strategy

Competitive Differentiation
Competitive Differentiation Jonathan Poland

Competitive differentiation refers to the unique value that a company’s product, service, brand, or experience offers in comparison to all other offerings in the market. When a company’s competitive differentiation aligns with customer needs, it can help the company gain market share in a competitive market. Ideally, a company’s competitive differentiation should be difficult for its competitors to match due to its unique competitive advantages. This can help the company stand out in the market and attract customers.

Quality
Superior quality such as the hotel with the most comfortable and visually stunning decor in all of central Paris.

Style
Being more stylish than the competition in the eyes of a target market. For example, the ice skate brand that hockey players view as cool.

Culture
The culture surrounding a brand, product or service. For example, the ice skates that are viewed as a Canadian classic with much lore attached to them.

Distinctive Capability
A distinctive capability is an ability to do something no other competitor can match. For example, the only industrial company in a nation that has the know-how to safely decommission a nuclear power plant.

Talent
Superior talent such as an architectural firm filled with award winning architects.

Relational Capital
Relational capital such as the real estate agent who knows the most people in a market such that they can give you insights into each buyer, seller and agent.

Usability
A product or service that is more pleasing and productive to use may have an advantage over the competition. This is particularly true in product categories where users spend a lot of time using the product such as a television, mobile device or vehicle.

Locations
Locations such as the only restaurant in a luxury hotel.

Convenience
Convenience such as a company with faster delivery and more service locations than the competition.

Performance
The performance of products and services such as running shoes that are unusually bouncy and easy on the knees.

Speed
Being faster than the competition, such as a bank that does everything in real time in a country where competitors commonly take several business days to do most transactions.

Safety
Being safer than all other competition such as a car that has superior crash test results and an exceptional real world safety record.

Health
A product or service that is perceived as more healthy than the competition. For example, a fast moving consumer goods company that uses no artificial ingredients in its products.

Risk
The ability to reduce or transfer a risk better than the competition. For example, a cloud platform that is known for its superior stability, reliability and availability that reduces business risks related to technology outages.

Privacy
Products and services that do not collect or retain data as compared to the competition. For example, a vehicle safety system that only retains 20 seconds of video footage that never leaves the vehicle itself as opposed to a vehicle that collects and retains every moment permanently in the cloud to be shared with third parties.

Configurability
Products and services that afford the user full control of their experience. For example, a microwave that allows customers who value quiet to turn off beeping sounds and customers who require notifications to turn them on.

Compatibility
Products and services that integrate with things. For example, a television that can automatically connect to a broad range of data storage devices with no configuration required.

Efficiency
A product or service that uses less resources such as an electric bicycle that can travel extreme distances on a single charge.

Price
A lower price than the competition. For example, a solar panel company that offers the lowest prices on the market for solar panels at a reasonable level of quality. This typically requires a lower unit cost than the competition as a competitive advantage.

Durability
Offerings that are more durable in the face of stresses than the competition. For example, a house construction company known for its earthquake resistant designs and construction techniques.

Customer Service
Friendly and diligent customer service as compared to the competition. This can be a particularly strong competitive differentiation in an industry that is known for poor customer service.

Network Effect
Having more customers or users than the competition can be a significant advantage. For example, the most popular bar in a business district that consistently feels more socially lively than the competition.

Sustainability
The ability to deliver your products and services without hurting people or planet. For example, a drinking straw product that safely biodegrades within days such that it doesn’t add to the problem of ocean plastic.

Barriers to Entry
Barriers to Entry Jonathan Poland

Barriers to entry refer to factors that make it difficult for new companies to enter a particular market. These barriers can take many forms, including technological know-how, government regulations, reputation, location, and the need for large investments or specialized assets. When barriers to entry are high, it can allow existing firms in the industry to maintain a strong market position and charge higher prices due to their market power. In extreme cases, high barriers to entry can lead to the formation of a monopoly, where a single firm controls the entire market and can charge high prices without fear of competition.

