Thursday, January 28, 2010

Competitive Advantage and Differentiation

Kotler states that "To build a profitable relationship with target customers, marketers must understand customer needs better than competitors do and deliver more customer value. To the extent that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage" Thus, competitive advantage is a certain value to the customer that a firm offers that is greater than the competitors.

The key word here is differentiate. The main way to achieve competitive advantage is through differentiation. Differentiation is to "actually differentiating the market offering to create superior customer value." Some ways to differentiate are...

Through product differentiation
- differentiate on features, performance, style, design, etc...

Through service differentiation
- differentiate on speed, convenience, care, etc..

Through channel differentiation
- differentiate on channel's coverage, expertise, performance, etc...

Through people differentiation
- differentiate on firm's people or employees(friendly, helpful, better trained, etc...)

Through image differentiation
- differentiate on company's brand image (including reputation and history)



When I came home today from long day of school, where I went through 4 hours of class, a group presentation on job satisfaction and stress, 4 different meetings for group projects and extracurricular activities, I needed to take a rest before I could think about what to write on this blog.

As I started watching Nip/Tuck on TV, I realized that I should pay attention to the ads during the show to see if I can find an ad that would fit well with some concept I have learned in marketing.

After the first segment ends, the ads begun. To my surprise, it didn't take me long to find a great prop to use for this blog. The following is an advertisement for Jack Daniel's whiskey:



The very first thing you notice with this ad is that they don't really talk about the product itself. It is an ad for whiskey, so one might expect that they would try to sell how their whiskey is better than their competitors. But rather, here they talk about the history of "the old number 7", which is part of their product label. This, in fact, is an example of image differentiation.

Marketers at Jack Daniel's understand their competitive advantage in the whiskey market, which is their rich history. Jack Daniel's was originally made at Kentucky in 1904 by Jack Daniel. It's been around for more than a century, thus it is rich with history and tradition. This is not something every competitor can say about themselves. With history comes reputation, which leads to comfort and trust in part of the customers. This may lead them to choose Jack Daniel's rather than their competitor's.

Here in this ad, even though they do not directly talk about the whiskey's history, they talk about the "the old number 7" printed on the packaging. This number 7 was placed on the package by Jack Daniel himself, and the company is claiming that they do not know the meaning behind. They use this mystery in their advantage by bringing up possible scenarios behind the number. It makes the viewer wonder about it, which inputs the product in to their minds.

The ad ends with the narrator saying that "The truth is, only Jack Daniel knows the true meaning of the old number 7... We won't be hearing from him anytime soon..." By doing this, they are indirectly restating that: we've been around so long that our founder is long dead! Again, emphasizing the history and culture behind Jack Daniel's whiskey.


Samu Shobeiri, Section G

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