people who will see your marketing will NOT have a need or interest in buying an expensive parrot cage. Yes, that sound you just heard is the sound of your money being flushed down the toilet because you ignored niche marketing. Here is another example. Lets say you invent a new kind of ergonomic chair. This chair is very comfortable and really helps people who suffer from lower back pain. Now, what most inventors would do when they come to me to market their product is they would say, Everybody will want my ergonomic chair. I want to first market it nationally and then to the world. Then I ask my famous question of how much money do they have for marketing, and I am told it is a couple thousand dollars. So, my client wants me to launch a national marketing campaign for a brand new product nobody has ever heard of and I am supposed to do this with a few thousand dollars. Not going to happen. My advice for how to market this new ergonomic chair product is to market it to a very specialized niche market and there are several to choose from. The key is finding the market that most needs this product as well as can afford this product. One niche market to consider would be to market the chair to assisted living centers for the elderly. Another niche market is Chiropractors who could sell this chair directly to their patients who suffer from lower back pain. There are many other niche markets that could considered too. The key is to determine who has the most desperate need for your product or service and then focus your marketing on that niche market. If you are still confused, do this exercise. Find the people who stay up at night worrying about the problem your product or service solves and you have just found your niche market.

For example, sports channels like STAR Sports, ESPN, STAR Cricket, and Fox target a niche of sports lovers. In case of Pakistan, geo network introduced a sports channel GEO SUPER that targets the niche of sports lovers. Also, Ipad wireless keyboards is another example of targeting the ipad users. Theoretical aspect of the niche market: According to competitive advantage theory there are three main types of business strategies they are: cost leadership, differentiation and focus strategies. Of these three main types of strategy what concerns small business most is the focus strategy. Marketing niche strategy is a special Type of focus strategy:There are two types of focus strategies cost focus and differentiation focus. It is most advisable to the small business owner to concentrate on a differentiation focus strategy, since a cost focus strategy might be difficult to maintain without achieving very large volume of production. On what type of differentiation focus can the small business achieve marketing niche strategy? The following are a few examples: 1. Marketing niche strategy based on customer needs and wants are the most sustainable this usually arises when the mass-market product does not produce the item required. For example some products may not be customised to the individuals particular needs. 2. Marketing niche strategy can also be created if there are social and cultural differences within a single community that may require that changes may be required to be made to a product or service. This regularly gives rise to a niche market. 3. Marketing niche strategy is also created through exclusive rights such as brands, trademarks, patents etc For example under the main brand a niche brand can be created to serve special customer needs e.g. milk high in calcium, certain type of collectors items. 4. Marketing niche strategy is also achieved through adopting particular delivery channels.

The Product Life Cycle

A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below: Product Life Cycle Diagram

Introduction Stage: In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows: Product branding and quality level is established, and intellectual property protection such as patents and trademarks are obtained. Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs. Distribution is selective until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product. Idea Validation: The concept of idea validation includes: Assesment of market potential . Focus gropus with target customers or subject matter experts. Reseatch that may iclude SWOT analysis, market and consumer trends, competitorsetc. Design: Define initial specifications Assess design drawings Prototype Product: Match developer with the prototyping facility Produce a physical prototype or mock up Produce an initial run of the product and sell it in a test market area to determine customer acceptance Product Testing: Field testing with end users Reports of Strengths and weaknesses

Test the product in typical usage situations Growth Stage: In the growth stage, the firm seeks to build brand preference and increase market share. Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little competition. Distribution channels are added as demand increases and customers accept the product. Promotion is aimed at a broader audience. Maturity Stage: At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. Product features may be enhanced to differentiate the product from that of competitors. Pricing may be lower because of the new competition. Distribution becomes more intensive and incentives may be offered to encourage preference over competing products. Promotion emphasizes product differentiation. Decline Stage: As sales decline, the firm has several options: Maintain the product, possibly rejuvenating it by adding new features and finding new uses. Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment. Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.

Example: Product Life Cycle Of Nestle: Product life cycle consists of the aggregate demand over an extended period of time for all brands comprising a generic product category. Product life cycle is divided in four stages.Introduction: During introduction stage, sometimes called the pioneering stage, a product is launched into the market in a full-scale marketing program. Growth: In the growth stage, or market-acceptance stage, sales and profits rise, frequently at a rapid rate. Competitors enter the market, often in large numbers if the profit outlook is particularly attractive. Maturity:

During first part of the maturity stage, sales continue to increase, but at a decreasing rate. When sales level off, profits of both producers and middlemen decline. The prime reason is intense competition. Decline: In this stage sales volume decreases and losses become grater than the profits. Small competitors normally quit from the market at this stage and only large and strong remain moderately successful in decline stage. NPL is at the growth stage of the product life cycle. Large and small both kinds of competitors are entering in the market. Sales volume and market share is increasing rapidly. Last year, the sales of water were 8000 tons and now this figure is raised up to 14000 tons.