Differentiated Markets

Question 1

Differentiated mkt Definition

Answer 1

Market where products have material differentiating points (opposite of commoditized market)

Question 2

Differentiated mkt Quick examples

Answer 2

Dating mobile apps, high end apparel, real estate, cybersecurity software

Question 3

Typical characteristics of differentiated mkts

Answer 3

• many differentiating points and unique value prop b/t market players
• customer segments not very price sensitive and ready to pay price premiums
• price pressure is likely low/moderate
• margins likely high/moderate
• differentiating points are one of the key success factors

Question 4

Competitive landscape of differentiated mkt

Answer 4

• comp. landscape is likely fragmented with many players offering highly-differentiated product/service lines

Question 5

Differentiated mkt example (software developer wanting to offer new services for member management and fee collection software)

Answer 5

• a lot of different features and interfaces across different software vendors
• price is not the only purchasing decision making criteria
• margins likely high/moderate but dependent on scale because tech has high operating margins due to scalability of tech operations
• competitive landscape is likely fragmented with many players

Question 6

Software example (sample jargon more fleshed out)

Answer 6

• “the considerable differentiation in the software development mkt I would hypothesize allows players to charge price premiums and enjoy healthy margins”
• “ also, given favorable economics of business, I would expect to see a lot of vendors of member management software, does this assessment sound reasonable”