The introduction of unique, distinctive characteristics or features to a product
What is Product Differentiation?
Product differentiation is the introduction of unique, distinctive characteristics or features to a product to ensure a USP (unique selling proposition) of the product. The differentiation enables a company to achieve a competitive advantage over other companies offering similar product substitutes. It is an essential marketing process that is of vital economic importance to a business.
Product differentiation serves as a catalyst in a consumer’s purchase decision-making process. It basically sets one product apart from the rest and serves as the deciding factor in purchase decisions.
Breaking Down Product Differentiation
The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. The different factors through which the process is implemented include:
1. Price differentiation
Products in the market are differentiated solely on the price factor. This establishes a price hierarchy for a particular product from lower to higher costs.
2. Non-price differentiation
Products, in this case, are differentiated by form, shape, feature, function, color, customization, durability, quality, services, etc.
Types of Product Differentiation
1. vertical differentiation.
Vertical differentiation focuses on differentiation in a product based on quality. In any market, a quality hierarchy exists for a particular type of product that ranks products of one kind from a position of low quality to the highest quality product.
Essentially, vertical differentiation is aimed at differentiating the product in order to move up the hierarchy toward higher quality and use the trait as a competitive advantage to sell the product.
2. Horizontal Differentiation
Horizontal differentiation is when products are differentiated according to a specific feature. The differentiation can be about colors, packaging, shapes, flavors, etc.
Advantages of Product Differentiation
1. provides economic benefits.
Product differentiation is economically advantageous to a company. It provides a reason for consumers as to why their product is worth investing in, as opposed to all the other substitute products available in the market. A successful differentiation campaign boosts sales for a company by a significant margin and gives it a competitive advantage in the market as to why they deserve a consumer’s investment more than the others.
2. Helps achieve a higher price point
In addition, product differentiation helps a company operate at a higher price point just because of that additional benefit or feature introduced in a product. When that one distinct feature or difference introduced in the product makes it better than its substitutes, consumers more often than not perceive it to be worth the increased price.
3. Promotes brand loyalty
Another implication of product differentiation is that very often, it brings brand loyalty into the picture. When a company efficiently differentiates its products, and a few essential products stand out, it usually brings out brand loyalty on the consumer’s part.
This is because once a consumer is satisfied with a few products of a brand, they tend to just start buying other products from that one particular brand. The consumer believes that the company’s other products are as good and stand out just as much as the ones they use.
Case Study: Blackberry in the 2000s
In the early 2000s, Canadian company Blackberry Ltd. stood out exceptionally through product differentiation. Blackberry was the only smartphone brand that offered an in-device instant messaging feature called BBM. It helped the company stand out significantly in the market.
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13 Amazing Differentiation Strategy Examples (in 2022)
While many companies focus on cost leadership as a competitive advantage strategy, others’ main goal is to stand out from the crowd with something unique that differentiates them from the rest. And of course, this approach isn’t precisely easy to undertake with success, especially when we are talking about highly competitive industries.
For this reason, today I will show you some differentiation strategy examples that will hopefully inspire you on your own journey to gaining a sustainable competitive advantage!
What is a differentiation strategy?
As opposed to cost leadership, the differentiation strategy allows companies to take on an innovative approach for their products, and charge premium prices for it. For example, Starbucks goes beyond selling coffee by providing a unique coffee experience in their coffeehouses.
Building a successful differentiation strategy usually requires good research and development, innovation, but most importantly – having an in-depth understanding of what the customer really needs and desires.
But of course, I believe that the best way to understand this concept is to take a look at some practical cases. So, without further ado, let’s see some of the most brilliant differentiation strategy examples:
When we talk about differentiation, Apple is one of the brands that will most often come to our mind. Started in 1976 by Steve Jobs, Ronald Wayne, and Steve Wozniak, the company has had an unquestionable impact on the consumer electronics and computer software industry.
In fact, nowadays it is considered one of the Big Tech companies, also known as the Big Five – among Amazon, Google, Facebook and Microsoft.
Ever since its creation, Apple has been well-known for its innovative products, including their Macintosh line computers, the iPod, iPad, and of course – the iPhone. And it has successfully managed to distinguish them from their competitors through a multi-layered approach:
The iconic, elegant and minimalist design on all Apple’s products is one of the first things that makes the brand stand out from its competitors. Their products not only display a different visual style which is aesthetically pleasing, but is also well-thought to simplify the use of each device.
Differentiation strategy examples: Apple
This elegance and simplicity is highly valued by customers. And they are willing to pay a premium price for it.
Another factor, which of course is considered a part of the product, is Apple’s unique operating system. However, I wanted to differentiate it in another section because Apple could have stopped at just having a beautiful and visual product. Which, in some cases and depending on the product, can be enough for a company to differentiate itself.
But they didn’t! Apple also wanted to differentiate their products with an operating system that further enhanced user experience, bridging the gaps that were unseen or unaddressed by competitores.
The company’s pricing strategy is another factor that takes part in their differentiation strategy.
The prices for most of their products are significantly higher than those of competitors, set with the idea of being proportionate to the level of quality – with Apple still maintaining high profit margins.
2. Tiffany & Co
Next on our list of differentiation strategy examples is Tiffany & Co.
The jewlery company, which you may also know from Audrey Hepburn’s iconic movie “Breakfast at Tiffany’s”, is famous for its stunning hand-crafted and timeless designs. Founded in 1837, Tiffany & Co has managed to built a strong brand name that allows them to target a very particular niche target market.
And that is, wealthy and affluent customers who appreciate the high quality products and the outstanding reputation of the brand.
Differentiation strategy examples: Tiffany & Co
In the same way that we saw with Apple, Tiffany & Co aims to differentiate its products with stunning, unique, and hand-crafted designs that undoubtedly stand out from the crowd .
Additionally, the iconic blue boxes in which the jewlery is carefully placed have become a trademark logo of the company. All this attention to design and detail shows very well how the brand is aiming to position as distinctive and exclusive on the market.
Although establishing a reputable brand name takes a long time, Tiffany & Co has really put the extra effort in positioning itself as an innovative company with timeless designs . Over the years, they have built a solid brand image that helps with their differentiation strategy.
And last but not least, it is worth mentioning another element that differentiates Tiffany from their competitors: the high prices for their jewlery.
Similar to Apple, the company wanted to match the prices with the high quality and exclusivity of their products. However, they went further by setting up even higher prices and profit margins to make sure that they only reach their niche, affluent audience.
With a single piece of jewlery costing thousands of dollars, it is not difficult to see how:
While airlines like Ryan Air and Wizz Air have chosen the approach of cost leadership as a competitive advantage strategy , other companies within the industry are looking for ways to differentiate themselves. For this reason, next on our list of differentiation strategy examples is Emirates .
Differentiation strategy examples: Emirates
Based in Dubai, Emirates is the state-owned airline and flag carrier of the United Arab Emirates. The company operates about 3,600 flights per week to more than 150 cities in 80 countries.
However, what really differentiates them is not the number of flights or countries they go to. Let’s see what makes Emirates stand out:
Exceptional customer service
Narrow spaces between the seats, no entertainment and a limited variety of foods and drinks… Emirates can’t relate! The company provides exceptional service and commodities to their passengers, taking great care of them throughout their whole flight.
Even Economy class, the cheapest one from their offerings, includes:
- High-quality, regionally inspired dishes from the flight destination;
- In-flight digital entertainment with over 4,500 movies to choose from;
- Excellent customer service and catering;
- Complimentary beverages;
- On-board Wifi;
You get the point! As for First Class, all I need to say is that Emirates was awarded the airline with the Best First Class for 2020:
An important part of Emirates’ differentiation strategy is the fact that they invest a lot of money in the latest technologies available on the market.
From using advanced navigation technology for their airplanes to ensuring the best entertainment on board, their dedication to innovation is a fundamental part of the customer-centric experience that they aim to provide.
In my previous blog post Hermes Marketing: Why People Spend $300,000 on a Purse , I discussed the unique Marketing strategy of the French brand Hermés, and how they managed to convert their iconic bags into actual investment tools.
For this reason, next on our list of differentiation strategy examples is precisely this brand. Their brilliant approach to differentiation, combined with powerful storytelling, is what makes people spend thousands of dollars on a purse…and keep coming back for more.
But let’s see more on that:
The most important aspect of the company’s differentiation strategy is exclusivity . Of course, exclusivity is a very generic word, and we could say that practically any high-end brand tries to achieve it as a part of their unique selling proposition.
However, Hermés took this one step further with their famous Birkin bags.
Differentiation strategy examples: Hermés
To position them as exclusive and beyond, Hermés took the following approach:
- Difficult access – you can’t simply enter a Hermés shop and purchase a Birkin bag. You need to have a history with the brand, having spent a good amount of money on it over a consistent period of time. In many cases, you will have to wait to be invited for the opportunity of purchasing a Birkin.
