Page 124 - DMGT408DMGT203_Marketing Management

Unit 5: Designing a Customer-driven Strategy .......

Crego and Schiffrin have proposed that customer-centred organizations should study what Notes
customers value and then prepare offerings that exceed their expectations. The organisation
must also study the different levels of customers need hierarchy in terms of company’s value
addition. For example, while buying a car the customer will have a basic need for car that can be
conveniently driven but he may expect the car to be of good design and fuel-efficient. The
customer also desires good service and ultimately will be delighted if an extended warranty,
easy financing schemes and additional free accessories are given. So the company has to choose
a combination of tangible and intangible items, experiences and outcome design to outperform
competitors and win the customers’ delight and loyalty.

5.5.2 Tools for Differentiation

The number of differentiation opportunities varies with the type of industry. The Boston
Consulting Group (BCG) has distinguished four types of industries based on the number of
available competitive advantages and their size.

Figure 5.3: The BCG Competitive Advantage Matrix
Number of approaches to Achieve Advantage
Few Many
Size of the advantage Large Small Stalemated Fragmented

Specialized
Volume

Volume Industry: When companies can gain only a few but large competitive advantage.
Profitability is correlated with company size and market share, e.g., construction equipment
industry.

Stalemated Industry: When there are few potential competitive advantages and each is small.
Profitability is unrelated to company market share, e.g., steel industry.
Fragmented Industry: Where there are many differentiating opportunities but each opportunity
gives very little competitive advantage, for example, a restaurant.
Specialized Industry: Where there are many high-payoff differentiating opportunities. For
example, specialized machine tools.

There are several variables through which a company can differentiate its market offerings such
as:
1. Product Differentiation: A product can be differentiated in many ways such as by changing
the form and by varying the features or by setting a superior performance quality or by
having a unique and superior design or by having a high degree of reliability or higher
durability or simply by having a unique style.

Example: When other stain removers or detergents stress on the power of blue or white,
Vanish Stain Remover stress on the power of pink and it comes with unique OXI action gel.

2. Service Differentiation: When the physical product cannot be easily differentiated, the key
to competitive success may lie in adding valued services and improving their quality.

LOVELY PROFESSIONAL UNIVERSITY 117