THE IMPACT OF PRODUCT DIFFERENTIATION STRATEGY ON SALES PERFORMANCE- DETERGENT POWDER
INTRODUCTION
For increasing the profit and to fulfill the needs of the stakeholders, and to gain an edge in an increasingly competitive and complex market climate, every company must recognize, predict, satisfy, and care for customers. Every industry, including the agriculture industry, has an underlying structure or collection of fundamental economic and technological characteristics that produce competitive forces. “A company's product differentiation strategy may either strengthen or weaken its role within an industry. Customer’s expectations (needs, wants, wishes, tastes, purchasing patterns) are matched with the capacities of the enterprise, based on the expertise and resources available to the company organization, which leads to the issue of core competence.”[1]
“The results of a company are linked to performance. Organizational efficiency is revealed by the outcome of business processes and milestones, as well as the progress of achieving set goals.”[2] Cost reduction, customer satisfaction, increased efficiency, and the ability to innovate were typically used to assess organizational success subjectively. We usually measure any firm’s performance using productivity, sales performance, customer satisfaction, and relationship growth. However, we will be limiting our study to impact sales performance due to product differentiation of detergent powders in our study. Product differentiation is a positioning technique used by many companies to set themselves apart from their rival’s products. Markets are rife with product differentiation. To prevent ruinous market competition, businesses distinguish their goods. Some companies also distinguish their products based on efficiency, such as strength, professional reputation, and so on. Companies, on the other hand, can differentiate their physical products based on features like creativity, performance, longevity, reliability, and reparability. The chosen picture should send out a clear and distinct message that communicates the product's key value and positioning. In our paper, we will understand the impact of product differentiation strategy on sales performance taking into consideration the detergent powder segment.
NEED FOR THE STUDY
The topic of our research paper is, the impact of product differentiation strategy on sales performance, this would allow the students to get deep insights about the topic and at the same time would help the young entrepreneurs to form a consolidated statement of the impact of product differentiation strategy and on sales performance which would help them with their ideas while opening their own company.
RESEARCH OBJECTIVES
· Understand product differentiation in detail.
· Relation between Product differentiation and sales performance
· Determine the effect or influence of differentiation strategy on the sales performance of detergent powder
RESEARCH METHODOLOGY
Qualitative and quantitative research are the most critical and widely used methods. These research methods are based on both numerical and non-numerical data analysis. They are primarily used to collect and evaluate data to comprehend the topics at hand, as well as the views expressed, statistics and figures provided by different sources, and the experiences discussed. It entails gaining in-depth knowledge of the subject. Theoretical research design is used in the current study as another method for increasing performance. The final tool is Content Analysis, which entails gathering and analyzing data from different written sources
LITERATURE REVIEW
First, the researcher went across “Marketing success through differentiation of anything by Theodore Levitt” – The author defines the characteristics of products that enable a marketer to win a customer from the competition and retain him once he has been won. Finally, the author explains the warning, creative mindset that characterizes effective product differentiation management. The rest articles are as follows
“Price Competition and Product Differentiation when Consumers Care for the Environment-by Klaus Conrad”.The following is a breakdown of the paper's structure. The author defines the Nash equilibria and provides a model of price and product differentiation. The paper then searched for social welfare-maximizing environmental characteristics and policy instruments to influence a firm’s decisions on characteristics against social ones, before concluding with some recommendations.
“Effectiveness of Differentiation Strategy on Business Performance of Kenyan Betting Companies by James Chege”. The study's main goal was to assess the impact of differentiation strategies on the financial performance of Kenyan betting companies.
“Product Differentiation and Customer Brand Loyalty in Selected Soap/Detergent Firms in Anambra State by ONWUCHEKWA FAITH CHIDI, Ph.D. IFEANYI, TITUS TOCHUKWU, Ph.D. EKWELI, CHINYERE ESTHER.” Customers of selected soap/detergent products in Anambra State were studied to see if there was a connection between product differentiation and consumer loyalty. The Resource-Based Theory and Differentiation Theory were used to guide the research.