- Waiting list – if you want a Birkin bag, you will not only have to wait for your invitation to purchase. You will also have to wait for your Birkin bag to arrive, which could take weeks and even months!
- Lack of choice – now, if waiting for a few months wasn’t enough, you will most probably not have a saying in what your bag will look like. They will offer you a model, and you can take it or leave it.
- Scarcity – Hermés Birkin bags are handcrafted, and the lack of massive production processes, combined with the high quality of the products, means that there will be not many bags like yours.
For example, there are less than 10 bags from the famous albino crocodile skin model in the whole world! And the most expensive one was sold at an auction for the incredible 380 thousands dollars!
As I just mentioned, the Birkin bags, but also all the brand’s purses and handbangs, are hand-crafted . In fact, they are all handmade by one artesan in a process that can take up to 48 working hours.
Despite the existing mass production tools and automatization processes, the company is still using traditional processes. Which is highly valued by their customers as well!
Next on our list of differentiation strategy examples is Tesla .
With a mission to accelerate the world to sustainable energy, the American electric vehicle company initially entered the market with the idea of targeting affluent customers in the luxury sector. Then, move into larger markets at lower price points.
Differentiation strategy examples: Tesla
But what makes the company stand out and differentiate from its competitors?
The first and most important point is product innovation . Tesla entered the automotive industry offering market-disruptive electric vehicles that people absolutely loved.
Their cars are not only environmentally friendly and extremely high tech, but also have a very distinctive and beautiful aesthetic. Over the years, many companies have tried building electric or hybrid cars, but none of them with the detail and elegant design that Tesla achieved.
But these are not the only aspects of Tesla’s product differentiation. Some others include:
- The possibility to customize your car;
- Regular software updates;
- Solar panels and supercharging compatibility;
- And self-driving features.
From the tech functionalities to the materials the cars are built it, it is no surprise that Tesla really managed to differentiate from competitors.
Another point of differentiation for Tesla is their Marketing strategy…or the lack of one.
According to Forbes , the company focuses more on referrals and word of mouth advertising rather than traditional TV advertisements and pushing their products onto the target audience.
And of course, let’s not forget that its CEO Elon Musk is a walking advertisement himself. From his iconic interviews to his even more iconic Tweets (and more than 30 million followers), he is constantly attracting the attention to both himself and Tesla.
And constantly creating controversy around himself as well!
6. Happy Socks
In this section, we are quickly moving from electric vehicles to colourful socks for our next company on the list of differentiation strategy examples: Happy Socks.
Differentiation strategy examples: Happy Socks
Happy Socks is a Swedish manufacturer and retailer of socks, underwear and swimwear, but they are mostly famous for their super colourful and vibrant sock designs.
From starting small in Stockholm, the company has now grown to over 12,000 points of sale across 90 countries, becoming a $100 million eCommerce business.
And here is why:
Again, we have another example of how a differentiation strategy can become successful by focusing on the product , and making sure that it stands out from competitors.
Happy Socks saw the opportunity to convert a simple everyday garment that people didn’t care much about to a fashion trend . Nowadays, you see many people proudly wearing extra colourful and over-the-top socks as a part of their outfit, in the most visible way possible (and it’s awesome!).
The company created high-quality socks with gorgeous and unique designs , and put them in beautiful distinctive boxes. In fact, they created such a great product that people started buying socks as a gift to their family and friends.
Storytelling & Happiness
Of course, it is not only about their fun and creative design that makes Happy Socks so unique. The company managed to build a great storytelling behind it.
From the Sock Factory, which is “like Charlie in the Chocolate Factory but with socks instead of candy” to the Sock Scientists (the founders of the company), the enchanting storytelling really gets you excited about the brand. You can read more about it here.
7. Harley Davidson
Our differentiation strategy examples list continues with the bike sector, or more specifically, the brand Harley-Davidson. Founded in 1903, the American motorcycle manufacturer is one of the oldest and most reputable companies in the industry.
Differentiation strategy examples: Harley Davidson
According to Wikipedia , it was also one of the two major motorcycle manufacturers to survive the Great Depression, among with many other periods of poor economic health over the years.
And although this information may not seem so relevant to our article, I think that this strength and resilience over the years has helped the company establish and maintain a rock solid reputation even today.
But here is what also differentiates them:
The sound of the V-twin engine in Harley-Davidson motorcycles is so distinctive that the company filed a sound trademark application in 1994. And although it was opposed by competitors and not given to Harley, this unique sound distinguishes the brand even today, at every point of customer interaction.
But this is not the only thing that makes the Harley-Davidson motorcycles so unique. The company is also noted for a customization style that gave rise to the chopper motorcycle style.
Community & brand culture
Harley Davidson has become so iconic over the years that it has established an entire community and brand culture around its motorcycles. The company has hundreds of fan clubs around the world, the oldest one of which can be found in Prague (founded in 1908).
There are also theme restaurants, such as the Harley-Davidson Las Vegas Café. The company attracts a loyal brand community all over the world.
With our next example, we are going to do switch direction a little bit, and move on to the Software-as-a-Service industry. Having said this, next on our list of differentiation strategy examples is Shopify.
Differentiation strategy examples: Shopify
Shopify is a Canadian multinational ecommerce platform that provides the necessary tools so that people can build their own business online. But what makes it so different from competitors? Let’s take a look:
The company is known for its excellent customer service. From 24/7 support to a live chat and a Help Center, Shopify has got its clients covered in case they need to contact them, no matter the time of the day.
However, Shopify also identified the communication and social media channels that their customers most often frequent, and took their support even further. The company actually made a Twitter account dedicated entirely to providing help to their customers.
In this account, people can tweet their issues and problems to Shopify, and they will receive responses for immediate assistance.
This company has managed to stand out in a very saturated market: cosmetics . For this reason, I couldn’t help but put it on our list of differentiation strategy examples.
Lush is a UK-based cosmetics retailer that has grown to operate in 49 countries, and is quickly building its way in the highly competitive industry. Here is what makes the company stand out:
Differentiation strategy examples: Lush
The first differentiation point for Lush is quality – not only in terms of ingredients, but also when it comes to the production of the final product.
All Lush products are 100% vegetarian , and about 85% are also vegan, often containing fruits and vegetables such as grapefruit juice, fresh papaya, vanilla beans, avocado butter, and aloe vera. Their products are also handmade, which is highly valuated by their customers.
The company’s values are also aligned with those of their target customers in terms of ethics and social responsibility . Instead of testing on animals, the company actually tests on human volunteers before selling their products to the public.
They are also involved in a series of donation and charity campaigns, such as the Charity pot campaign. Launched in 2007, the campaign generated over $33,000,000 in profits, of which 100% were donated to small organizations in the areas of human rights, animal welfare, and environmental conservation.
10. The Coca Cola Company
I decided to include the next company among our differentiation strategy examples because it is a very clear example of how to stand out across multiple areas. Let’s be honest, The Coca Cola Company is one of the most powerful brands in the world, and we can definitely learn a lot from it!
Differentiation strategy examples: The Coca Cola Company
Trademarks & Patents
Starting from their trademarks, The Coca Cola Company has done everything to ensure that their product will remain unique in the market of soft drinks.
The Coca Cola Corp owns the trademark to the name Coca Cola, including the trademark for the bottle shape, and even the graphic representation of the brand name. All these elements help distinguish the company’s iconic products on the market.
But of course, this is not all! Coca Cola also owns the patent of their famous soft drink formula, which means that no other company is allowed to make their cola using the same formula. They are also famously quite protective of it, too.
The Coca Cola Company achieves its differentiation not only through special packaging and branding, but also through its carefully positioned advertising.
The brand is famous for its unique and powerful campaigns that help spread their core values and mission: to inspire moments of happiness and refresh the world.
Differentiation strategy examples: Coca Cola
A great example is their multi-national Share a Coke campaign , in which they printed out cans and bottles with the 250 most popular names in each country. The campaign was subsequently rolled out in 80 countries, and managed to generate an incredible global impact.
As you might have probably noticed already, a lot of our differentiation strategy examples are focused on product differentiation. It is one of the most powerful and sustainable ways to stand out from your competitors.
Our next example, Nespresso, is following the same path. The Swiss-based operating unit of the Nestlé Group is a premium price coffee, and it is mostly known for its single-use coffee capsules.
The capsules, offered in stunning elegant boxes, are made of Aluminum and hermetically sealed, preventing the coffee aroma to degrade over time. (As opposed to a pack that has been opened).