Examples of barriers to entry:

  1. Intellectual property: Patents, trademarks, and copyrights can be used to protect intellectual property, making it difficult for new competitors to enter the market.
  2. Economies of scale: Companies that have already achieved a large scale of production may have cost advantages over smaller competitors, making it difficult for them to enter the market.
  3. Network effects: When a product or service becomes more valuable as more people use it, new competitors may find it difficult to enter the market because they cannot attract enough users to generate the same value as the existing players.
  4. Government regulation: Regulations and licensing requirements can create barriers to entry, particularly in industries that are heavily regulated, such as healthcare and financial services.
  5. Access to distribution channels: Established firms may have established relationships with distributors and retailers, making it difficult for new competitors to gain access to these channels.
  6. Customer loyalty: If customers are highly loyal to a particular brand, it can be difficult for new competitors to attract these customers and gain a foothold in the market.
  7. Supplier relationships: Established firms may have longstanding relationships with suppliers, making it difficult for new competitors to secure the necessary raw materials or components.
  8. High startup costs: Industries that require large investments in equipment, research and development, or marketing may have high barriers to entry for new competitors.
  9. Legal barriers: Legal contracts, such as exclusive agreements or non-compete clauses, can create barriers to entry by preventing new competitors from entering the market.
  10. Industry consolidation: When a few large firms dominate an industry, it can be difficult for new competitors to enter and compete effectively.
  11. Reputation: Established firms may have a strong reputation in the market, which can make it difficult for new competitors to gain credibility and attract customers.
  12. Customer acquisition costs: Industries that require significant marketing and sales efforts to attract customers may have high barriers to entry for new competitors due to the costs associated with acquiring new customers.

First-mover Advantage
First-mover Advantage Jonathan Poland

First-mover advantage refers to the competitive advantage that a company can gain by being the first to enter a new market or introduce a new product or service. This advantage is often attributed to the ability of a first-mover to establish a strong brand and customer base, as well as to secure key resources, such as patents and distribution channels, that can be difficult for competitors to replicate. It is a monopoly-like advantage that includes both a high market share and pricing power. The effects of a first-mover advantage can be temporary if the position isn’t successfully defended.

One of the key benefits of being a first-mover is the ability to establish a strong brand and customer base. By being the first company to enter a new market, a first-mover can gain a significant share of the market and build a loyal customer base. This can provide a strong foundation for future growth and can make it difficult for competitors to gain a foothold in the market.

Another advantage of being a first-mover is the ability to secure key resources, such as patents and distribution channels. By being the first to enter a new market, a first-mover can often secure these resources before competitors, which can provide a competitive advantage. For example, a first-mover may be able to secure key patents that allow them to protect their technology or intellectual property, or they may be able to establish strong relationships with key distributors that can be difficult for competitors to replicate.

Here are a few examples of first-mover advantage:

  • Amazon was the first company to introduce e-commerce on a large scale, and as a result, they were able to establish a strong brand and customer base. This allowed them to gain a significant share of the online retail market and made it difficult for competitors to gain a foothold in the market.
  • Google was the first company to introduce a search engine that used algorithms to rank search results, and as a result, they were able to establish a dominant position in the search engine market. This allowed them to secure key patents and build a loyal customer base, which has helped them maintain their market share and stay ahead of competitors.
  • Apple was the first company to introduce smartphones with touchscreen interfaces, and as a result, they were able to establish a strong brand and customer base. This allowed them to gain a significant share of the smartphone market and made it difficult for competitors to gain a foothold in the market.
  • Netflix was the first company to introduce a subscription-based streaming service for movies and TV shows, and as a result, they were able to establish a strong brand and customer base. This allowed them to gain a significant share of the streaming market and made it difficult for competitors to gain a foothold in the market.

While first-mover advantage can provide significant benefits, it also comes with risks. One of the key challenges of being a first-mover is the uncertainty of entering a new market. Because the market is untested, it can be difficult for a first-mover to accurately forecast demand and plan for potential challenges. This can make it difficult for a first-mover to recoup their initial investment and can lead to significant financial risks.

Overall, first-mover advantage can provide significant benefits, including the ability to establish a strong brand and customer base, as well as to secure key resources. However, it also comes with risks, such as the uncertainty of entering a new market, which can make it difficult for a first-mover to recoup their initial investment. The following are types of first-mover advantages.

Technological Leadership

Developing capabilities in an area of technology that are difficult or impossible to match. This may include intellectual property such as patents and trade secrets.

Brand

A brand that becomes ingrained in the culture of the new market. For example, the first brand of snowboard may garner a certain amount of respect and esteem by enthusiasts of the sport.

Resources

Securing scarce resources that make it difficult for others to enter your market. This is similar to the advantages of traditional monopolies such as railways whereby it is extremely difficult for a new competitor to enter the market as the land required isn’t available.

Switching Barriers

The first firm in a new market is sure to capture most of the initial customers. Such customers may be reluctant to switch or they may face switching costs.

Quality Assurance
Quality Assurance Jonathan Poland

Quality assurance (QA) is the process of verifying that a product or service meets specific quality standards. This is often done through a combination of testing and inspection, and is typically performed by a dedicated QA team or by an individual with expertise in quality assurance. This may encompass areas such as organizational structure, processes, systems, design, reliability engineering and human factors. The goal of QA is to identify and address any issues or defects in a product or service before it is released to customers. This can help ensure that the product or service meets the expectations of its users and is free of defects or errors that could negatively impact its performance.

