ABSTRACT
In recent years the concept of competitive advantage has taken centre stage in discussions of business strategy; that is why, one of the major challenges organizations face today is how to have a competitive advantage. In most cases a stand out product will do the job, since products are perceived as both highly relevant and meaningfully, the ability for any one product to standout in a competitive category will guarantee the success of such organization. While there are numerous ways to differentiate brands, identifying meaningful product-driven differentiators can be especially fruitful in gaining and sustaining a competitive advantage.
Differentiation is when a firm or brand outperforms rival brands in the provision of a feature(s) such that it faces reduced sensitivity for other features (Sharp & Dawes, 2001). Even in industrial economics, a discipline where there is more of a tradition of providing formal statements of theoretical concepts, two eminent industrial economists felt obligated to write an article for the Journal of Industrial Economics titled “What is Product Differentiation, Really?”
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Branding has been around for centuries as a means to distinguish the goods of one producer from those of another producer. To firms, brands represent enormously valuable pieces of legal property that can influence consumer behaviour, be bought and sold as well as provide the security of sustained future revenues of their owner. Well- recognized brands make shopping easier. Brand promotion has advantages for branders as well as customers. A good brand reduces the marketer’s selling time and effort and sometimes a firm’s brand name is the only element in its marketing mix that a competitor cannot copy. Also good brands can improve the company’s image- speeding acceptance of new products marketed under the same name. Thus branding can be seen as a powerful means to secure a competitive advantage.
Beyond deciding which segments of the market it will target, the company must decide on a value proposition, that is, how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments. Companies must pursue relevant differentiation and positioning, each company and its product must represent a distinctive big idea in the mind of the target market. Given the many brands available in the market place, a company must carefully consider both the strengths and the weaknesses of competitors when developing marketing strategy; this is to aid the product positioning task.
The differentiation and positioning task consists of three steps: Identifying a set of possible differentiations that create competitive advantage, choosing the right competitive advantages and selecting an overall positioning strategy. In essence, product positioning extends market segmentation by defining the market target that management intends the firm to penetrate. It establishes the segments at which the firm intends to focus its marketing efforts; this is the segments where the firm is most likely to have a competitive advantage.
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