Page 352 - Marketing Management

SETTING PRODUCT STRATEGY | CHAPTER 12 329

Product Differentiation
FORM Many products can be differentiated in form—the size, shape, or physical structure of a
product. Consider the many possible forms of aspirin. Although essentially a commodity, it can be
differentiated by dosage size, shape, color, coating, or action time.

FEATURES Most products can be offered with varying features that supplement their basic
function. A company can identify and select appropriate new features by surveying recent buyers
and then calculating customer value versus company cost for each potential feature. Marketers
should consider how many people want each feature, how long it would take to introduce it, and
whether competitors could easily copy it. 7
To avoid “feature fatigue,” the company must prioritize features and tell consumers how to use
8
and benefit from them. Companies must also think in terms of feature bundles or packages. Auto
companies often manufacture cars at several “trim levels.” This lowers manufacturing and inven-
tory costs. Each company must decide whether to offer feature customization at a higher cost or a
few standard packages at a lower cost.

CUSTOMIZATION Marketers can differentiate products by customizing them. As companies
have grown proficient at gathering information about individual customers and business partners
(suppliers, distributors, retailers), and as their factories are being designed more flexibly, they have
increased their ability to individualize market offerings, messages, and media. Mass customization
is the ability of a company to meet each customer’s requirements—to prepare on a mass basis
individually designed products, services, programs, and communications. 9
Levi’s and Lands’ End were among the first to introduce custom jeans. Other firms have intro-
duced mass customization into other markets. Online retailers such as Zazzle and CafePress allow
users to upload images and create their own clothing and posters or buy merchandise created by
other users. Customers must know how to express their personal product preferences, however, or
be given assistance to best customize a product. 10
When Mercedes-Benz’s quality
PERFORMANCE QUALITY Most products occupy one of four performance levels: low,
ratings took a dive, the automaker
average, high, or superior. Performance quality is the level at which the product’s primary
characteristics operate. Quality is increasingly important for differentiation as companies adopt a instituted a number of significant
value model and provide higher quality for less money. Firms should design a changes to bring them back up.
performance level appropriate to the target market and competition, however, not
necessarily the highest level possible. They must also manage performance quality
through time. Continuously improving the product can produce high returns and
market share; failing to do so can have negative consequences.

Mercedes-Benz From 2003 to 2006, Mercedes-Benz
endured one of its most painful stretches in its 127-year history. Its stellar quality
reputation took a beating in J.D. Power and other surveys, and BMW surpassed
it in global sales.To recoup, a new management team reorganized the company
around functional elements—motors, chassis, and electronic systems—instead
of by model lines. Engineers begin testing electronic systems a year earlier and put each new
model through 10,000 tests that ran 24 hours a day for three weeks. Mercedes tripled its
number of prototypes for new designs, allowing engineers to drive them 3 million miles before
production.With these and other changes, the number of flaws in the cars dropped 72 percent
from their 2002 peak and warranty costs decreased by 25 percent. As a side effect,
Mercedes-Benz dealers have had to contend with a sizable drop in their repair and service
businesses! 11

CONFORMANCE QUALITY Buyers expect a high conformance quality, the
degree to which all produced units are identical and meet promised specifications.
Suppose a Porsche 911 is designed to accelerate to 60 miles per hour within
10 seconds. If every Porsche 911 coming off the assembly line does this, the model is