1. Sustainable Competitive Advantage
Product Differentiation
Market Segmentation

2. INTRODUCE AND APPLY STRATEGIC CONCEPTS OF…
Objectives
INTRODUCE AND APPLY STRATEGIC CONCEPTS OF…
Sustainable Competitive Advantage
Product Differentiation
Market Segmentation

3. "This is the market group we'll be targeting" Dave Carpenter Copyright 2002, Harvard Business Review

4. Sustainable Competitive Advantage
OBJECTIVE
Deliver Benefits at Lower Price - “Single Dimension Competition” or…
Deliver Superior Benefits - Requires Capability to “Add Value”

5. Sustainable Competitive Advantage
FORMULATION
Expand Consumer Perceptions of Product to include Attributes that will have Enduring Value
Acquisition Price (Amount paid to Get Something)
Value Attributes (Amount paid to Have Something)
TOTAL PRICE

6. Distinctive Competencies
Competencies Necessary to Create Value-Adding Attributes
Innovativeness
Efficiency
Quality
Customer Responsiveness

7. Tactical Elements of Sustainable Competitive Advantage
Four “Ps” of Marketing Mix
Price: Quality/Price Relationship
Place: Distribution Methodology
Promotion: Customer Communication
Product: Features and Benefits

8. Product Differentiation
Set of Meaningful Differences… Designed to Distinguish a Firm’s Product or Service… From its Competitors
Note: “Meaningful” equates with Long-Term Financial Value, Not an Unsustainable Short-term Windfall

9. Product Differentiation
DIFFERENTIATION VARIABLES
Form: Size, Shape or Physical Structure
Features: Supplement Product’s Basic Function
Quality: Level where Product’s Primary Characteristics Operate

10. IDENTIFY RELEVANT SEGMENT
Market Segmentation
IDENTIFY RELEVANT SEGMENT
Mass Marketing: Mass Production, Distribution and Promotion of Single Product for All Buyers
Segment Marketing: Large, Identifiable Group with Similar Buying Attitude and Habits, Purchasing Power and Preferences
Niche Marketing: Small Market with Un-served (not under-served) Needs

11. IDENTIFY COMMERCIALLY VIABLE GROUP WITHIN MARKET SEGMENT WITH SIMILAR…
Market Segmentation
IDENTIFY COMMERCIALLY VIABLE GROUP WITHIN MARKET SEGMENT WITH SIMILAR…
Tastes and Preferences
Purchasing Power (Economics)
Geographical Location, Age, Gender (Demographics)
Purchasing Patterns and Habits (Sociological)

12. TOOLS: Perceptual Mapping
VISUAL REPRESENTATION OF MARKET SEGMENT AND CUSTOMER PERCEPTIONS
Identify Meaningful Product Attributes
Compare on X- and Y-Axis
Analyze Key Competitive Characteristics

13. Perceptual Map Crunch Chocolate Opportunity? KitKat Nestlé Crunch
Hershey’s
w/ Almonds
Hershey’s
Milk Chocolate

14. STRATEGIC DEVICE FOR IDENTIFYING AND ANALYZING:
TOOLS: SWOT Analysis
STRATEGIC DEVICE FOR IDENTIFYING AND ANALYZING:
Strengths: Internal Capabilities to Expand Product Market Share
Weaknesses: Vulnerabilities in Product Mix or Line
Opportunities: External Market or Competitor Conditions
Threats: External Macroeconomic or Industry Factors

15. TOOLS: SWOT Analysis INTERNAL EXTERNAL Strengths Weaknesses
Opportunities
Strategic Implications of Strengths and Weaknesses versus Opportunities and Threats
Threats
INTERNAL
EXTERNAL