1.1.3 adding value and differenciation

Question 1

what is competitive advantage

Answer 1

a competitive advantage is a set of unique features that a company has that is superior to that of its competitor

Question 2

what are some factors contributing to a competitive advantage

Answer 2

• product differenciation
• ability to add value
• operation efficiency
• position relative to competitors

Question 3

what is micheal porter’s generic strategy

Answer 3

it states that a firm can enjoy a competitive advantage if it is either:

• low cost
• highest differentiated

Question 4

what does product differentiation mean

Answer 4

product differentiation arises when customers perceive a distinct difference betweeen your product and the alternatives provided by competitors

Question 5

what are the 3 purposes of product differentiation

Answer 5

• positioning v competition
• protect and build a brand
• add more value

Question 6

how is positioning v competition beneficial

Answer 6

• source of comptitive advantage

- ideally hard to copy

Question 7

how is protecting and building a brand beneficial

Answer 7

• build intangible value

- strengthen customer loyalty

Question 8

how is adding more value beneficial

Answer 8

• strong differentiation should allow a higher price

- higher profit margins

Question 9

what does USP mean

Answer 9

somthing that sets a product apart in the eyes of customers ,both new and existing

Question 10

what are the requirements for effective product differentiation

Answer 10

• delivers things that are important to customers
• distinctive (compared with the competition)
• profitable
• not easily copied by competitiors
• affordable by the target customers

Question 11

what are some examples of highly differenciated products

Answer 11

• fairy liquid (key point of differentiation: “it lasts longer”)
• premier inn (key pnt of differetiation “a great night’s sleep- guaranteed”

Question 12

what is meant by “adding value”

Answer 12

the difference between the price of the finished product/service and the cost of the inputs involved in making it