Hoofdstuk 5 Product differentiation

Question 1

Product differentiation

Answer 1

Firms attempt to gain a competitive advantage by increasing the perceived value of their products or services relative to the perceived value of other firms’ products or services
Charge a higher price

Question 2

Differentiate a product

Answer 2

• Focus directly on the attributes of its products or services (product features, product complexity, timing of product introduction or location)
• Focus on relationships between itself and its customers (product customization, consumer marketing or product reputation)
• Focus on linkages within or between firms (linkages among functions within a firm, linkages with other firms, product mix, distribution channels or service and support)

Question 3

Value of product differentiation

Answer 3

Entry: overcome additional costs of product differentiation advantages
Rivalry: carve out own unique product niche
Substitutes: more attractive than substitutes
Suppliers: pass increased costs onto customers
Buyers: quasi-monopoly

Fragmented: consolidate
Emerging: first mover
Mature: product refinement
Declining: survive or become market leader

Question 4

Rarity of product differentiation

Answer 4

Depends on the ability of individual firms to be creative in finding new ways to differentiate their products

Question 5

Imitability of product differentiation

Answer 5

Possible: product features
Maybe: Product mix, links with other firms, product customization, product complexity, consumer marketing
Costly: Links between functions, timing, location, reputation, distribution channels, service and support

Partial substitutes for each other or with another strategy

Question 6

Organization for product differentiation

Answer 6

Organizational structure: cross-divisional/functional product development teams, complex matrix structures (more bosses) and isolated pockets of intense creative efforts
Management control systems: broad decision-making guidelines, managerial freedom with guidelines and a policy of experimentation
Compensation policies: rewards for risk-taking and creative flair, not punishment for failures, multidimensional performance measurement