08+ms-11+strategic management+sem ii+d10108020010

7/29/2019 08+MS-11+Strategic Management+Sem II+D10108020010

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MS 11 Strategic Management SEM II

Question 1 .Suppose you are the business strategist of your company, which is into

manufacturing FMCGs. What would be your differentiation strategy looking at the present

trend? Discuss.

Differentiation strategy can be defined as an integrated set of actions designed to produce and

deliver goods and services that the customers perceive as being different in ways that are

important to them and these are directed at customers who are relatively price-insensitive. It calls

for a company to sell non standardized products to customers with unique needs. Most of the fast

moving consumer goods like biscuits, soaps, toothpastes oils etc. come under the category of

differentiated products. To make differentiated products. To make differentiated strategy

successful it is necessary for the firms to do extensive research to study the different needs of the

customers. A firm is able to differentiate if it is able to position itself uniquely at something that

is valuable to the buyers.

Differentiation has gained a lot of importance in the present scenario due to globalization which

has led to hyper competition. The targeted customers today have many choices which can be

fulfilled instantly. Thus priority is given by customers to products which are different and unique

in nature besides satisfying their demands among the options available. Thus differentiation is

one of the most important strategic and tactical activity in which a company must constantly

engage.

The greatest potential of differentiation lies in products which are of complex nature without

having to adhere to strict regulatory standards and success of differentiation depends upon the

firms commitment to the customers by giving them a product perceived by them as unique be

it in terms of value, style, packaging, etc.. The firm has to understand the demand of the

customer and fulfill it while keeping the advantage of differentiation in mind. For this the firm

should concentrate on its creativity and innovativeness than on market research.

Differentiation should be aimed at the broad market that involves:-

(a) Creation of a product that is perceived throughout its industry as unique.

(b) The company may then charge a premium for its product.

(c) The specialty can be associated with design, brand image, technology, features, dealers,

and network or customer services.

Differentiation strategy is viable as it results in higher earnings as brand loyalty lowers price

sensitivity in customers. Customers are willing to pay more so increased costs can easily bepassed on to the customers. Brand loyalty also results in customers not accepting new entries of

similar products in the market. Thus a differentiation strategy will be more likely to generate

higher profits than a low cost strategy by creating an entry barrier.


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There are a number of factors which result in differentiation:-

(a) To compete against the rivals.

(b) To create entry barriers for newcomers by building a unique product.

(c) To reduce threats arising from substitutes.

(d) To develop a differentiation advantage.

For this the company has to give importance to:-

(a) Positioning and differentiating the business.

(b) Positioning and differentiating the products against rivals

(c) USING the Business-level cross-functional process management

(d) Anticipating changes in technology and customer perceptions and adjusting the strategy

to accommodate them.

(e) Influencing the nature of competition through strategic actions such as virtual integrationand through political actions

(f) Building strategic partnerships and co-innovating with other business units, partners, and

customers

In order to be considered different you must provide the customer with More Value-Added

(MVA). This means having to give the customers far more than you have even done before. E.g.

you can give discounts or have one plus one free scheme or give like a toothbrush with

toothpaste free etc... You have to simplify your interaction with customers and deliver solutions

to your customers problems. The MVA principle can be visualized as a ladder with your product

at the bottom and the solution to your customers problems at the top. The more you fill the gap

the value you add to them and the more you differentiate yourself from your competitors. The

more control you have of the ladder less likely it is that your customers will abandon you in

favor of someone who offers less value. At the same time your margins and profits will increase.

In order to have good differentiation strategy you must keep in mind the following:-

(a) Reflect the spirit of the Business.

(b) Be symbolic and intuitive.

(c) Be distinctive.

(d) Catch eye.

(e) Stay in memory.

(f) Connect to different cultures.

(g) Be adaptable.


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08+ms-11+strategic management+sem ii+d10108020010

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