1. Differentiation Strategies & value chain
Group 2
Saurabh Gupta, 08
Bhabanishankar Maiti, 19
Mangesh Narkar, 29
Pulkit singhi, 50

2. Generic competitive strategies
Management game plan to competing successfully and securing competitive advantage over rivals
Objective
Defeat the rival companies in doing job of satisfying needs and preferences of customers better than rivals

3. 5 Generic Strategies

4. Broad Differentiation
Differentiate companies product offering from rivals that will appeal broad spectrum of buyer
Focused Differentiation
Narrow buyer segment
Offering niche members customized attributes that meets buyers test and requirements better than rival product
Integrated cost leadership and Differentiation (Best cost)
Giving customer more value for their money
Good to excellent products attributes at lower cost than rivals

5. (broad) Differentiation
Unique in ways that are valuable for wide range of customer
Almost anything can be base of differentiation
Tangible factors (product , location etc)
Intangible factors (Reputation, cause, an ideal)
Three basis of differentiation
Product attributes
Firm customer relationship
Firm linkage

6. Differentiation through Product attributes
Unique test
Multiple features
Wide selection
Superior service
Engineering design and performance
Differentiation through Firm-customer relationship
Customization
Image reputation
Consumer marketing
Differentiation through Firm linkage
Distribution channel
Service and support

7. Ways to implement differentiation strategy
Incorporate product attributes and user features that lower buyer overall cost.
Providing just in time deliveries
Cell phone for rural economic market with longer battery period, solar battery, inbuilt flash light, mosquito repellant
Chevrolet promise
Incorporate features that raise product performance
Provide buyer greater reliability, ease of use, convenience, durability – Johnson & Johnson baby product
Product or service safer, cleaner - Singapore airlines

8. Ways to implement differentiation strategy
Incorporate features that enhance buyer satisfaction in non economic or intangible ways
Image, prestige, status superior craftsmanship,
Rolls Royce, Gucci, Harley Davidson
Deliver value by means of Differentiating on the basis of competencies and competitive capabilities that rivals don’t have or can’t match
fox news, cnn
Japanese auto makers
Microsoft having better capability than Avon

9. When differentiation strategy works best
Buyer needs and uses of products are diverse
Bigger window of opportunity to do things differently
Few rivals following similar differentiation approach
Differentiator encounter less head to head rivalry
Many rivals – strategy overcrowding – weak brand differentiation

10. When differentiation strategy works best
Technological change is fast paced
Cell phone
Mp3 players – apple
Availability of many ways to differentiate product and service and availability of many buyers to perceived these differences as having value
Unless different buyer have distinguishingly different preferences for certain features and product attribute profitable differentiation opportunities are restricted .

11. Pitfalls of differentiating Strategies
Differentiations strategies can fail for any of several reasons
Competitors are able to quickly copy most of appealing product attributes
Buyers may not see sufficient value in appealing attributes of companies product
Overspending on efforts to differentiate affects company profit
Over differentiating – product quality or service level exceeds buyers’ need
Charge to high price premium

12. Best Cost strategy Concept – competitive advantage through….
Lower cost than rivals for similar product
Incorporation of upscale product attributes
putting company in position to under price rivals whose products have similar upscale attributes
Blend of low cost advantage and differentiation advantage
Appeals broad market as a whole and narrow niche market .

13. Best cost strategy
For successful implementation firm must be able to ..
Incorporate attractive features at lower cost than rivals whose product have similar features
Manufacture good to excellent quality product at lower cost than rivals similar quality product
Develop the product that delivers good to excellent performance at lower cost than rivals whose products also known for good to excellent performance
Provide attractive customer service at lower cost than rival who provide similar services

14. When Best cost strategy works best
Market where buyer diversity makes the product differentiation the norm and there many buyers are also sensitive to price and value

15. Toyota Best Cost strategy for Lexus Line
Introduction
Toyota Widely regarded as low cost producer
Despite its emphasis on product quality Toyota achieved low cost leadership through efficient supply chain management and low cost assembly capabilities
Models are positioned in low to medium end price spectrum
High production volume are conduce to low unit cost.
Toyota decided to introduced new Lexus model to compete in luxury car segment it employed integrated strategy .

