“Don’t forget that it (your product or services) is not differentiated until the customer understands the difference” – Tom Peters
Even though imitation is a form of flattery, organizations work so hard to be different. Why do organizations go into all the trouble to be different? This is because the key to a successfully business is being different from your competitor.
According to an article by Terra L. Fletcher, differentiation strategy of a business “is a predetermined set of actions designed to produce and deliver goods or services to customers who perceive the company’s offering as different”. The product or services are not just different, but different in a way that is unique to the customer.
Organizations opted differentiation strategy in their products or services in order to have a competitive advantage over its rivals in attracting customers. Differential strategies are formulated so that their competitors are not able to duplicate their products or services without considerable cost and risk. Thus, only that organization will be the product leader in that particular market.
Differentiation strategy becomes an important tool to survive in the market because there a loads of similar products out there. Customers have a lot of choices when selecting a product or services. For that reason alone, it is crucial for a product to be differentiated so that consumers have reason to prefer the product instead of a competitor’s. Organizations using a differentiation strategy will make the customers to choose their products.
Examples of Successful Product Differentiation Strategies in Food Manufacturing Company
In food manufacturing business, it is difficult to differentiate the food produce. However, in order to survive, the manufacturer brands must be innovative and uses the firm’s unique capabilities. Leadership is preserve when firms are able to differentiate their product offerings from competitors. This is true for companies like Heinz, Snyder’s of Hanover and the Fonterra Cooperative Group.
1) H.J. Heinz
H.J. Heinz is a leading manufacturer and marketer of branded foods in the global food industry. It becomes a challenge to the company when there are many large food manufacturers in the industry. In response, the company has created attractive consumer products by offering packaging innovations and the promotion of the health benefits of its existing products. The health dimension is a critical factor in its product differentiation strategy for Heinz.
2) Snyder’s of Hanover
Snyder’s, known as ‘‘America’s Pretzel Bakery,’’ and is considered a niche player in the snack food industry. It specializes in pretzels and similar snack foods. In order to be different, Snyder takes a special approach through its own online club called ‘‘Pretzel Eaters’ Club.’’ It carries out surveys and polls to get consumer reactions to various products. As an example, a recent poll asked consumers how they prefer to eat Snyder’s pretzels. This is important since the company is looking for better complements, such as dips, for its pretzels. This is how Snyder’s strategic direction in producing differentiated products.
3) The Fonterra Cooperative Group
FCG was formed by the merger of New Zealand Dairy Group, Kiwi Co-operative Dairies and the New Zealand Dairy Board in late 2001. It is owned by its nearly 12,000 dairy farming shareholders. An important part of Fonterra’s global business operations is procurement of raw milk and gaining access to product markets. Milk is perishable goods and it is difficult to be transported globally. In order to be a leader in the industry, Fonterra successfully established several strategic alliances and partners to increase efficiency and flexibility in its global supply chain.
Being unique and having a strong business differentiation strategy are important especially with hyper-competition in a global market. This is because in the global market there will always be another organization that can sell the same product or service for less. Process innovation can facilitate product innovation, leading to successful product differentiation and enhancing the organization leadership position in the market.
ii) STRATEGIC DIRECTION, VOL. 26 NO. 1 2010, pp. 17-20, Emerald Group Publishing Limited, ISSN 0258-0543 j