DIFFERENTIATION
CONCEPT OF DIFFERENTIATION :
Every
individual customer is unique in itself so is his/her preferences regarding tastes,
preferences, attitudes, etc. These needs of the customers are fulfilled by the
firms by producing differentiated products. In our day-to-day life we see many
such examples of differentiated products. Most of the fast moving consumer
goods like; biscuits, soaps, toothpastes, oils, etc. come under the category of
differentiated products. To satisfy the diverse needs of the customers, it
becomes essential for the firms to adopt a differentiation strategy. To make
this 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
from its competitors if it is able to position itself uniquely at something that
is valuable to buyers. Differentiation can lead to Differential advantage in
which the firm gets the premium in the market, which is more than the cost of
providing differentiation. The extent to which the differentiation occurs
depends on the overall strategy of the firm. Previously differentiation was
viewed narrowly by the firms, but in the present scenario it has become one of
the essential components of the firm’s strategy. Reliance Infocomm, offers
varied products like; different facilities to its customers in the CDMA
telephones. This is differentiation.
When
we talk of differentiation, it can be said that virtually any product can be differentiated
(Sadler, 2004). The greatest potential of differentiation lies in products, which
are of complex nature but do not have to adhere to strict regulatory standards,
but the success of a differentiation strategy depends on the firm’s commitment
towards customers and the understanding of customer needs as differentiation is
all about perceiving on the part of the customer of something unique.
Differentiation can be said to have more competitive advantage than the cost
advantage as it is quite difficult to imitate the differentiated products. Even
if the initiation is done in terms of concept, then also a particular product
remains unique regarding its value, style, packaging, etc. Therefore, when we
talk about differentiation, it is important to understand the demand of the
customers and fulfilling this demand keeping in mind the differentiation advantage.
In this case, one thing the firms should concentrate on its creativity and innovativeness
than on market research. We have discussed about the concept of differentiation
as a whole but we need to know the why aspect of differentiation, i.e., why do
the firms need differentiation?
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