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HORIZONTAL FEATURE DIFFERENTIATION

Appeal is made to a variety of different customers by adding or sub­tracting tangible features to the same basic product. Examples would be several varieties of food items at a restaurant, different styles of mens' pants for a clothing manufacturer, or various models of all-ter­rain vehicles with different engine and transmission options.

Critical relationships necessary in the current reality for this ap­proach to work are that our business has extra production capacity or an aggressive growth plan.

Strategic solution implementation is simply selling the same basic thing to a new customer. We are "taking a second bite" out of a competitor's existing customer base, or we are adding to the market's overall customer base. To ensure that this approach works, the current reality analysis of the competitors is crucial.

Negative branch pitfalls include marketing misjudging the new market, engineering leading, and investing funds we don't have in new tooling and manufacturing resources. Simple and safe applications of this intervention are selling the same thing to customers in a different "place" and selling a variety of the same basic "product" at different "price" points.VERTICAL FEATURE DIFFERENTIATION

Often missed due to the visibility or obvious tangible elements of the horizontal features approach. The vertical feature approach is intended to sell more product to the same customers, more frequently. The "more product" sold may be the same product, or it may be a completely different product/service then was originally sold to that customer. Examples are liquor and dessert sales to a restaurant customer and con­venience stores. It is far easier to sell something else to the same cus­tomer than it is to find a new customer.

 

Critical relationships for this approach include several of those mentioned for horizontal features. However, the marketing emphasis is on the way the same customer uses the tangible related products.

 

Strategic solution implementation mandates that the common ground relating the different tangible products to be sold to the same customer is the current reality of the customer. This so­lution should be used prior to horizontal differentiation and should be applied in our company's current reality near the beginning of the growth stage in the product life cycle as shown in figure 2.

Negative branch reservations are the design of the differentiation based upon utilization of a common re­source of the supplier.

DOMINANT EDGE DIFFERENTIATION

A less frequently seen approach and also a more diffi­cult and dangerous approach. The essence of this ap­proach is to top end every competitor's product. Ex­amples illustrating this are the Dodge Viper, personal computers, and Dillon Reloading Presses.

 

Strategic solution elements include top-ending the competition on a factor that interests the market, and resources developed for the top-end market should be applied judiciously to other segment at lower price points.

 

Negative branches are selecting a dominant edge that the market does not care about, investing in a dominant edge prior to ensuring that the base factors are robust enough, or the dominant edge stealing mar­ket from our own existing products that are still in their life cycle growth stage.

BENEFITS DIFFERENTIATION

Based upon the way the customer uses or experiences the product. The tangible product is augmented through intangibles such as options, warranties, delivery, lead time, service, etc. Examples of this approach are Hardees/McDonald's and the companies from It's Not Luck, Pete's Printing and Pressure Steam.

 

Critical relationship preconditions include extra production ca­pacity or an aggressive growth plan, and a sales force that can relate to the customer's needs. It cannot be used if our marketing and sales de­partment has weak TOC current reality and evaporating paradigm (cloud) ability.

 

Negative branch concerns are not looking at differentiation through the customer's eyes, and staying too close to our current features and resources.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11


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