What are three activities or capabilities a firm should possess to support a differentiation-based strategy? Can you give an example of a company that has done this?
- Creative talent and Flair (i.e. access to talented employee pool who has the capability to innovate)
- Strong Product Engineering (which can support product development to create unique values for the customers)
- Strong marketing capabilities (this enables a firm to help the customers understand the value proposition and the uniqueness of the value compared to the competition)
We can perhaps take the best example of differentiation implemented by Apple Inc. Consider the iPhone. Compared to all other smartphones, iPhone stands distinct in the market. The value proposed in unique because it offers ‘simplicity with robustness and excellence’, which no other brand can offer. The ability to differentiate the products in this way has come from the organization’s capability to innovate, its talented employee pool, excellent marketing practice, access to different channels, singular focus on innovation (so much uniquely focused that Apple has outsourced its entire manufacturing and has openly declared that it only focuses on product innovation)