Product differentiation

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The product differentiation represents a supplement to an already introduced product or service with a new variant . Often, segment-specific feature modifications are made to the existing product in order to be able to meet the different needs of individual customer groups in a more targeted manner. An example would be the introduction of a station wagon model for an already existing sedan , which is specifically aimed at families with children.

With a product differentiation strategy, providers can retain existing customers and expand the target group of their market development .

The best-known theoretical basis of the product differentiation approach is formed by the writings on competitive strategies by Michael E. Porter .

Starting points for implementing product differentiation:

  • Offer of modular systems: Modular products in which the customer can put together different product variants from modules .
  • Offer of product-related services , so-called "value-added services": The customer is given the opportunity to increase the benefits of an existing product by purchasing additional services .

Horizontal and vertical product differentiation

There are two classic types of product differentiation:

  • Of horizontal product differentiation (design competition) is when the product variations in taste terms differ such that at the same prices several variants would find buyers ( Hotelling's Law ).
  • Of vertical product differentiation (quality competition) is when the variants differ in terms of quality such that when the same price just a variation would find buyers.

Example: product differentiation in automotive engineering

In automobile construction, a vehicle model, which is defined by the assemblies body, engine and transmission, can be differentiated using various equipment ( features ). For a single model in a vehicle class, there can be over a thousand different equipment options. Alternative equipment can be grouped into equipment families, of which there can be over a hundred different equipment families: The "Lacquer" family contains all color finishes, the "Navi" family combines the various navigation systems, etc. Each of these families can be used when ordering a vehicle only one (of the alternative) equipment can be selected, but one equipment must always be selected. A family's equipment is mutually exclusive (in pairs). Therefore, only equipment from different families can be combined in one order, which makes the product definition clear and makes it easier for customers to order. This systematics achieves a consistent product definition that meets the requirements of an ideal Boolean algebra . This consistency is essential for numerous applications in the context of sales and production control, e.g. B. for the construction of a product configurator and for the planning and creation of the production program of great advantage (see also PPS system , production planning and control , sales program ).

Further product differentiation also includes the offers of additional equipment for special professional groups (taxis, doctors, police, ...), authorities and public institutions (post office, municipalities, social support services, ambulances, ...) or for companies (company cars, field service vehicles, ...). Many vehicle manufacturers also offer their customers the option of further customizing the so-called series vehicles. For example, Audi (Audi Sport GmbH), Mercedes (AMG) and Volkswagen (R-GmbH) have founded special subsidiaries that take care of this customization. The manufacturers try to integrate this individualization as far as possible into the series process (see web link [1]).

Individual evidence

  1. ↑ Bernd Woeckener: Strategic Competition: An Introduction to Industrial Economics . Jumper; Edition: 3rd, completely revised. 2014 edition. ISBN 978-3-642-36990-2 , p. 16.
  2. ^ Herlyn: PPS im Automobilbau , Hanser Verlag, Munich, 2012, pp. 81–101.

literature

  • Frank Thomas Piller: Mass Customization: A Competitive Strategic Concept in the Information Age . Gabler, Wiesbaden 2000, ISBN 3-8350-0355-0 .
  • Ralf Reichwald, Frank Thomas Piller: Interactive added value: Open innovation, individualization and new forms of division of labor . Gabler, Wiesbaden 2006, ISBN 3-8349-0106-7 .
  • Herlyn, Wilmjakob: PPS in automotive engineering - production program planning and control of vehicles and assemblies . Hanser Verlag, Munich 2012, ISBN 978-3-446-41370-2 .

Web links