# 3.3 Differentiation Strategy Channel: MeanThat Video: https://www.youtube.com/watch?v=I97XsAcNuQ0 Duration: 7 min Language: English Words: 1107 Transcript page: https://viewrankai.com/tools/youtube-transcript/I97XsAcNuQ0 --- [0:00] hello and welcome to video number four in the module number three in the course where we are discussing business strategies in this video we are going to talk about differentiation competitive strategy it's the next one from the generic competitive strategies in the previous one we discussed cost leadership now we go for the other extreme which is a differentiation and I have a definition for you straightaway differentiation involves uniqueness along some dimension that is sufficiently valued by customers to allow price premium I think you are already getting the point if we are the differentiator we would like to charge a premium price we would like to be very [0:43] expensive so that our margin is very high and we can achieve a lot of profit now it is not so easy to be able to charge customers much more than what the average competitor charges well how can you achieve that we already have that in the definition we need to identify some dimension which is valued by our customer and then sort of offer great value on this dimension so if you look at the clothing stores maybe one dimension that is particularly valued by customers when it comes to clothing stores is the size and the variety of the offering within this clothing store so we can focus that our shops are very [1:31] large and we have large variety of offer within our shop because this is the dimension that we have identified as being valued by our customers and if we do that we will be able to charge presumably higher price than average competitors well is this gonna work is it not gonna work that is always the question that is why you need to go step by step first of all you need to identify these key dimensions that are valued by your customers and when you do that you need to act upon these dimensions where well and just then it hopefully is going to work and it will be a successful differentiator being [2:11] able to ask for a pre Brants so we are going to now do an exercise they have done several times in various companies it was always nice to do this exercise to identify the key dimensions and position ourselves within these and also our competitors but just to say it's not like that there would be always two key dimensions in our business or within our industry no there are many dimensions that you can pick for this exercise but your task is a successful business analyst is to take the key two of the more key couple of them so there are always many alternatives on to picking these [2:53] dimensions let's go for the exercise as you can see we have an example from American airline companies this should be from somewhere around 2005 our first dimension that we identified our service attributes is the traveling with this rank comfortable is the personal exceptionally helpful and friendly and so on and so on the other dimension is flight performance attributes such as are the flights on time now we plot each of the American Airlines as you can see our scanner client scores the highest on flight performance attributes while united being voiced from the other dimension Southwest scores highest on the service attributes while many other airlines that is united or Delta are on the other [3:47] extreme this kind of exercise can really help you identifying where you are on the market and what can you improve of course it's gonna tell you whether you can ask for a premium price as you can see once we identify the key dimensions the rest of the exercise is quite simple we can plot the competitors quite easily and and see whether we perform well on the key dimensions so when you are picking the dimensions which is the key part of this exercise you can consider two factors first of them think about a strategic customer who is the strategic customer for you usually it's it feels very [4:29] straightforward hey this is going to be my strategic customer say people aged 25 to 35 who are tech savvy and are having sort of higher income well it's not always that straightforward for instance think about newspaper companies who is the strategic customer for a newspaper companies is it the readers all the advertisers the revenue is coming from both sides but if we don't have the readers we don't DB advertisers and on the other hand if we don't have the advertisers probably we will not have high enough revenues from the readers ourselves so who is the key customer for us or the strategic customer for us that [5:09] is one thing that you always have to keep in mind when constructing the differentiation exercise second factor key competitors well I have seen this in practice sometimes when you are doing the differentiation exercise you tend to draw the dimensions or or draw the market too tightly so that it shows for you very favorable situation so you don't consider all of your competitors and you don't consider their advantages towards the customers so for instance an example would be Italian company I think they're Italian Benetton they were creating these nice colorful flowers but they failed to recognize that this niche can be addressed by the generalist companies such as Mark Spencer they can [6:05] produce colorful plovers as well this kind of a can it work well and what Benetton was thinking hey we are so great at creating these colorful flowers that this this dimension that we have created is going to help us survive in the future and retain high revenues and high profits however all of a sudden generalists came such as Mark Spencer and they serve these needs as well and the niche was satisfied with lower quality of the products maybe not so distinctive design of the product but they were happy and all of a sudden Benetton simply by failing to recognize that their dimension along which they are [6:49] trying to be unique is not so important dimension for the customer so you always need to keep the competitors in mind when designing these so and that is all for the differentiation strategy we talked about the need to identify key dimensions along we can define which we can differentiate ourselves if we successfully do so then we will be able to ask for a premium price and that is all from this video I am looking forward to see you in the upcoming ones --- About this transcript Read from YouTube's own caption track and laid out by ViewRank AI (https://viewrankai.com). 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