Differentiation strategy examples: Nespresso
The company is currently offering a huge variety of options on the market, selling 28 different Original Line arabica and robusta capsules. They also release Limited editions occasionally, allowing their customers to select from a wide range of carefully selected flavours .
Additionally, the beautiful, elegant packaging gives out a sense of luxury and premium quality.
Another way Nespresso differentiates from its competitors are the company’s physical locations. The majority of its competitors doesn’t have stores exclusively for their capsules , and you are only able to purchase them in conventional stores and supermarkets.
Additionally, the company’s shops are not just any randomly looking shop. They are designed to create an experience once you are there, and feel that you are purchasing a very premium product.
The way their capsule boxes are ordered by colour and flavour only adds up to the high-end experience. You can also try their coffee right there , in the shop, which is something that competitors are not able to offer in a conventional store. Unless they do a specific try out campaign within the store.
Differentiation strategy examples: Royce-Royce
Next on our list of differentiation strategy examples is Rolls-Royce . Since its establishment in 1998, the British luxury automobile maker has been extremely successful in positioning itself as the provider of superior quality branded products, and here is why:
One of the main reasons why Rolls Royce has managed to establish itself as a leading super-luxury product is its exclusive craftsmanship.
The company, now owned by BMW, stands firm by their handmade motto, confirming that very little robotics is involved in the production of their cars. Some parts of the process, such as the paintwork, are automated by only for consistency.
In fact, no two Rolls-Royce are ever exactly the same – customers tailor their vehicles with variations in wood leather, colour, and other requirements. According to Business Insider , a whopping 84% of Phantom customers customized their cars with some sort of unique and bespoke design.
The luxury brand notes that “no request is left unexplored”. In the past few years, their design team has matched leather colours to customer lipstick, sourced wood from a tree on the buyer’s real estate, and they even found ways to incorporate wine glasses and picnic sets into their cars.
Differentiation strategy examples: Zalando
Our list of differentiation strategy examples continues with Zalando , a European e-commerce company based in Berlin, Germany that offers fashion and lifestyle products across 17 European markets.
The company has really managed to differentiate itself among thousands of other competitors in the clothing industry, and here is why:
Zalando offers an oustanding delivery and return service. In fact, you have 100 days (3 months!) to return your clothes for absolutely free, which is more time that most clothing and fashion companies will ever offer.
And the best part is, you will not have to explain yourself on why are you returning the clothes. You can select the reason if you want, but it’s optional and is only for their feedback in order to improve.
Another way in which their return service is exceptional is that they can actually come to collect your clothes from your own home if you don’t want them. Yes, you don’t have to go anywhere, and is completely free as well.
Another way in which Zalando stands out is user experience. Their platform is extremely intuitive and easy to navigate through, and you can easily mark clothes in favourites or check other buyers’ reviews.
Additionally, the platform will regularly offer you selected clothing pieces and collections based on what you’ve marked as favourite or what you’ve purchased. In other words, they build tailored collections that you may like, and needless to say – it’s working really well.
That was all for today! Thank you for taking the time to read my article on differentiation strategy examples, and I hope I will see you in the next one! If you want to look at more examples, I suggest that you visit my articles:
- 3 Great SWOT Analysis Examples with Real Companies
- Top 7 Brilliant Cost Leadership Examples (in 2022)
And one more thing! If you are passionate about Marketing as much as I am, and you are looking for a job as a Digital Marketing Manager, click here to visit Jooble.com and explore thousands of vacancies across 71 countries.
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My name is Ani and I am a trilingual Digital Marketing & Analytics Specialist with 10 years of experience across multiple sectors including Cloud-based services, SaaS, Digital payments, Mobile apps, and Executive Education, among others.
My expertise covers areas such as Google Ads, Google Analytics, Search Engine Optimization, Content Marketing, and Social Media.
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A Practical Guide for Product Strategy From Almundo: A Case Study:
BY Franco Fagioli ON APRIL 6, 2020
Eighteen months ago travel tech company Almundo started to refine its processes to become a product-driven company. Our goal was to define how we would set and communicate the company strategy, and how that strategy would lead OKRs and backlog definition. This is what we did.
Note: This post was written before the Covid19 lockdown. We are currently rethinking the process to be 100% remote-friendly. Stay safe.
Product (and company) strategy is the backbone that guides product goal-setting and roadmap definition, although it’s sometimes overlooked or confused with having a vision. Without it, product teams become feature teams focused on outputs and not outcomes .
The Approach (the Frameworks)
We started working with the product teams on how each tool – product strategy, OKRs, and roadmaps – should be used so that we could merge them together.
OKRs serve to answer where we want to go (the objective) and how we pace ourselves to see if we’re getting there (key results). They are a marvelous and simple tool to help teams to focus on key outcomes, prioritize work, and communicate results.
Some of the best-known resources on the subject include the books Radical Focus by Christina Wodtke , Measure What Matters by John Doerr , and reWork and Google’s guide on setting goals with OKRs.
Andrew Grove explained his methodology of “management by objectives” (MBO) in his book High Output Management in 1983: “The idea behind MBO is extremely simple: If you don’t know where you’re going, you’ll not get there. MBO is largely designed to provide feedback relevant to the specific task at hand; it should tell us how we are doing so we can make adjustment in whatever we are doing if need be. The one thing an MBO system should provide par excellence is focus. A few extremely well-chosen objectives impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.”
We experimented for several quarters till we got an OKR format to suits our needs. We needed something transparent, easy to complete, and with focus: no more than three objectives, with no more than three key results each, shared across the organization, on a Google spreadsheet.
Product roadmaps are essential tools for assessing opportunities and defining how we accomplish our objectives. As C. Todd Lombardo said, a roadmap is more about communicating your product strategy than it is about fixing features and dates. It is a statement of intent and direction – a compass, a destination, with options for a path to get there – complementary to OKRs.
Our focus was on clarity and simplicity. After trying complex Gantt charts and even product backlog software, we opted for a single slide on a Google presentation to show the roadmap and its execution. This approach helped us to communicate to upper management that the roadmap was fluid, and the ‘lack of formality’ gave teams the confidence to commit in defining what epics to tackle each quarter.
What aligned roadmaps and OKRs together was the product strategy. It is the guiding principle for OKRs and roadmaps. As defined by Alan Lafley and Roger Martin in their brilliant book “Playing to win” , a strategy is the coordinated and integrated set of five choices:
- What is your winning aspiration? What is the purpose of your enterprise, the “why” in Simon Sinek’s golden circle?
- Where will you play? Where will you compete: which customer segments, which categories, which channels? I believe that not having focus is one of the main reasons why products fail.
- How will you win? What is or will be your competitive advantage? Will you follow Porter’s path for differentiation or cost leadership?
- What capabilities must be in place? Do you have the skills and resources to see it through?
- What management systems are required? What processes and mechanisms are needed to support the choices?
I’d like to share next how we merged these frameworks together in a unified process.
Our Three Stepped-Process
1. defining the north star: a full-day workshop, corporate-level choice cascade.
The process starts top-down. The leadership teams gather before each quarter ends to review the company vision and revise the strategy.
This is an important step, but it’s often omitted. As the Chinese general Sun Tzu said, tactics without strategy is the noise before defeat. Without focus, the teams can’t be outcome-oriented. Without the proper boundaries, bottom-up goals and initiatives can’t emerge since the scope is too broad to cope with.
A product strategy is meant to describe the vision of what you are trying to accomplish. Usually, the timeframe is between two and five years out. It is a visionary work and meant to be persuasive. It is definitely not a spec in any sense. Product Strategy in an Agile World Marty Cagan
We start the workshop morning with the leadership team sharing business context and direction. Their presentation ends with a Q&A session to clarify any uncertainty. Transparency is paramount for autonomous and agile teams.
In our case, we were recently bought by Brazil’s CVC Corp , the biggest travel company in Latin America. An article published by travel industry news outlet Skift commented: “More importantly, the Almundo acquisition will provide CVC with the ‘omnichannel’ sales platform the company has been developing for years. Almundo CEO, Juan Pablo Lafosse, told Skift that Almundo is a ‘key piece in this transformation’ of CVC to become more digitally focused, and that the two companies are highly complementary.
Business-Level Choice Cascade
Once the corporate-level choices are understood, the process can cascade to lower levels, leaving the business units and teams to decide which choices can support higher-level goals.
After usually a keynote from an outside speaker (and lunch), each business unit gathers together for a deep dive into their strategy. We start by reviewing each quarter a different framework to re-think our decisions and get ideas flowing. Some methodologies we have used are:
- Strategy Canvas (‘Blue Ocean Strategy’ by Renée Mauborgne and W. Chan Kim): this process consists of capturing the main competitive factors for the industry and the satisfaction levels that competitors deliver on these factors. Then, we use the four actions framework to analyze which factors are served or fulfilled beyond customer demands, and where the customer expects better service and we have an opportunity to create a new value curve.
