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Week 5 - Product Differentiation

Week 5 - Product Differentiation - Integrated Core Fall...

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Click to edit Master subtitle style Brian Anderson and Valya Kuskova Week 5: Product Differentiation Integrated Core, Fall 2010 J-370, Strategy Component
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Chapter 5: Important Things to Know Understand the concept of product differentiation Know three categories of product differentiation, consisting of 11 bases Explain the relationship with managerial creativity Explain how it fits into the Five Forces and VRIO Framework Understand how it’s implemented in the organization
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Chapter 5: Important Terms to Know Product differentiation Product attributes (features, complexity, etc.) Links within and between firms Organizational structure Matrix structure Policy of experimentation
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The Strategic Management Process Mission Objectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage Business Level Strategy Corporate Level Strategy How to Position a Business in the Market? Which Businesses to Enter?
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Business Level Strategies Two generic business-level strategies Cost Leadership: generate economic value by having lower costs than competitors (Wal- Mart) Product Differentiation: generate economic value by offering a product that customers prefer over competitors’ product (Harley- Davidson)
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Product Differentiation A business-level strategy intended to: Increase the perceived value of the focal firm’s products and/or services relative to the value of competitors’ products and/or services Create a customer preference for the focal firm’s products and/or services
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Bases of Differentiation A base of differentiation must fill some customer need: image status comfort taste beauty style furthering a cause reliability in use safety nostalgia cleanliness service quality accuracy hunger belonging A differentiated product fills one or more needs better than the products of competitors
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Question While firms often alter the ________ of their products or services in order to implement a product-differentiation strategy, the existence of
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