Download ppt - 1 Sustainable Competitive Advantage Product Differentiation Market Segmentation

1

Sustainable Competitive Sustainable Competitive AdvantageAdvantage

Product DifferentiationProduct DifferentiationMarket SegmentationMarket Segmentation

2

ObjectivesObjectives

INTRODUCE AND APPLY INTRODUCE AND APPLY STRATEGIC CONCEPTS OF…STRATEGIC CONCEPTS OF…

SustainableSustainable Competitive Competitive AdvantageAdvantage

Product DifferentiationProduct Differentiation

Market SegmentationMarket Segmentation

3

"This is the market group we'll be targeting""This is the market group we'll be targeting"Dave CarpenterDave Carpenter

Copyright 2002, Harvard Business ReviewCopyright 2002, Harvard Business Review

4

Sustainable Competitive AdvantageSustainable Competitive Advantage

OBJECTIVEOBJECTIVE

Deliver Benefits at Lower Deliver Benefits at Lower PricePrice - “Single - “Single

Dimension Dimension Competition” Competition” or…or…

Deliver Superior Benefits Deliver Superior Benefits -- Requires Requires Capability to “Add Capability to “Add Value”Value”

5

Sustainable Competitive AdvantageSustainable Competitive Advantage

FORMULATIONFORMULATIONExpand Consumer Perceptions of Expand Consumer Perceptions of

Product to include Attributes that will Product to include Attributes that will have Enduring Value have Enduring Value

Acquisition Price (Amount paid to Acquisition Price (Amount paid to Get Something) Get Something)

+ Value Attributes (Amount paid Value Attributes (Amount paid to to Have Something)Have Something) TOTAL PRICE TOTAL PRICE

6

Distinctive CompetenciesDistinctive Competencies

Competencies Necessary to Competencies Necessary to Create Value-Adding AttributesCreate Value-Adding Attributes

InnovativenessInnovativeness

EfficiencyEfficiency

QualityQuality

Customer ResponsivenessCustomer Responsiveness

7

Tactical Elements of Tactical Elements of Sustainable Competitive Sustainable Competitive

Advantage Advantage

Four “Ps” of Marketing MixFour “Ps” of Marketing Mix

PricePrice: Quality/Price : Quality/Price RelationshipRelationship

PlacePlace: Distribution Methodology: Distribution Methodology

PromotionPromotion: Customer : Customer Communication Communication

Product: Features and BenefitsProduct: Features and Benefits

8


Set of Meaningful Differences… Set of Meaningful Differences… Designed to Distinguish a Designed to Distinguish a Firm’s Product or Service… Firm’s Product or Service… From its CompetitorsFrom its Competitors

NoteNote: “Meaningful” equates with Long-: “Meaningful” equates with Long-Term Term Financial Value, Not Financial Value, Not an an Unsustainable Unsustainable Short-term WindfallShort-term Windfall

9


DIFFERENTIATION VARIABLESDIFFERENTIATION VARIABLES

FormForm: Size, Shape or Physical : Size, Shape or Physical StructureStructure

FeaturesFeatures: Supplement : Supplement Product’s Basic FunctionProduct’s Basic Function

QualityQuality: Level where Product’s : Level where Product’s Primary Characteristics OperatePrimary Characteristics Operate

10

Market SegmentationMarket Segmentation

IDENTIFY RELEVANT SEGMENTIDENTIFY RELEVANT SEGMENT

Mass Marketing:Mass Marketing: Mass Production, Mass Production, Distribution and Promotion of Single Distribution and Promotion of Single Product for All Buyers Product for All Buyers

Segment MarketingSegment Marketing: Large, : Large, Identifiable Group with Similar Buying Identifiable Group with Similar Buying Attitude and Habits, Purchasing Power Attitude and Habits, Purchasing Power and Preferencesand Preferences

Niche MarketingNiche Marketing: Small Market with : Small Market with Un-served (not under-served) NeedsUn-served (not under-served) Needs

11

Market SegmentationMarket SegmentationIDENTIFY COMMERCIALLY IDENTIFY COMMERCIALLY VIABLE GROUP WITHIN MARKET VIABLE GROUP WITHIN MARKET SEGMENT WITH SIMILAR…SEGMENT WITH SIMILAR…

Tastes and PreferencesTastes and Preferences

Purchasing Power (Economics)Purchasing Power (Economics)

Geographical Location, Age, Geographical Location, Age, Gender (Demographics) Gender (Demographics)

Purchasing Patterns and Habits Purchasing Patterns and Habits (Sociological) (Sociological)

12

TOOLS: Perceptual MappingTOOLS: Perceptual Mapping

VISUAL REPRESENTATION OF VISUAL REPRESENTATION OF MARKET SEGMENT AND MARKET SEGMENT AND CUSTOMER PERCEPTIONSCUSTOMER PERCEPTIONS

Identify Meaningful Product Identify Meaningful Product AttributesAttributes

Compare on X- and Y-Axis Compare on X- and Y-Axis

Analyze Key Competitive Analyze Key Competitive CharacteristicsCharacteristics

13

Perceptual MapPerceptual Map

Chocolate

Crunch

Hershey’sw/ Almonds

Hershey’sMilk Chocolate

NestléCrunch

KitKat

Opportunity?

14

TOOLS: SWOT AnalysisTOOLS: SWOT Analysis

STRATEGIC DEVICE FOR IDENTIFYING STRATEGIC DEVICE FOR IDENTIFYING AND ANALYZING:AND ANALYZING:

Strengths: Internal Capabilities to Strengths: Internal Capabilities to Expand Product Market ShareExpand Product Market Share

Weaknesses: Vulnerabilities in Product Weaknesses: Vulnerabilities in Product Mix or LineMix or Line

Opportunities: External Market or Opportunities: External Market or Competitor ConditionsCompetitor Conditions

Threats: External Macroeconomic or Threats: External Macroeconomic or Industry Factors Industry Factors

15

TOOLS: SWOT AnalysisTOOLS: SWOT Analysis

StrengthsStrengths WeaknessesWeaknesses

Opportunities Opportunities Strategic Implications of Strategic Implications of

Strengths and Weaknesses Strengths and Weaknesses versus Opportunities and versus Opportunities and

ThreatsThreatsThreatsThreats