Chapter 5 Differentiation CHAPTER 5 DIFFERENTIATION DIFFERENTIATION DEFINITION

Chapter 5: Differentiation

CHAPTER 5: DIFFERENTIATION

DIFFERENTIATION DEFINITION Providing unique value that allows a firm to command a premium price for its product or service Relies on the consumers’ willingness to pay more

4 PRIMARY WAYS TO DIFFERENTIATE Superior Features Better Reliability Convenience Brand/Image

3 WAYS TO WIN WITH SUPERIOR FEATURES Does a better job on existing features Does more “jobs” than other products Does a “unique” job that nothing else does

DIFFERENTIATION ADVANTAGES Differentiation strategies require a deeper understanding of the customer’s needs than cost-based strategies. This typically requires • Customer segmentation analysis • Consumption chain analysis

CUSTOMER SEGMENTATIONS DEFINITION Analysis of customer needs to identify groups of buyers who are similar in the way they discriminate among (and value) product or service offerings OBJECTIVE Identify a profit and market share maximizing strategy for each need-based customer segment to minimize: • Over-satisfying some customer segment needs (excess financial cost) • Under-satisfying others (market share cost)

3 WAYS TO SEGMENT THE MARKET PRODUCT ATTRIBUTES CUSTOMER DEMOGRAPHICS JOB-TO-BE-DONE Features of the product Attributes of the customer Attributes of the circumstance and job-to-be-done

DEFINING JOBS-TO-BE-DONE “People don't want to buy a quarter-inch drill… …they want a quarter-inch hole!” - Theodore Levitt

JOB DISCOVERY Get the job done by providing a solution that offers greater simplicity, convenience, cost, and access Look for jobs that are important, unmet, and widely-held

Sometimes a milkshake… Workbook Page 124

…isn’t just a milkshake Functional Job: Yummy treat Workbook Page 124 Social Job: Appease my kids Emotional Job: Commute Companion

UNDERSTAND THE JOB-TO-BE-DONE

WHY DO CUSTOMERS HIRE A HARLEY? Functional Job Transportation-Leisure Riding Social Job Meet Riding Buddies Emotional Job Feel Cool

ELEMENTS OF JOBS-TO-BE-DONE EMOTIONAL “Help me feel” • • • SOCIAL FUNCTIONAL “Help me seem” “Help me do” • • • “I need a pick-me-up. Help me feel inspired or rejuvenated. ” “I want to make a difference. Help me feel needed, irreplaceable. ” “I want to impress my peers with my poise and presence. Help me to seem looked up to. ” “I want to feel included. Help me to fit in, seem like a part of the group. ” “I want it to just work. Help me find a reliable solution. ” “Give me the best value for my money. Help me find a deal. ”

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