QA processes are typically implemented at various stages of the product development lifecycle, including during the design and development phase, during testing, and prior to launch. This can help ensure that any issues or defects are identified and addressed early in the development process, before the product or service is released to customers. QA processes typically involve a combination of manual testing and inspection, as well as automated testing using specialized software tools. Manual testing involves a QA team or individual manually testing the product or service to identify any issues or defects. Automated testing, on the other hand, involves using specialized software tools to test the product or service automatically, allowing for more efficient and comprehensive testing.

Overall, quality assurance is a critical part of the product development process. By verifying that a product or service meets specific quality standards, QA helps ensure that the product or service is able to meet the expectations of its users and is free of defects or errors that could impact its performance.

The following are common techniques and considerations.

  • Benchmarking
  • Business Capabilities
  • Business Process Reengineering
  • Compliance
  • Configuration Management
  • Conformance Quality
  • Continuous Improvement
  • Fail-safe
  • Fit For Purpose
  • Gap Analysis
  • Graceful Degradation
  • Human Error
  • Incident Management
  • Ishikawa Diagrams
  • Kaizen
  • Latent Human Error
  • Operations Analysis
  • Pokayoke
  • Problem Analysis
  • Problem Management
  • Process Improvement
  • Quality
  • Quality Control
  • Quality Goals
  • Quality Objectives
  • Quality Policy
  • Reliability Engineering
  • Requirements
  • Safety By Design
  • Service Management
  • Specifications

Product Management
Product Management Jonathan Poland

Product management is the practice of managing a portfolio of products throughout their lifecycle from concept to end-of-life. It can be thought of as the strategic management of product development and product marketing. This includes defining the product’s features and benefits, creating a product roadmap, managing the product’s budget and resources, and ensuring that the product is aligned with the company’s overall business strategy.

Product managers are responsible for overseeing the entire product development process, from concept to launch. This involves working closely with cross-functional teams, such as engineering, design, sales, and marketing, to ensure that the product meets the needs of its target customers.

One of the key responsibilities of product managers is to define the product’s target market and customer needs. This involves conducting market research, gathering customer feedback, and analyzing data to identify opportunities for new products or product enhancements.

Once the product’s target market and customer needs have been defined, product managers create a product roadmap that outlines the development and launch timeline for the product. This roadmap includes key milestones and deliverables, as well as the resources and budget required to bring the product to market.

Throughout the product development process, product managers work closely with cross-functional teams to ensure that the product is on track and meeting its objectives. This may involve making adjustments to the product roadmap or collaborating with other teams to address any challenges or obstacles that arise.

Once the product is launched, product managers continue to play a critical role in its success. This may involve tracking and analyzing product performance, gathering customer feedback, and working with other teams to identify opportunities for product improvements or enhancements.

Overall, product management is a critical function that plays a vital role in ensuring that a company’s products are successful in the market. By defining the product’s target market and customer needs, creating a product roadmap, and overseeing the product’s development and launch, product managers help ensure that a company’s products are aligned with its overall business strategy and are able to meet the needs of its customers.

The following are common product management techniques and considerations.

  • Adoption Lifecycle
  • Branding
  • Cash Cow
  • Competitive Intelligence
  • Distribution Strategy
  • Market Research
  • Positioning
  • Pre-announcement Effect
  • Product Analysis
  • Product Cannibalization
  • Product Category
  • Product Development
  • Product Economics
  • Product Knowledge
  • Product Management Process
  • Product Objectives
  • Product Rationalization
  • Product Requirements
  • Product Risk
  • Service Life

Product Identity
Product Identity Jonathan Poland

Product identity refers to the overall personality or character of a product. This can include the product’s features, benefits, and branding, as well as how it is perceived by customers. Marketing teams often think of products as having a distinct personality and identity in the market, and customers may describe products using the same words they would use to describe people. A strong product identity can help a product stand out in the market and can contribute to its success. Here are a few examples of product identity.  In each of these examples, the product’s features, benefits, and branding all contribute to its overall product identity.

  • A luxury car may have a product identity that is associated with elegance, performance, and exclusivity.
  • A sports drink may have a product identity that is associated with health, energy, and endurance.
  • A smartphone may have a product identity that is associated with innovation, functionality, and design.
  • A clothing brand may have a product identity that is associated with fashion, quality, and sustainability.
  • A toy may have a product identity that is associated with fun, creativity, and safety.

