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Strategic Management

Project on

Differentiation Strategy

Done by:

Ranjeet Ramaswamy Iyer

wdp420059@gmail.com
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.
• 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.

• 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 strategies include targeting, positioning and
segmentation.
• 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 kick-


start.
 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 scribd.

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.