- User Story Mapping (check the book by Jeff Patton ): this is helpful to create a full picture of how a product is used. Creating a story map is always an enlightening activity since it forces you to think about the complete customer experience. With the journey visually displayed, we can clearly see the pain points and opportunities to enhance our strategic decisions.
- Business Model Canvas (by Alexander Osterwalder, of Strategyzer): The business model canvas is a great tool to help the teams think of their goals, resources, and stakeholders in a straightforward, structured way
- Hands-on games like Design the Box : the goal is to create a physical “box” that sells the product strategy. By imagining the box, the teams make decisions about differentiation features, the target customer, and other aspects of their vision that are more difficult to articulate.
After this creativity-boosting activity, we then try to agree on the first draft of OKRs. These objectives and key results should measure effectively if they are moving towards their strategic goals.
Additionally, teams should be able to name the main themes/epics, pain points or development opportunities that should be tackled to succeed.
OKRs and Backlog Draft
The day ends with an activity called “World Café”. The methodology is quite simple, it consists of 20-minute rounds of group discussion at tables followed by a group synthesis.
Since we have a lot of product teams, we fix product vertical teams like Flights, Hotels, or Packages at one table and have cross-functional teams like the Marketing, Checkout or After-sales rotate from table to table. This means teams have a chance to go ‘around the world’ and bring their ideas with them from table to table.
It means that teams have a chance to go “around the world” and take their ideas from table to table. The goal is to end the rounds with a good understanding of the other teams’ main epics and objectives. Similarly a team should get a clear view of the expectations from others of their own team.
2. Prioritization and Definition
During the following two weeks, each team will get together, reflect on all insights gathered during the World Café, and make their best effort to define the “final” backlog and OKRs.
Although we don’t have a defined framework for prioritization, most teams use the RICE approach (reach, impact, confidence, and effort) trying to estimate impact and effort but adding confidence to the equation.
When the work is done, every product manager validates the outcome with their main stakeholders. If you don’t know who they are or the best strategy to engage them you can even perform a Stakeholder Mapping activity. Managing expectations, handling multiple conflicting requests and communicating product strategy are key skills of a product manager . This is a vital step to have everyone on board and reduce the likelihood of completely modifying the intended roadmap and stressing the team.
The end result is shared across the organization using Google Sheets for OKRs and Google Slides presentation for roadmap communication (I’m not a big fan of fancy product roadmap software). Here’s an example of both deliverables:
3. Quarterly Meeting and Planning Day
Lastly and as the new quarter begins, we share all the work done on our planning day. This is not an exclusive product gathering, but a whole leadership team meeting.
This is our most important gathering whose goal is to:
- Bring alignment and discuss around vision and strategy
- Celebrate achievements and outstanding contributors
- Share business updates and results of the previous quarter
- Present the OKRs and roadmaps for the following period
On top of the presentations and hard work, the quarterly meeting is a great opportunity for fun and team-building (any resemblance between rafting and getting the product backlog through corporate processes is purely coincidental).
We iterate and set a framework to integrate mid-term planning, OKRs setting, and backlog prioritization. Summing up, the quarterly product strategy is defined by a three-step process:
- Company vision and goals are clearly defined and shared within the organization. Business units use the strategic choice cascade to align their choices with the upper-level strategy.
- We use world café methodology to incentivize backlog discussion, identify dependencies and ‘cross-pollinate’ ideas and insights across the area. Each team then prioritizes, sets and aligns with its main stakeholders their quarterly roadmap and OKRs.
- The process outcome, along with previous quarter results, is shared on a leadership team full-day meeting.
Reference and Inspiration
- What is strategy – Michael Porter
- Playing to win – Alan Lafley and Roger Martin
- The World Café: Shaping Our Futures Through Conversations That Matter – Juanita Brown and David Isaacs
- Radical Focus – Christina Wodtke
- Measure What Matters – John Doerr
- Blue Ocean Strategy – W. Chan Kim, Renée Mauborgne
- Business Model Canvas – Alexander Osterwalder
- User Story Mapping – Jeff Patton
- Escape from the feature roadmap to outcome driven roadmap – Mind the Product
- Roadmaps are Dead! Long Live Roadmaps! – C Todd Lombardo on Mind the Product
Comment on or discuss this article
With more than 6 years leading digital teams, Franco is currently the Head of Product & UX at travel technology company Almundo. Previously, he was the Flights product manager at Despegar where he also ran part of the Personalization team. Before travel, he managed marketing and growth teams on e-commerce startup Avenida which raised +30M in funding and grew from 20 employees to +200. Besides his academic and work career, he founded an NGO that gives microcredit in slums of Buenos Aires proudly borrowing +40k in loans to more than 80 amazing entrepreneurs.
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- Product Marketing
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- User Experience
Churn Rate: Solutions With UX Design? Case Study On Xeropan
SEPTEMBER 20, 2018
In this case study , we show how we enhanced the user experience and gave solutions to reduce the churn rate for Xeropan. In this case study we cover: The user onboarding redesign process, Problems and their solutions, and. And because in many cases , the UI proved too complicated, people ended up not understanding the features. Our users couldn’t find what they wanted easily or differentiate the core lessons from the practice exercises.
UX Case Study: How We Designed A Bilingual Lifestyle Magazine
APRIL 10, 2018
In this UX case study we show how we designed Sport360.fit. This UX case study will walk through all the challenges and learnings this project presented. So why mention cultural differences in a UX case study ? In the English UI, we used some extra character spacing on some of the elements to make them more readable and more easily differentiated from other elements. Example feedback sheet. We hope you enjoyed our UX case study !
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Mind the Product
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A Practical Guide for Product Strategy From Almundo: A Case Study:
APRIL 6, 2020
Will you follow Porter’s path for differentiation or cost leadership? In our case , we were recently bought by Brazil’s CVC Corp , the biggest travel company in Latin America. Here’s an example of both deliverables: Fictitious Flight backlog.
User Research For India’s Top Property Site – MagicBricks Case Study
JANUARY 29, 2020
We conducted user research for the site and we will share what we’ve learned from it in the following case study . In order to get the full picture, we talked to different members of the management board, for example , the CEO, the Head of Marketing, and the Head of Product.
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In this article, I want to zoom into the branding process and make a case for incorporating users stories when you create your brand. It can differentiate you from the competition, project positive feelings or make it easier for customers to remember and choose your product over others. Case study : How we conducted brand research on our UX studio brand. The post How to Conduct a Brand Research – Practical Guide with a Case Study appeared first on UX Studio.
UX Case Study: an information architectural redesign project
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Case study: How Alpha enables Aetna to make smarter business decisions and innovate faster
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We were also able to identify content opportunities that would help to differentiate the new site from other information sources. The post Creating an Accessible Website for Europe’s Oldest Eye Hospital Charity: a Case Study appeared first on Mind the Product.
We want to change that paradigm and be a partner – that’s what drives truly differentiated value to our members.”. We can test and align ourselves with consumer expectations,” Nwokah says, pointing to a recent example involving a web portal. “We The post Case study : How Alpha enables Aetna to make smarter business decisions and innovate faster appeared first on Feedback Loop. Case Studies
We want to change that paradigm and be a partner – that’s what drives truly differentiated value to our members.”. We can test and align ourselves with consumer expectations,” Nwokah says, pointing to a recent example involving a web portal. “We The post Case study : How Alpha enables Aetna to make smarter business decisions and innovate faster appeared first on Alpha. Case Studies
What a Good Continuous Discovery Team Looks Like [Case Study]
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One of the challenges of teaching continuous discovery is that we don’t have very many public examples of what “good” looks like. One of the challenges of teaching continuous discovery is that we don’t have many public examples of what ‘good’ looks like. She opens your mind to think above and beyond the solutions; and that’s where your product can become a market differentiator and have true, valuable impact.
Product Case Study: ESPN’s Draft Lobby Redesign
The Product Coalition
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Whereas other platforms like CBS differentiate on the basis of being the place for serious fantasy players, the decision to dedicate their resources towards building a mobile app, which is heavy on features like sticker packs which are obviously geared towards making new players feel welcome and comfortable. Take, for example , the amount of real estate given to the list of active players, as opposed to the previous versions.
Slack: A Product Led Growth Strategy Case
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Before solving the case , let’s first understand the fundamentals of product-led growth, something that is not complete without mentioning a few best-of-breed products. A recent example is Team vs Slack. Let’s move the case . I would illustrate this with a quantitative example .
Differentiate Yourself in an Already Clustered SaaS Market
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The winners emerging from the scrum of similar offerings differentiate themselves in significant, meaningful, and sometimes surprising ways. But one way to grab a little extra attention and loyalty is to focus on specific use cases .