Product Identity vs Brand Identity
Product identity and brand identity are essentially the same concept. Brand identity is the far more common term. As such, product identity is the application of brand identity to a single product. This can be useful as products under the same brand many have unique identities.

Product Identity vs Product Positioning
Product identity is the concept behind a product framed in terms of target customer perceptions. In other words, it is the overall impression you want customers to have of a product. Product positioning is a unique and valuable market fit for a product. This can include identity and other factors such as price, quality and product experience.

Premiumization
Premiumization Jonathan Poland

Premiumization is the strategy of offering higher-quality products or services that consumers perceive as having greater value. This is in contrast to commoditization, which involves competition to offer lower prices for a standard level of quality. Premiumization occurs in a product category, market, or industry where customers are willing to pay a premium for higher-quality products or services. Premiumization can help a company differentiate itself from its competitors and can lead to increased revenue and market share. Here are some examples.

Rarity
Releasing things in small batches such that demand exceeds supply. For example, a toy manufacturer that releases 10,000 units of a limited addition collectable when demand might be 100,000 units.

Ingredients
Using quality parts, materials and ingredients such as a restaurant that offers artisanal foods.

Craft
Offering handmade things in an automated world.

Customer Service
Customer service that is exemplary in some way. For example, a restaurant with well dressed waiters who are unusually good with people.

Sensory Design
Superior look, feel, taste, smell and sound. For example, a pair of shoes that customers appreciate for their form and overall artistic design.

Experience
The end-to-end experience of a product or service including intangible elements such as the interior design of a restaurant.

Status
Social status attached to a brand, product, service, ingredient or area. For example, a spa that is located in a posh shopping area such as Ginza in Tokyo.

Features
Functionality such as a vehicle with cutting edge safety features.

Performance
A product that outperforms the competition in a measurable way.

Reliability
Quality is heavily associated with durability in real world conditions. A mobile device that breaks the first time you drop it won’t be perceived as a premium item.

Position
A superior position that is difficult for competitors to match. For example, the only hotel on a popular beach.

Details
Attention to details such as packaging.

Time To Market
Time To Market Jonathan Poland

Time to market is an important metric for businesses because it can affect a company’s ability to remain competitive and respond to changes in the market. A shorter time to market allows a company to bring new products and services to market faster, which can help them gain an advantage over their competitors. A longer time to market, on the other hand, can make it difficult for a company to stay ahead of the competition and may result in lost revenue and market share.

Here are a few examples of how time to market can impact a company’s ability to remain competitive:

  • A technology company is working on developing a new smartphone. They are able to bring the product to market in six months, while their competitors take a year to develop and launch a similar product. As a result, the company is able to gain a significant advantage over their competitors by being the first to market with the new smartphone.
  • A clothing retailer is working on launching a new line of clothing. They take two years to develop the line and bring it to market, while their competitors are able to launch similar products in just six months. As a result, the retailer misses out on potential sales and market share because they are not able to respond to changing consumer preferences as quickly as their competitors.
  • A food manufacturer is working on launching a new line of healthy snacks. They take six months to develop the snacks and bring them to market, but their competitors are able to launch similar products in just three months. As a result, the manufacturer loses out on potential sales because they are not able to respond to changes in consumer demand as quickly as their competitors.

Price Sensitivity
Price Sensitivity Jonathan Poland

Price sensitivity is a measure of how much the demand for a product or service decreases as the price increases. It can be seen as the drop in conversion rate as the price of a product or service goes up. The degree of price sensitivity varies greatly among different customers, with some individuals being more willing to pay higher prices than others. For example, businesses and governments may be willing to pay more for a product or service than individual consumers.

Pricing strategies often take price sensitivity into account by offering different prices to different customers based on factors that indicate their level of price sensitivity. For example, an airline may offer lower prices for tickets that require a Saturday night stay, as this is typically a signal that the customer is a business traveler who is less sensitive to price. This allows the airline to target their pricing more effectively and maximize their revenue.

Here are some examples of price sensitivity:

  1. Customers who are willing to pay a premium price for a high-quality product or service
  2. Customers who are shopping on a tight budget and are very sensitive to price increases
  3. Customers who are loyal to a particular brand and are less sensitive to price changes
  4. Customers who are willing to switch to a competitor’s product or service if the price is lower
  5. Customers who are willing to pay a higher price for convenience or time savings
  6. Customers who are price sensitive when it comes to purchasing necessities, but less sensitive when it comes to luxury items
  7. Customers who are price sensitive when it comes to products or services that they use frequently, but less sensitive when it comes to infrequently purchased items
  8. Customers who are price sensitive when it comes to products or services that have many substitute options available, but less sensitive when it comes to products or services with few substitutes.

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