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How do cost leadership strategies create value?
generate economic value by having lower costs than competitors
How do product differentiation strategies create economic value?
generates economic value by offering a product that customers prefer over competitors’ product
The intention of a product differentiation?
- Theintention of a product differentiation strategy is to increase the perceived
- value of the focal firm’s products and/or services relative to the value of
- competitor’s products and/or services
True or false. Typically,
a firms differentiation strategy is likely to rely upon multiple bases of differentiation from multiple BOD categories?
- base of differentiation, we refer to the preferences created by actual differences
- in the tangible product or service offered by the focal firm vis-à-vis
- competitors’ offerings
the size of a golf club head; baking soda in toothpaste
- weights you can insert into a golf club to correct your swing; multiple functions on a
- watch – does the feature make it more complicated to use?
Timing of Introduction?
being the first to market – timing introduction
- locating next to a freeway exit for gas stations; mobile mechanics (ability to move
- refer to the customer preferences that are created as the focal firm develops and
- exploits relationships with customers based on what the focal firm’s target
- customers want
- Dell computer customers get exactly what they want; West Coast Choppers – Custom
- motor cycles
creating brand loyalty to a product or service through image advertising
- a product or service that indicates membership in an elite or socially meaningful
among Functions in the Firm?
- ability to effectively integrate multi-functional R&D or innovation teams in the
- development and transfer of product differentiation ideas
with other Firms?
- Affiliations with highly reputable firms or causes -a sporting goods store sponsors a
- benefit race by donating running shoes and receives free radio advertising in
- return; Mattel toys of Disney movie characters in McDonalds happy meals
- a furniture store begins to sell home gym equipment, computers, and lawn mowers;
- grocery stores that have pharmacies and gas stations
Paul Mitchell hair care products only available through salons
Service and Support?
- an oil change service that offers pick up and delivery of cars to employees of a
- particular firm parking garage
BOD in Fragmented Industry?
BODS in Emerging Industry: ?
first mover advantages
BOD's in Mature Industry?
- firms attempt to differentiate established products by
- “refining” the product—new and improved
- firms may differentiate a product by offering new levels
- of service to accompany the product
BOD's in Declining Industry: ?
- moving toward specialization and/or niches
- by definition
At the business level, the U-Form?``
- used to implement product differentiation strategies just as it is to implement cost
- leadership strategies.
True or false, Decision
making is usually more decentralized in a product differentiation strategy as
compared to a cost leadership strategy.?
Can firms effectively pursue both cost
leadership and product differentiation simultaneously?
- yes, but it is extremely difficult most companies that pursue both end up being
- stuck in the middle, they don’t achieve either cost advantages or successfully
- differentiate their product.