Week 4 - part 2

Question 1

Definition of differentiation strategy

Answer 1

Differentiation strategy means making products or services stand out from competitors by offering unique features or attributes that customers value.

Question 2

The four major categories/sources of product differentiation:

Answer 2

Product features or performance
Product convenience
Brand image or reputation
Quality and reliability

Question 3

Two processes that companies can use to search for differentiation opportunities

Answer 3

Market research to identify unmet customer needs or desires
Analyzing competitor products and strategies to identify areas of potential differentiation

Question 4

Definition of customer segmentation

Answer 4

Customer segmentation is the analysis and process of dividing a market into smaller groups of consumers with similar needs or characteristics

Question 5

Three different ways that customer segmentation can be done

Answer 5

Demographic segmentation (based on age, gender, income, education, etc.)
Psychographic segmentation (based on personality, values, lifestyle, etc.)
Behavioral segmentation (based on purchasing behavior, product usage, etc.)

Question 6

Definition of the consumption chain

Answer 6

The consumption chain refers to the sequence of activities that a customer engages in before, during, and after purchasing and using a product or service.

Question 7

Why NPS is a useful indicator of differentiation success:

Answer 7

NPS is a direct measure of customer satisfaction and loyalty, which are key components of successful differentiation.
A high NPS indicates that a company is doing a good job of meeting customer needs and expectations and creating loyal customers who are likely to recommend the product to others.

Question 8

What is mass customization?

Answer 8

When a company mass-produces the various modules of the product and then allows the customer to select which modules will be combined together.
○ Build-a-bear

Question 9

What are the advantages of differentiation strategies?

Answer 9

customers develop brand loyalty

powerful suppliers would not matter because the focus is what the product will charge than its cost

Your firm has charge whatever, no pressure from customers

create barrier to entry with brand loyalty and differentiation

threat of substitute depends on competitors ability to meet customer needs

Question 10

disadvantages of differentiations strategies?

Answer 10

difficulty with maintaining long term distinctiveness
competitors can imitate

difficulty maintaining premium price customers