STEN 4980 Lecture Notes - Lecture 3: Product Differentiation, Customer Service, Network Effect
Document Summary
Differentiation strategy: differentiation means providing unique value that allows a firm to command a premium price for its product or service (relies on the consumers" willingness to pay more). There are four primary ways that companies differentiate their products from competitors: Superior product features: better reliability, convenience, brand/image. Sources of differentiation advantage: the product does a better job of meeting a customer need on existing product features. This can be done by focusing on one particular feature and doing a better functional job than other products of providing value on that particular feature: the product does more jobs for the customer than other products. Rather than simply doing existing jobs better or doing more of jobs than other products, they offer a completely new feature to the market. Mass customization: when a company mass-produces the various modules of the product and then allows the customer to select which modules will be combined together.
