Building a successful differentiation and growth strategy 1 (2)

Building your differentiation strategy

Robert Farrell

Building your differentiation strategy

Robert Farrell

Dare to be differentDare to be different

Robert Farrell

..STRATEGIC

CHOICES

Bases of competitive strategy

Generic Strategy Decisions

The choices as to how an

organisation positions itself in relation to competitors

Strategydirections

Alternative growth options & directions

The choices of products and markets available to an organisation

Methods for pursuing strategies

The choices about how strategies are to be pursued

What basis? Which direction? How?

Source: Adapted Johnson & Scholes 2008Robert Farrell

Porter’s Generic StrategiesPorter’s Generic Strategies

Robert Farrell

Differentiation DefinedDifferentiation Defined

The unique qualities, perceived or

real, of a good or service, that

distinguishes it from a

competing good or service

The unique qualities, perceived or

real, of a good or service, that

distinguishes it from a

competing good or service

Robert Farrell

CUSTOMER VALUE MAPCUSTOMER VALUE MAP

PRICE

PERCEIVEDVALUE

Robert Farrell

What gives organisations a competitive edge

What gives organisations a competitive edge

Controlling or having something others do not have Doing something better then other organisations Doing something others cannot do Designing competitive strategies to exploit their

competitive advantage

Controlling or having something others do not have Doing something better then other organisations Doing something others cannot do Designing competitive strategies to exploit their

competitive advantage

Robert Farrell

BOWMAN’S STRATEGY CLOCK

BOWMAN’S STRATEGY CLOCK

Source: Johnson & Scholes:1993Robert Farrell

Route 4: Broad DifferentiationRoute 4: Broad Differentiation

Key factors for successful differentiation

1) Indentifying and understanding the strategic customer.

2) Identifying key competitors

Offer products/services that create value to customers

Offer products/services not easily matched

Key factors for successful differentiation

1) Indentifying and understanding the strategic customer.

2) Identifying key competitors

Offer products/services that create value to customers

Offer products/services not easily matched

Robert Farrell

Differentiation in practiceDifferentiation in practice Unique taste – Bailey’s with its various flavours

Convenience – SPAR

Superior service – FedEx

More for your money –Dunnes Stores, McDonald’s

Engineering design/performance – Mercedes Benz

Manufacturing quality – Audi

Prestige - Rolex

Unique taste – Bailey’s with its various flavours

Convenience – SPAR

Superior service – FedEx

More for your money –Dunnes Stores, McDonald’s

Engineering design/performance – Mercedes Benz

Manufacturing quality – Audi

Prestige - Rolex

Robert Farrell

Route 3: The hybrid strategyRoute 3: The hybrid strategy Seeks to achieve both differentiation and

low price relative to competitors

Can be advantageous when Much greater volumes can be achieved than competitors, so that

margins may still be better because of a low cost base. Cost reductions are available outside of its differentiated

activities Used as an entry strategy in a market with established

competitors

Seeks to achieve both differentiation and low price relative to competitors

Can be advantageous when Much greater volumes can be achieved than competitors, so that

margins may still be better because of a low cost base. Cost reductions are available outside of its differentiated

activities Used as an entry strategy in a market with established

competitors

Robert Farrell

Route 5:Focused DifferentiationRoute 5:Focused Differentiation A focused differentiation strategy seeks to

provide high perceived product/service benefits whilst justifying a price premium, usually to a selected market segment (niche) or small number of targeted segments. e.g.Rolex & Killester Travel (sports holidays/breaks)

A focused differentiation strategy seeks to provide high perceived product/service benefits whilst justifying a price premium, usually to a selected market segment (niche) or small number of targeted segments. e.g.Rolex & Killester Travel (sports holidays/breaks)

Robert Farrell

SUSTAINING COMPETITIVE ADVANTAGE

SUSTAINING COMPETITIVE ADVANTAGE

Need for the unique resources and core competencies necessary to support their adopted strategy

Create difficulties of imitation. Mix of linked activities (bundles) e.g. UPC TV, broadband,

phone. Imperfect mobility such that the capabilities that sustain

differentiation cannot be traded. Top pharmaceutical research scientist Star footballer

Brands – difficult to imitate or obtain Switching costs

Need for the unique resources and core competencies necessary to support their adopted strategy

Create difficulties of imitation. Mix of linked activities (bundles) e.g. UPC TV, broadband,

phone. Imperfect mobility such that the capabilities that sustain

differentiation cannot be traded. Top pharmaceutical research scientist Star footballer

Brands – difficult to imitate or obtain Switching costs

Robert Farrell

4 WAYS TO GROW YOUR BUSINESS4 WAYS TO GROW YOUR BUSINESS

Ansoff’s Matrix

Source: Johnson & Scholes1993Robert Farrell

Gap AnalysisGap Analysis

Where the companywants to be

Where the company islikely to be without a strategy

change

TIME

PROFITS

GAPCurrentPosition

Robert Farrell

Ansoff’s Matrix

Source: Adapted Johnson & Scholes1993

`MARKETPENETRATION

PROTECT/BUILD


Robert Farrell

Ansoff’s Matrix



Robert Farrell



Robert Farrell

Ansoff’s Matrix



Robert Farrell

DiversificationDiversification

Related diversification Where the product and market are still roughly in the same

industry e.g. Gillette

Unrelated diversification based on the concept that any new business or company, which

can be acquired under favourable financial conditions and has the potential for high revenues, is suitable for diversification

Related diversification Where the product and market are still roughly in the same

industry e.g. Gillette

Unrelated diversification based on the concept that any new business or company, which

can be acquired under favourable financial conditions and has the potential for high revenues, is suitable for diversification

Robert Farrell

Why would you diversify?Why would you diversify?1. Objectives cannot be accomplished with the present portfolio of the

firm.

2. Promises more profitability than business expansions.

3. Cash reservoirs contain more cash than that required for present

expansions.

4. Company has strong brands that could be transferred to the

products of other businesses.

5. With closely related business it opens new avenues for reducing

costs.

1. Objectives cannot be accomplished with the present portfolio of the

firm.

2. Promises more profitability than business expansions.

3. Cash reservoirs contain more cash than that required for present

expansions.

4. Company has strong brands that could be transferred to the

products of other businesses.

5. With closely related business it opens new avenues for reducing

costs.

Robert Farrell

Strategic Planning Exercise (gap analysis)Strategic Planning Exercise (gap analysis)

1. Establish the 3 year objective that has to be achieved

2. Produce forecast on basis of doing nothing differently.

3. Establish the gap

4. Attempt to fill the gap Market penetration

Look at what’s possible . Start with productivity. Main products – market growth/ market

share growth?

1. Establish the 3 year objective that has to be achieved

2. Produce forecast on basis of doing nothing differently.

3. Establish the gap

4. Attempt to fill the gap Market penetration

Look at what’s possible . Start with productivity. Main products – market growth/ market

share growth?

Robert Farrell

ConclusionConclusion

Be better than competitorsin ways that matter to your customers.

Understand your customers Know and understand your competition Market research is key

Be better than competitorsin ways that matter to your customers.

Understand your customers Know and understand your competition Market research is key

Robert Farrell

Building a successful differentiation and growth strategy 1 (2)

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