16. Toyota took following steps in crafting and implementing its Best cost strategy.
Design an array of high performance characteristics and upscale features in to Lexus model so as to make comparable in performance and luxury to other high end models such as Mercedes, Audi, Jaguar, Cadillac.
Transferring it’s capability in making high quality Toyota models in low cost to making premium quality Lexus model at cost below other luxury car market
Toyota supply chain capabilities and low cost assembly know how allowed it to incorporate high tech performance features and upscale quality at substantially less cost compare to Mercedes and BMW models

17. 4. Toyota manage to keep the price of attractively equipped Lexus car low enough to draw price conscious buyers away from Mercedes and BMW.
5. Establishing a new network of Lexus dealers, separate from Toyota dealers, dedicated to providing a level of personalized, attentive customer service unmatched in the industry.

18. Case study conclusion
Lexus models consistently ranked first in widely watch J D Power & associate quality survey.
Lexus models are typically several thousand below Mercedes and BMW models clear signal that Toyota succeeded in implementing integrated strategy.
Price
Lexus RX 330, midsize SUV
Mercedes M-class SUV
BMW X5 SUV
$ $ 45000
$ $ 65000
$ $ 70000

19. Big risk of best cost provider strategy
Possibility of getting squeezed between low cost provider and high end differentiation strategy.
Low cost providers may siphoned away with the appeal of low cost despite their less appealing product attributes
High end providers may be able to steal customer away with appeal of better product attribute even though their product carry high price tag

20. Focus Differentiation
Concentrated attention on narrow piece of total market
Target segment or niche can be Geographical uniqueness – community coffee
Specialized requirement in using the product
Special product attribute the appeal niche members
To implement a focus strategy, firms must be able to:
Complete various primary and support activities in a competitively superior manner, in order to develop and sustain a competitive advantage and earn above-average returns

21. Factors That Drive Focused Strategies
The target niche is big enough to be profitable and offers good growth potential
Large firms may overlook small niches.
The industry has many different segments there by allowing focuser to pick competitively attractive niche
A firm may lack the resources needed to compete in the broader market
A firm is able to serve a narrow market segment more effectively than can its larger industry-wide competitors
Focusing allows the firm to direct its resources to certain value chain activities to build competitive advantage
The focuser has reservoir of customer goodwill and loyalty that it can draw on to help to keep away ambitious challengers

22. Competitive Risks of Focus Strategies
A focusing firm may be “outfocused” by its competitors
A large competitor may set its sights on a firm’s niche market
Customer preferences in niche market may change to more closely resemble those of the broader market

23. Value-Creating Activities Associated with the Differentiation Strategy

24. Summary Broad Differentiation Focus Differentiation Best Cost provider
Broad Differentiation
Focus Differentiation
Best Cost provider
Strategic target
a broad cross-section of the market
Narrow market niche where buyer needs and preferences are distinctively different
Value conscious buyer
Basis of competitive advantage
ability to offer buyers something attractively different from competitor
Attributes that appeal specifically to niche members
ability to give customers more value for money
Product line
Many product variation, wide selection, emphasis on differentiating features
Features and attributes are tailored to the test and requirement of niche members
Items with appealing attributes & upscale features
production strategy
build in whatever features buyer are willing to pay for , strive for product superiority
custom made product that match the test and requirement of niche members
Build in upscale features and appealing attributes at lower cost than rivals
marketing strategy
tout differentiating features , charge premium price to cover extra cost
communicate how product offering does the best job of meeting niche buyer expectation
tout delivery of best value , either deliver comparable features at lower price than rivals or match rivals on prices and provide better features
Key to sustaining strategy
Stress consistent innovation to stay ahead of imitative competitors, concentrate on few differentiating features
stay committed to serving niche better than rivals, don't blur the firm image by entering other market segment, or adding other product to widen market appeal
unique expertise in simultaneous managing cost down while incorporating upscale features and attributes

25. Thank you