1.1.3 adding value and differenciation Flashcards
what is competitive advantage
a competitive advantage is a set of unique features that a company has that is superior to that of its competitor
what are some factors contributing to a competitive advantage
- product differenciation
- ability to add value
- operation efficiency
- position relative to competitors
what is micheal porter’s generic strategy
it states that a firm can enjoy a competitive advantage if it is either:
- low cost
- highest differentiated
what does product differentiation mean
product differentiation arises when customers perceive a distinct difference betweeen your product and the alternatives provided by competitors
what are the 3 purposes of product differentiation
- positioning v competition
- protect and build a brand
- add more value
how is positioning v competition beneficial
- source of comptitive advantage
- ideally hard to copy
how is protecting and building a brand beneficial
- build intangible value
- strengthen customer loyalty
how is adding more value beneficial
- strong differentiation should allow a higher price
- higher profit margins
what does USP mean
somthing that sets a product apart in the eyes of customers ,both new and existing
what are the requirements for effective product differentiation
- delivers things that are important to customers
- distinctive (compared with the competition)
- profitable
- not easily copied by competitiors
- affordable by the target customers
what are some examples of highly differenciated products
- fairy liquid (key point of differentiation: “it lasts longer”)
- premier inn (key pnt of differetiation “a great night’s sleep- guaranteed”
what is meant by “adding value”
the difference between the price of the finished product/service and the cost of the inputs involved in making it