5 Best Product Messaging Examples for SaaS
MARCH 18, 2022
In this blog post, we will discuss how you can build your product messaging, five great product messaging examples , so you can better communicate your brand value and attract the right audience. Highlight what differentiates you from competitors. 5 great product messaging examples .
How a top 10 pharma company tracks drug innovations and more with Feedly
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Case Study . And if members of the team weren’t already experts in an area (like bioprocessing, for example ), Sienna found it hard to know which sources to look at for relevant research. Case Study User Stories feedly enterprise Feedly for Biopharma leo
How an Australian energy provider stays on top of critical cyber threats with Feedly
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Case Study . For example , the analyst team has always tracked news at the intersection of cybersecurity and the energy sector. Leo recognizes most of these names as companies, so he can differentiate if an attack is about Amazon (company) vs. Amazon (the river), for example .
What Leadership Qualities Does it Take to be a Good Leader?
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Also, we’ll give some examples of what leadership on a UX team looks like. So after that they’ve done the job, they can set their team an example . Just as in other cases , it always depends on the context. UX researcher vs UX designer – Leadership qualities list: I tried to differentiate the “leadership skills”, but I found that UX researchers and designers don’t have different specific leadership skills. Case Study
3 Feature Prioritization Methods With Your Users In Mind
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This article deliberately didn’t try to become an ultimate list of feature prioritization methods ( others have done a pretty good job) but it selects three great examples UX Studio uses effectively. But debate the idea; everyone can come up with good and bad examples – let us know your opinion). Compared to the hierarchy of needs, it differentiates only three broader categories: Threshold features: Sometimes called satisfiers, as users expect these features by default.
2 Ways to Design Your SaaS Signup Flow in 2021 [Examples & Best Practices]
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For example , booking a demo that goes to your sales pipeline first is also counted as friction-based. This is generally the case for products that are not purely self-service and/or that require a bunch of integrations first to setup. Take for example the case study of FullStory.
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While it is not a book on strategy per se , the deep understanding of how you will create a differentiated value proposition is the basis for creating a strategy that focuses on generating it. Most examples are from physical products, but lessons apply to the digital world.
UX Audit: how to improve your product's performance?
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We will provide examples from one of our clients throughout our blog post: the Learninghubz case study . In case you are wondering what does a UX Audit consist of, this case study will help you better understand and follow each stage's importance.
Agile, Kanban & Scrum–and other innovation observations for product managers April 13, 2018
Product Innovation Educators
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2) Differentiate Yourself. (3) A favorite example of mine is GE Appliances innovation lab, First Build. An example of startups helping large organizations innovate – a PepsiCo case study in 4 steps. Each week I scour articles, wading through the dogs, and bringing you the best insights to help product managers and innovators be heroes. Agile, Kanban & Scrum for product management in different contexts.
10 Ways of Adding Value to Products in SaaS to Drive High-Margin Sales and Increase Profitability
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Post Webinar Q&A: How to get executive buy-in for UX
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In this instance – your company launching something quickly without up-front research – is an opportunity to build a case around the importance of conducting research from the very beginning. This research can be a remote moderated study with 5-10 participants.
Applying the ‘Target Customer Scenario Canvas’ to Cross the Chasm
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An example can be: “Eat healthier” After having a better understanding of our stakeholders and our customer problem to be solved we focus on understand better the current state: 1. Pain Relievers: Here we summarize how our solution addresses the user’s pain points, e.g., our differentiators 3.
How startups die from their addiction to paid marketing
JUNE 4, 2018
It’s much harder to fix the underlying issues – creating real moats, product differentiation , doing deeper adtech integrations. Facebook uses paid to build out new regions, for example . One of the best case studies of this is from @drewhouston’s Dropbox presentation from the early days. [Originally tweetstormed at @andrewchen , Follow me for more!].
Hook trial users from their first use
Instead, marketing websites describe a product’s key differentiators and benefits, offer a few case studies and encourage a prospective customer to evaluate the product by using it. For example , when someone fires up a video game after a long day, their Job-to-be-Done is to be entertained and distracted by their pursuit of success. This minimum viable flow will vary by customer segment and use case , so make sure you customize your onboarding for each segment.
Top UX Design Agencies in San Francisco: How to Choose?
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What differentiates San Francisco UX/UI agencies form the rest (if anything). A few well-known examples : Google, Netflix, HBO, Starbucks, Stanford and even NASA. In many cases they work on an even higher one, and do so much more humbly and diligently. In some cases , the problem comes not in that we don’t care, but we want to go faster and further than our partners’ internal teams. They should present case studies with actual UX process and design decisions.
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Those are the differentiators .” — Dan Pink, Atlassian interview By painting a picture of a world that had transitioned to sustainable energy, Musk was giving his employees a unified sense of meaning, reinforcing what sits at the centre of providing purpose?—?a
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How working as a Product Marketer can help you become a better Product Manager
FEBRUARY 26, 2019
I would also propose that companies should never differentiate between Product Managers and Product Marketers while hiring and they should encourage transition into one role from another. We are better at prioritisation, stakeholder management, effective communication, develop a taste for design, and build a more in-depth understanding about studying buyer personas. For example , if your product is not 95% self-serve, such claims in marketing materials might backfire.
Digital Accessibility – a Guide for Product Managers
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For example , clean and simple page layouts, straightforward use of language, options for audio description and closed captions on video, good colour contrast, the ability to increase font size, or change the colours on the page. Take Facebook’s accessibility features , for example .
What Are In-App Notifications And How Are They Different From Push Notifications?
JANUARY 31, 2022
A few examples would be alerts when a name message comes in, suspicious account activity, update announcements, feature launches, and incoming payments. Checklist example created by Userpilot. Churn survey example .
Key Product Manager Goals For Successful Product Development
MARCH 17, 2020
For example , we can imagine that your main long term goal is to launch a new product successfully. For example , creating case studies includes approaching potential partners, tracking their results, writing a study , and promoting it using SEO strategy or through paid campaigns.
The Digital Workspace Monitoring Journey
MARCH 5, 2021
We started by installing Citrix in our lab, studying what this technology was about, and learnt the use cases , limitations, failure modes, etc., Different types of dashboards and visualizations is one way in which we differentiate our product from others.
Customer Communication Management Guide For SaaS Companies
OCTOBER 6, 2022
Creating customer experiences that consistently meet and exceed their expectations is a huge differentiator in a customer-centric market where they can easily switch to another brand. Zendesk’s recent study shows that 68 percent of consumers expect all experiences to be personalized.
The Cost of a Bad Product Strategy
OCTOBER 3, 2019
For example , take Kmart’s product strategy from earlier this decade: “To thrive as a mass merchandising company that offers customers quality products through a portfolio of exclusive brands and labels.” Segway is a great example of this. People’s struggles cleaning their floors stemmed from the overall process, rather than a discrete product,” the case study says. One embarrassing example of the danger of silos in product strategy happened to Sony.
How Behavioral Cohorts Unlock the Customer Lifecycle
DECEMBER 6, 2020
Sadly, this isn’t the case —so your users will invariably find and engage with your product for a variety of reasons, and from a variety of different sources. . Within conversion , differentiating your product from your competitors is key. For example : .
A Product Managers’ take on the Nielsen Norman UX Conference 2019
SEPTEMBER 3, 2019
This was a learn-by-doing session as we participated in 5 exercises, following the real case study of someone trying to buy a TV. We also looked at long term business impact vs short term business impact to see if our quick wins and differentiating solutions rang true. Failing examples are siloed to channel. Our customers do not differentiate between channels, and now neither will we.”
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5 Companies That Brilliantly Differentiated Themselves From the Competition, and How You Can, Too
Written by Maddy Leslie @wearearticulate
Brand differentiation is what will get you the lion’s share of buyer attention.
With a stand-out brand, you will achieve what the 333 million brands out there wish they could do:
- Gain loyal customers
- Become a household name
- Beat competitors
- Have a positive impact
- Accelerate business growth
Today, we’re going to break down how to differentiate your business in eight easy-to-follow steps, plus take a look at how five brilliant companies are killing it when it comes to differentiating themselves from their competition.
Keep reading, or jump ahead:
The Eight Steps to Brand Differentiation
- Five Product Differentiation Examples
What is brand differentiation?
According to Articulate Marketing , “Brand differentiation is your identity as distinct from others. The things that make you original. Maybe even odd. Worthy of attention, expressive, diverse, value-added, authoritative, helpful, customer-focused, people-led, more than the sum of your parts.”
In other words, brand differentiation is how you set yourself apart from competitors. It’s also how you turn consumers into advocates for your brand.
