Why is it important to differentiate your product Would a cost Essay

Why is it important to differentiate your product Would a cost leadership strategy be more effective Why or Why not - Essay Example The use of internet and cell phones made the purchasers to shift from 'marketplace'1 to the 'marketspace'2. The companies are to appeal both to the cognitive as well as to the emotional aspect of the buyers to sell their products in this fast changing consumer preferences. The task of diversifying the product or value addition to it to get more consumer acceptability is becoming more and more complex in this era. The marketing stalwarts are to devise different strategies to achieve success in making their product moving. Sometimes they differentiate their product and justify the demand of a premium price for the same while in other cases they reduce the manufacturing cost of the produce thereby making it cost effective. In this paper discussions are made regarding pros and cons of two such strategies such as 'Product Differentiation' and 'Cost Leadership' strategies and an analysis has been made regarding their applicability in different situations. Before the globalization process started the national firms were catering to the local needs thus making the choices for the customers restricted. But with globalization new companies with a varied range of products entered the market giving customers ample scope to choose the best among them. This gives rise to hyper competition for the companies to sell a similar kind of product. As choosing among the multiple products mainly based on differences between various attributes of the same, addition of value to the product as per the requirement of the customer became one of the important marketing strategies. "Product Differentiation is the modification of a product to make it more attractive to the target market" (http://en.wikipedia.org/wiki/Product_differentiation). It can be used as a complement or means of implementing market segmentation. This differentiation is being made to create a perception of uniqueness in the mind of a customer(Irene, Handouts). It gives a brand reputatio n thus catching the emotions of the customers to buy the particular product even if by giving a premium price. With product differentiation the changing needs of the buyer is duly addressed. The techno savvy buyer gets the goods with latest technology with a high price he has to pay for the same. For example "General Motors offers the OnStar system on selected vehicles. It includes GPS(Global Positioning System)for locating the car's exact position. The Driver can locate te nearest ATM, Hospital, convenience store, gas station and even book a room. The driver can a press a button in case of emergency to get immediate aid."(Kotler 318). Thus differentiation of the product always preceeds market research and study of various market segments. Some products are capable of high degree of differentiation (e.g. automobiles, furniture, cell pones etc.) while the scope for differentiating some other are very very less( e.g. steel). This differentiation can be made to various product attributes such as its form, features, performance, durability, style etc. Also we can differentiate a service by modifying its mode of delivery, installation, training etc. The primary task in this process is determing that "which features are worth adding. For each potential feature the company sould calcualte the customer value