Card Set Information
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
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
Dell computer customers get exactly what they want; West Coast Choppers – Custom
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
At the business level, the U-Form?``
used to implement product differentiation strategies just as it is to implement cost
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.