Next, let’s dive into how you can differentiate your brand.
These steps are based on principles from “The Difference Engine”. This is a model of differentiation best practices founded by HubSpot Diamond Solutions partner, Articulate Marketing.
To start, let’s view the eight steps from a high level. Then, we’ll dive into the details, along with examples you can use to inspire your own efforts.
In this article, we’re going to look at:
- The importance of your mission and strategy.
- Why company culture plays such a major role.
- The toolkit you need to differentiate your business.
- Defining your positioning with strategic blueprints.
- The core principles of stand-out brand architecture.
- What is thought leadership (and how to do it well).
- Capturing your audience’s attention and generating leads.
- The differentiating benefits of iterative optimization.
1. Your mission.
Google’s mission is to organize the world's information and make it universally accessible and useful. This Google example showcases a few key elements to help you define your mission:
- Recognizability: You read this, you know it’s Google’s mission.
- Ambition: “The world’s information”.
- Actions and outcomes: “Organize” “accessible”, “useful”.
- Context: Industry position (in this case, the tech sector).
- Short is best: A dozen words.
- Clarity: It’s easy to read and understand.
Your mission should be a central goal. From here, you can position your products and services, build out yearly goals, quarterly objectives and metrics for success, and develop your strategies. This is the first step. You’ll want to use this structure to define your ambitions.
Once you’ve identified your mission, everyone in your business will be singing from the same song sheet. Your collective voice will carry. Stations play your tune on the radio, the album goes platinum, you become the next Adele of … HealthTech.
It’s all within reach, if you make it your mission to get there.
2. Talent and culture.
So, what makes LUSH so different from the likes of Sephora or even Etsy? Handmade products. Advocates of LUSH are committed to ethical buying, and are obsessed with the purity that comes from a handmade item. The company's biggest success is knowing that its core buyers value social and corporate responsibility over a luxurious and out-of-reach image.
LUSH's branding is simple and genuine, with great contrast between visuals that is simply not seen elsewhere. For that reason, the company has a massive brand-loyal following.
How they ' re doing it:
- Understands its customers — appeals to the girl who's "had enough" and believes in what they believe
- Selfless with its products — offers free samples and in-store trials on nearly everything
- Not selling an image—the business is selling a viewpoint on how to define "beauty"
- Offers a one-of-a-kind retail experience like you're walking into an Etsy store in real life
Top competition: jayco, winnebago, fleetwood.
Airstream is a cult classic — the company was founded in 1929 (if great marketing is a mix of inbound and tradition, there's your tradition ). As one of the most recognized RVs on the road, its sleek, silver cabin is an iconic image of cross-country road trips.
So what makes Airstream any different than Winnebago or Jayco? Like LUSH, it focuses on the intangible desires of its core customer. Airstream owners embrace the "retro"side of life, something other RV brands just don't offer. What you get with an Airstream is exactly what you want to tout on the open road: a classic exterior with a modern interior. It's a great blend of the past meets the future.
Airstream is simply a "silent" luxury. It doesn't scream "I'm rich," but definitely makes you feel like it from the inside. The company even partners with luxury brands like Mercedes Bens to maintain the sense of independence that "streamers" (the affectionate nickname of Airstream drivers) crave.
- Focus on quality, image and community — expensive, but rarely lose value, and built to last
- Recently relaunched a new website and digital experience
- Offers endless community and dealership events where you can sit in an Airstream to experience it yourself
- Customer stories focused on Airstream experiences, with the tagline "Live Riveted"
3. Oscar Health Insurance
Top competition: new york life, metlife.
Oscar Health Insurance prides itself on being insurance made friendly. For the layperson, healthcare is a fairly daunting subject. With that in mind, this brand sought to make medical coverage — a tradition for its core customer — personable and easy to understand.
But that's not the only way Oscar Health Insurance uses simplicity to differentiate itself in the healthcare marketplace.
In prioritizing an inbound approach to its insurance offerings, Oscar Health Insurance designed a user experience (UX) into its website that allows customers to browse and learn about what they're paying for, buy their desired plan, and customize it with a doctor who is in their insurance network — all from the Oscar Health website. This build-your-own-plan concept makes the company truly shine in its market.
- Uses bright visuals, large short copy, and a parallax scrolling site to make digesting information easy on desktop, mobile and tablet
- Focuses on a small, niche network just in New York
- The company is transparent in partnering with doctors, allowing you to customize your quote immediately
- Making customer-benefit promises like "Talk with our doctors for free, one will call you within the hour"
4. Whole Foods
Top competition: trader joe's, earthfare, fresh market.
Whole Foods goes beyond groceries -- the company is one of content generators and thought leaders. You don't often find them from a consumer packaged goods (CPGs) manufacturer.
So, what does content marketing and thought leadership do for Whole Foods customers? Better yet, what does it give people that they can't get from Fresh Market or even Trader Joe's?
Whole Foods mixes traditional CPG marketing with the content, storytelling, and digital experience of inbound marketing by showing shoppers why they buy the food they buy: a healthy, diverse, and "wholesome" selection. The company goes beyond the get-in-and-get-out experience of so many grocery stores today while still being a top-tier, large, national chain.
How they're doing it:
- Shares ideas, generating meaningful content that isn't boastful or sales-driven. The business understands what its customer is looking for
- Promotes a "greener" lifestyle -- got rid of plastic bags in 2008
- Focuses on local stores, taking away that feeling of the big chain
- Bright, unique and cheerful store design that's as easy to navigate as its website
- Partners with shows like Top Chef to promote their food
- Hosts events, runs multiple blogs and has an app -- showing the future of grocery shopping
Top Competition: Adecco, Kelly Services, Manpower
It's one thing to sell a service, but it's another thing to sell a message behind that service. Yoh embodies this difference in its recruitment product, which helps match tech companies with the right talent.
Yoh looks absolutely nothing like any other recruiting site (or company, for that matter). The company gives its customers — both recruiters and candidates, depending on the service they seek — the courage to steer away from generic, stuffy pictures and copy. This is critical when advertising yourself to a business or potential hire.
Yoh even makes learning about the company fun and engaging, showing that the company practices what it preaches. You could say the brand has a pulse .
- Uses bold messaging that speaks to "you" and not about "we"
- Little to no industry jargon
- Consistent and striking brand look and feel
- Unique and contextual images that go beyond what they're trying to define
- Original website design that is hyper visual
- Downloadable content and clear CTAs that drive interaction
As you can see, big brands with big budgets aren't the gatekeepers of differentiation. In fact, it's easier to stand out if you're a smaller business that is personable, agile and not afraid to make mistakes. Your biggest market disrupters — the Airbnbs and Ubers of your industry — only got to where they are today by proving they were different from the rest.
So, to get noticed, you need to figure out what makes your business stand out. Then use that "special sauce" to elevate your brand. Our eight steps and these five examples are here to inspire your own brand differentiation strategy.
A final thought: We said earlier that brand differentiation is how you get the lion's share of buyer attention. But there's no denying that being different feels like a risk. Change invites criticism. It's an untested path. Nevertheless, you must be brave as you go on this journey, because it is a necessary one. In other words, be the lion. Be fearless.
Originally published Jan 23, 2023 7:00:00 AM, updated January 30 2023
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Product Differentiation is the Secret Ingredient (Pepsi vs. Coca-Cola) In this article, I will be telling you about product differentiation using the example of Pepsi and Coca-Cola.
I am fighting out a case for Product Differentiation . I can’t stress over the fact about how it matters the most when you look at marketing from any perspective, the consumer’s or the company’s.
When creating a new product your aim, generally, is to not be yet another similar product on the market like your competitors’ products.
No one plans to spend an entire marketing budget in creating something exactly like something already out there.
In fact, your aim as a marketer is to create a product that is unique! Your aim is to create a purple cow, as the ace marketer Seth Godin calls it in his fantastic book on marketing that I was reading the other day.
But often times your product does end up being just another forgettable substitute for a product already out there in the market, doesn’t it?
In the last article I discussed Positioning, the need for it and how does it really work to create a product that is unique.
Check out the article here: What is Positioning in Marketing (The Viagra example) .
I also talked about how Cialis came about and did a fantastic job of creating a great product backed up by a unique positioning.
While on one end we have Cialis, we also have loads and loads of companies that fail to make a mark despite having some remarkable products and even more remarkable brands.
You want to ensure that your company provides customers with the best offerings in the market. The current competitive business environment requires that you ensure that your organization’s offerings are unique from that of your competitor.
Smart companies like Honda rely on differentiation by investing huge amounts of resources to develop new products that go through the product life cycle.
When I talk about product differentiation, I would like you to think of the product not just as the tangible product that we are hardwired to think about. Think of the product as a service or as a person, as an event or maybe an experience.
