Discovering New Points of Differentiation

1. Discovering New Points of Differentiation Management Analysis Summer 2001

2. Strategic Differentiation • Most profitable strategies are built on differentiation • Offering customers something they VALUE that competitors do not offer • Most companies focus only on differentiating their products or services

3. Strategic Differentiation • Company has the opportunity to differentiate itself at EVERY point where it comes in contact with customers • Examine every step in the customers’ consumption chain • Discover new ways to satisfy customers’ needs • Focus on ways to ADD VALUE that competitors have not discovered

4. MacMillan and McGrath’sTwo Step Process • Map the Consumption Chain • Capture the customers’ TOTAL EXPERIENCE with your product or service • Analyze Your Customer’s Experience • Uncover ways to differentiate even the most mundane product or service

5. Mapping the Consumption Chain • Map your customer’s entire experience with your product or service • Make consumers aware of a need in a way that is unique and subtle • Make the search process less complicated, more convenient, less expensive and more habitual • Make the selection process more comfortable, less irritating, more convenient

6. Mapping the Consumption Chain • Make the process of ordering and purchasing more convenient • Deliver your product or service in a way that adds value for the customer • Consider what must happen from the time a company delivers a product to the time the customer actually uses it • Simplify the process of opening, inspecting, transporting and assembling products • Simplify the installation process

7. Mapping the Consumption Chain • Make the entire payment process easier for customers to understand • Rethink why your company uses its current payment policy - revamp if you can better serve customers • Find ways to store the product for your customers until they need to use it - especially if product is dangerous, expensive or inconvenient for customer storage

8. Mapping the Consumption Chain • Reduce difficulties in transporting your product from one location to another • Find better ways for customers to use a product or service • Provide customers with the most helpful response when they need assistance • Handle things well when the product does not work out • Make the repair process as customer friendly as possible

9. Mapping the Consumption Chain • Anticipate the need for repairs and respond BEFORE the need arises • Make the disposal process as convenient and environmentally safe as possible

10. Analyze Customer’s Experience • Gain insight into the customer by appreciating the CONTEXT within which each step of the consumption chain unfolds • Customer is always interacting with people, places, occasions, or activities • Interactions determine the customer’s feelings toward your product or service at each link in the chain

11. Analyze Customer’s Experience • Viewing customer’s feelings about the product or service strategically can help shape the dynamics of competition for that customer’s business • Consider simple questions at each link in the consumption chain • Assemble an inventory of possible points of differentiation

12. Analyze Customer’s Experience • What? • What are customers doing at each point in the consumption chain? • What else would they like to be doing? • What problems could they be experiencing? • Is there anything you can do to enhance their experience while they are at this stage of the chain?

13. Analyze Customer’s Experience • Where? • Where are your customers when they are at this point in the consumption chain? • Where else might they be? • Where would they like to be? • Can you arrange for them to be there? • Do they have any concerns about their location?

14. Analyze Customer’s Experience • Who? • Who else is with the customer at any given link in the chain? • Do those other people have any influence over the customer? • Are their thoughts or concerns important? • If you could arrange it, who else might be with the customer? • If you could arrange it, how might those other people influence the customer’s decision to buy your product?

15. Analyze Customer’s Experience • When? • When - at what time of day or night, on what day of the week, at what time of the year - are your customers at any given link in the chain? • Does this timing cause any problems? • If you could arrange it, when would they be at this link?

16. Analyze Customer’s Experience • How? • How are your customers’ needs being addressed? • Do they have any concerns about the way in which your company is meeting their needs? • How else might you attend to their needs and concerns?

17. Analyze Customer’s Experience • Try to understanding the customer’s experience at any (and every) link in the chain for any (and every) product • Offers companies the opportunity to identify and explore many nontraditional ways to create value • Select possibilities that mesh with company’s resources and capabilities

18. Select Ways to Differentiate • Develop new competencies if necessary • Focus on ways to differentiate that can generate a competitive advantage • Rare • Valuable • Costly to imitate • Nonsubstitutable • Boost performance