In this article, I will be telling you about product differentiation using the example of Pepsi and Coca-Cola.
When you look at Hindustan Unilever it offers different toilet soaps for different target markets each with a unique brand identity. Proctor & Gamble also offers a variety of washing detergents to its customers with different brands.
Both Unilever and Proctor & Gamble have differentiated their physical products and their potential in the market.
The motorcycle industry is one that has a high level of product differentiation. Honda, TVS, and Bajaj Auto all offer motorcycles but their products are differentiated in terms of the price, aesthetic value, and quality.
This is the kind of differentiation that I want you to think about in your organization’s offerings.
Importance of Product Differentiation in Marketing
I have talked about the types of differentiation that you should consider in your offerings. You have to understand that the current business environment is competitive and every business has offerings that serve the needs of its customers.
In this regard, you have to ensure that you provide your customers with a reason to constantly seek your offerings.
In the subsequent sections of this article, I will discuss each of the following benefits of differentiating your offerings:
deliver outstanding customer value, maximize on profits, enhance brand loyalty, and adapt to the contemporary business environment.
First, you must appreciate the fact that current customers are quite knowledgeable and are out to maximize the value from the offerings that they purchase.
They are aware that there are substitutes that are cheaper or of higher quality than what you provide. When you differentiate your offerings, you will be unique among the available substitutes as you guarantee customers of the value they obtain in your offerings.
Second, Customer value and brand loyalty are two facts that go hand-in-hand. When you assure customers of the value they obtain from your offerings, then you tend to encourage brand loyalty.
Your customers will become loyal to your brand and they could make recommendations to their networks.
Isn’t this what you look out for in every sale that you make?
In effect, your customers will constantly refer to the brand as the offering they receive and will ignore other substitutes.
Third, you should be aware that the current business environment is characterized by vast knowledge, value, efficiency, and innovation.
When you seek to differentiate your offerings, you should always think about innovation. You should continuously provide your customers with new features or ideas. It will make you adjust fast to the dynamic business environment.
The last and most important benefit that you look for in product differentiation is to maximize your profits. When you serve the needs and wants of your customers, they would be willing to pay a premium for your products because they lack a reason to seek substitute offerings.
When you want to differentiate your offerings, you should make sure you address the following questions:
- How do I want my products to perform compared to those of my competitors?
- What quality to customers need in my offerings?
- How durable are my products?
- Is the design of my product different from those of my competitors?
When you answer these questions appropriately, I should expect you to have differentiated offerings in the market.
Product Differentiation at Pepsi & Coca-Cola
The intense competition between Coca-Cola and Pepsi, who are the largest producers of carbonated drinks in India, will make a good example to understand how they differentiate their offerings in India.
For them, product differentiation is definitely the secret ingredient .
Pepsi has undergone significant change since it was introduced to the American market in 1898 and in India in 1989. In 2016, Pepsi had a 26.7% control of the Indian market share; a slight decline from 2015 where it owned 27.6% of this market (Statista, 2018) .
Pepsi has always targeted a young audience with most of its advertisements addressing teens who have a keen interest in sports, fun, and music. With these eye-catching and interesting adverts, you would like to give Pepsi a taste just to experience the value the drink offers. The advertising slogan of Pepsi in India is “Youngistaan ka Wow”
Pepsi is a sugary carbonated drink that has a citrus flavor burst. It has a lot of calories, sugar, and caffeine. The Pepsi drinks are available in different varieties like Mountain Dew, Aquafina, Frito Lay, and AMP energy drinks. Pepsi’s brands, Pepsi, Pepsi MAX, Pepsi NEXT, and Diet Pepsi, are all packaged in a plastic bottle to reflect its youthful spirit.
Pepsi’s major competitor in refreshments is Coca-Cola. Coke has experienced a decline in its Indian market share between 2014 and 2016, from 35.5% in 2014 to 33.5% in 2016 (Banerji & Shashidhar, 2017). This decline has largely been contributed by a growing number of local beverage companies.
When you taste Coca-Cola, you cannot immediately tell how it is different to Pepsi. It has an almost similar content composition thus people have a behavioral preference for one of the drinks over the other.
How then does Coca-Cola differentiate itself from the Pepsi drinks?
The differentiation is in the story that they tell you.
I owe this piece of my knowledge to Seth Godin, the man himself. I have read most of his book but this one – All Marketer’s are liars – really brings together all the basic tenets of marketing.
And the most basic of them is that you differentiate yourself in the positioning , which is also the story that you tell to your customers with an integrated marketing effort.
That book is a must read whenever you find the time.
When you check most of Coca-Cola’s adverts, the company is keen on emphasizing on family , friendship, adorable bears, and other happy relationships. The current slogan of Coca-Cola is “Share a Coke, Open Happiness”.
When you taste a Coke, you get to have a raisin-vanilla taste that has a lot of sodium nutritional content. Through its different brands like Lemon Coke, Diet Coca-Cola, Cherry, and Vanilla Coke, the company has been able to differentiate its offerings to the different customer segments.
When you find any Coke product, you will first notice the different packaging used for its different brands. Coca-Cola differentiates its drinks from those of Pepsi through its packaging. I associate the classic Coke with the red color. When I find any Diet Coke, it is always black.
In addition to the packaging, Coca-Cola ensures that consumers can get these different brands in different quantities. The glass bottle is available in 0.25, 0.5, and 1 liter; the plastic bottles are available in 0.5, 1, 1.5, and 2 liters; and the cans can be bought in either 0.25 or 0.33 liters. It ensures that the packaging materials are recyclable and environment-friendly. In this way, Coca-Cola has differentiated its drinks from that of Pepsi to ensure it serves the needs of its consumers.
When you look at Coke and Pepsi, it is clear that these companies are different not only in their products but also their advertisements and packaging. They are different in, what Seth Godin says in his book , their storytelling.
In their products, you can notice that the taste of Pepsi’s products are quite sugary whereas those of Coca-Cola have a raisin-vanilla taste. Another difference between Pepsi and Coke is the message delivered to their customers in all their adverts. Coca-Cola emphasizes relationships while Pepsi focuses on entertainment like sports and music.
Even in their packaging, Pepsi and Coke make sure their customers have a variety of products that they can select.
Coke packs its products in cans and plastic and glass bottles in different quantities as mentioned above whereas Pepsi packs its drinks mostly in cans and plastic bottles in limited quantities. This article on differentiating your offerings will assist you to guide your organization on how it can differentiate its products.
If you feel this article was beneficial, you can share it through the links on the left. I rest my case.
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Product Differentiation Case Study Solution & Analysis
- Harvard Case Studies
Harvard Business Case Studies Solutions – Assignment Help
In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken.
To make a detailed case analysis, student should follow these steps:
STEP 1: Reading Up Harvard Case Study Method Guide:
Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important.
Harvard Case Study Solutions
porter’s five forces model
STEP 2: Reading The Product Differentiation Harvard Case Study:
To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant.
When having a fast reading, following points should be noted:
- Nature of organization
- Nature if industry in which organization operates.
- External environment that is effecting organization
- Problems being faced by management
- Identification of communication strategies.
- Any relevant strategy that can be added.
- Control and out-of-control situations.
When reading the case for second time, following points should be considered:
- Decisions needed to be made and the responsible Person to make decision.
- Objectives of the organization and key players in this case.
- The compatibility of objectives. if not, their reconciliations and necessary redefinition.
- Sources and constraints of organization from meeting its objectives.
After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case.
STEP 3: Doing The Case Analysis Of Product Differentiation:
To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused.
Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for Product Differentiation and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader.
After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin.
STEP 4: SWOT Analysis of the Product Differentiation HBR Case Solution:
- Pest analysis
SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for Product Differentiation is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management.
This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal-External Analysis.
In the strengths, management should identify the following points exists in the organization:
- Advantages of the organization
- Activities of the company better than competitors.
- Unique resources and low cost resources company have.
- Activities and resources market sees as the company’s strength.
- Unique selling proposition of the company.
- Improvement that could be done.
- Activities that can be avoided for Product Differentiation.
- Activities that can be determined as your weakness in the market.
- Factors that can reduce the sales.
- Competitor’s activities that can be seen as your weakness.
- Good opportunities that can be spotted.
- Interesting trends of industry.
- Change in technology and market strategies
- Government policy changes that is related to the company’s field
- Changes in social patterns and lifestyles.
- Local events.
Following points can be identified as a threat to company:
- Company’s facing obstacles.
- Activities of competitors.
- Product and services quality standards
- Threat from changing technologies
- Financial/cash flow problems
- Weakness that threaten the business.
Following points should be considered when applying SWOT to the analysis:
- Precise and verifiable phrases should be sued.
- Prioritize the points under each head, so that management can identify which step has to be taken first.
- Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.
- Make sure that points identified should carry itself with strategy formulation process.
- Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses.
STEP 5: PESTEL/ PEST Analysis of Product Differentiation Case Solution:
Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future.
Pest analysis is very important and informative. It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies.
To analyze the business objective and its opportunities and threats, following steps should be followed:
- Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization
- Analyze the opportunities that would be happen due to the change.
- Analyze the threats and issues that would be caused due to change.
- Perform cost benefit analyses and take the appropriate action.
- Next political elections and changes that will happen in the country due to these elections
- Strong and powerful political person, his point of view on business policies and their effect on the organization.
- Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.
- Change in Legislation and taxation effects on the company
- Trend of regulations and deregulations. Effects of change in business regulations
- Timescale of legislative change.
- Other political factors likely to change for Product Differentiation.
- Position and current economy trend i.e. growing, stagnant or declining.
- Exchange rates fluctuations and its relation with company.
- Change in Level of customer’s disposable income and its effect.
- Fluctuation in unemployment rate and its effect on hiring of skilled employees
- Access to credit and loans. And its effects on company
- Effect of globalization on economic environment
- Considerations on other economic factors
- Change in population growth rate and age factors, and its impacts on organization.
- Effect on organization due to Change in attitudes and generational shifts.
- Standards of health, education and social mobility levels. Its changes and effects on company.
- Employment patterns, job market trend and attitude towards work according to different age groups.
case study solutions
- Social attitudes and social trends, change in socio culture an dits effects.
- Religious believers and life styles and its effects on organization
- Other socio culture factors and its impacts.
- Any new technology that company is using
- Any new technology in market that could affect the work, organization or industry
- Access of competitors to the new technologies and its impact on their product development/better services.
- Research areas of government and education institutes in which the company can make any efforts
- Changes in infra-structure and its effects on work flow
- Existing technology that can facilitate the company
- Other technological factors and their impacts on company and industry
These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources.
STEP 6: Porter’s Five Forces/ Strategic Analysis Of The Product Differentiation Case Study:
To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market.
porter’s five forces model
These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:
- THREAT OF NEW ENTRANTS:
- as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
- Barriers to entry that includes copy rights and patents.
- High capital requirement
- Government restricted policies
- Switching cost
- Access to suppliers and distributions
- Customer loyalty to established brands.
- THREAT OF SUBSTITUTES:
- this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
- Price performance of substitute
- Switching costs of buyer
- Products substitute available in the market
- Reduction of quality
- Close substitution are available
- DEGREE OF INDUSTRY RIVALRY:
- the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
- Competitive advantage
- Continuous innovation
- Sustainable position in competitive advantage
- Level of advertising
- Competitive strategy
- BARGAINING POWER OF BUYERS:
- it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
- Bargaining leverage
- Switching cost of a buyer
- Buyer price sensitivity
- Competitive advantage of company’s product
- BARGAINING POWER OF SUPPLIERS:
- this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
- Input differentiation
- Impact of cost on differentiation
- Strength of distribution centers
- Input substitute’s availability.
STEP 7: VRIO Analysis of Product Differentiation:
Vrio analysis for Product Differentiation case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the Product Differentiation company’s activities and resources values. RARE: the resources of the Product Differentiation company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE: the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE: resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like Product Differentiation) must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate.
STEP 8: Generating Alternatives For Product Differentiation Case Solution:
After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:
- Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.
- as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive
- it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.
- Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable.
Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company.
STEP 9: Selection Of Alternatives For Product Differentiation Case Solution:
It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:
- Improve profitability
- Increase sales, market shares, return on investments
- Customer satisfaction
- Brand image
- Corporate mission, vision and strategy
- Resources and capabilities
Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study.
STEP 10: Evaluation Of Alternatives For Product Differentiation Case Solution:
If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints.
STEP 11: Recommendations For Product Differentiation Case Study (Solution):
There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.
Perspectives & resources, what is differentiated instruction.
- Page 1: Defining Differentiated Instruction
- Page 2: General Principles
How do teachers differentiate instruction?
- Page 3: Know Your Students
- Page 4: Differentiate Instructional Elements
- Page 5: Differentiate Content
- Page 6: Differentiate Process
- Page 7: Differentiate Product
- Page 8: Evaluate and Grade Student Performance
How do teachers prepare their students and their classrooms for differentiated instruction?
- Page 9: Communicate with Students and Parents
- Page 10: Organize the Classroom
- Page 11: Employ Effective Behavior Management
What does differentiated instruction look like in the classroom?
- Page 12: Classroom Implementation
- Page 13: References & Additional Resources
- Page 14: Credits
Differentiated Instruction: Maximizing the Learning of All Students
This module discusses the importance of differentiating three aspects of instruction: content, process (instructional methods), and product (assessment). It explores the student traits—readiness level, interest, and learning preferences—that influence learning (est. completion time: 3 hours).
Work through the sections of this module in the order presented in the STAR graphic above.
Related to this module
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Product Line Differentiation Case Study
The rivalry among them is vigorous and will remain so: All 3 club rivals are aggressively pursuing top-line revenue growth (chiefly by opening new stores, attracting more members at both new and existing stores, and endeavoring to grow sales revenues and shopper traffic at existing stores). The industry is becoming somewhat mature and that intensifies rivalry. It is easy for households and businesses to switch their memberships from one club to another. Switching costs are low, thus strengthening rivalry.
There is considerable similarity in the merchandise offerings of all three clubs. The degree of product line differentiation is Neck, which enhances rivalry. Threats of New Entrants?a weak competitive force The Endow to enter the warehouse club industry is pretty small unless an outsider opted to acquire Bi’s Wholesale Club with the intention of rapidly expanding into areas and states where there are currently no Bi’s locations. The barriers to a new entrant are high: Cost and Cam’s are formidable competitors and enjoy sizable scale economies not easily accessed by a newcomer.
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Capital requirements are sizable if an entrant wishes to compete on a scale comparable to the industry incumbents. The marketing and advertising costs to attract members and build a significant volume of sales (and otherwise overcome the loyalty of existing warehouse club members) would be very high.
Moreover, the three industry incumbents are in a strong position to vigorously contest any newcomer’s entry, making it not attractive for others to enter this industry. Bargaining Power of Suppliers?a moderate to weak competitive force.
The suppliers consist mainly of the manufacturers of the products that warehouse clubs elect to stock. While a big proportion of these manufacturers are undoubtedly large enterprises with well-recognized brand names and good petitions among consumers, they are not necessarily in any strong bargaining position that allows them to dictate the terms and conditions on which they will supply their products to the warehouse clubs. Cost and Cam’s, in particular, have considerable bargaining power over suppliers in obtaining the merchandise they desire to stock.
No single supplier constitutes a large percentage of the merchandise that the wholesale clubs stock, thereby limiting any one supplier’s bargaining power. Moreover, these wholesale clubs are big volume buyers and thus have substantial arraigning clout with their suppliers. If a particular supplier chooses not to sell to the Manhole’s clubs at an attractively low price, they can easily switch their purchases to alternative manufacturers with little disruption of their business.
Such ease of switching suppliers lessens the bargaining power of suppliers. In sum, the suppliers to the wholesale clubs cannot put much pressure on their wholesale club customers in negotiating for better/higher prices and other more favorable terms of sale.
Bargaining Power of errs (Customers)?a weak competitive force Wholesale club members are numerous and buy in relatively small quantities, with no single member accounting for a meaningful fraction of a wholesale club’s total sales.
Consequently, individual members of wholesale clubs have little power or leverage to bargain with a wholesale club over the prices they will pay or over other terms and conditions of sale. To be sure, a member can choose not to purchase a particular item (but obtain it from another retailer or discounter) and can also choose not to renew their membership, UT this does not yield any bargaining power of consequence.
Even though members have low switching costs, they cannot negotiate for better prices or obtain any benefit beyond what their membership card provides. Threats of Substitute Products or Services?a strong competitive force Small business and individuals/households do not have to go to warehouse clubs to shop. They have many other alternative places and channels they can make purchases, including from online retailers.
Overall, the threat of substitutes is quite strong, given that: Acceptable substitutes are readily available.
Buyer costs to switch to substitutes are minimal. While the prices of substitute retailers may not be quite as low, the range of merchandise selection is far greater and the number of convenient store locations of these substitute retailers is much greater as well. Many consumers are already familiar with and comfortable Ninth shopping at substitute retailers/discounters. The merchandise that can be purchased at substitute retailers/discounters is quite comparable to the merchandise sold by wholesale clubs.
Product differentiation is low.
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Product differentiation and sales performance of an organisation (a case study of globacom telecommunications), project information:.
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