“The influence of differentiation strategy on performance of water bottling companies in Mombasa County, Kenya by Tuva Juliet Nuru”-The impact of differentiation strategy on performance is examined in this report, as well as the role of industry background in mitigating this relationship. The study also gives us some insight into rapidly changing markets, allowing us to shape a more cohesive case about the water bottle industry.
CHAPTER 1: PRODUCT DIFFERENTIATION STRATEGY
The corporate world is a very dynamic and competitive place. As a result, companies that have stood the test of time are those who have meticulously planned out several tactics to differentiate their products and/or services in such a way that their customers remain loyal to them. Differentiation strategy refers to a strategy that allows an organization's products and/or services to stand out. It is the process of distinguishing a product or service from those offered by other manufacturers or service providers to make it more appealing to a certain target market. It is a technique for gaining a competitive edge over competitors by employing numerous strategies such as price promotion, store image, distribution intensity, packaging, product quality, and customer personality to acquire a competitive advantage over competitors. This method is most commonly employed in a monopolistic competitive market with homogeneous, highly substitutable, yet differentiated goods. Customers can effortlessly swap from one product substitution to another. As a result, product differentiation yields higher profitability since it protects competitive rivalry through brand loyalty based on appraisal, resulting in lower price sensitivity. With increased client demands as a result of globalization, manufacturing businesses are increasingly seeking competitive advantage by providing products with more desirable attributes, such as product quality, product flexibility, or reliable delivery. As a result, a differentiation strategy would provide these companies more leeway to create products with more valuable, desirable attributes to meet these demands. The focus of this research was on how product diversification of detergent powder’s strategy may be used to gain a competitive advantage and, ultimately, how it affects an organization's performance. Previous research has revealed that a lot of manufacturing companies regard differentiation as a more vital and distinct approach to achieving competitive advantage than a low-cost strategy. Product differentiation strategy can be a competitive advantage tool used by businesses to produce products that meet the needs of specific customers or could target a segment of them. Quality has become a crucial differentiating factor among products when it comes to meeting the needs of specific customers. Quality has become a crucial differentiating factor among products when it comes to meeting unique client wants as higher product quality, product design, distinctive product features, and new product innovation are used to quantify product differentiation and make the products competitive. The dimensions of sales growth and customer satisfaction are used to evaluate organizational performance. As a result, data analysis was conducted, which was then utilized to determine the influence of product differentiation as a competitive advantage tool on organize performance. Product differentiation should not be viewed solely as a tool for generating sales or profits, but also as a tool for putting the company in the spotlight and obtaining a competitive advantage position. Product diversification thus improves the organization's overall capability in terms of developing its products, attracting more customers and consumers. Using numerous differentiation strategies, a company's differentiation strategy tries to differentiate within just one or a small number of target market categories. Thus it is said that differentiation is seen as a means of gaining a competitive edge. The process of articulating the distinctions between products or services, or the resulting list of differences, is known as marketing or product differentiation. This is done to highlight the unique features of a company's product and to generate a sense of value.
CHAPTER- 2: PRODUCT DIFFERENTIATION AND SALES PERFORMANCE
The ever-increasing competition and the race for market share among makers of homogeneous products, such as soap and detergent, has led managers to strategize strategies to create a competitive advantage and build consumer loyalty. This necessitates a high level of differentiation for businesses to attract and retain customers' attention. Furthermore, demands on customers' discretionary cash, as well as their demand for more value, have prompted soap/detergent manufacturers to constantly seek to differentiate their goods through numerous means while keeping their pricing low. Differentiating services and products among detergent powders providers are dependent on a variety of variables. The following elements were evaluated after a thorough review of the literature to determine how detergent powder providers differentiate their products/services in the market. The relationship between chosen product differentiation and the firm's success was explored in a study. Product differentiation is favorably connected with business performance. According to the findings, product differentiation has a substantial impact on the marketing performance of detergent powders. When products are innovatively differentiated, their reputation is increased, which has a major impact on firm performance, with a positive link between the variables. According to the findings, a company's constant product differentiation resulted in considerable growth in distributors, showing that differentiated products had a beneficial impact on firm success.
The findings demonstrated that excellent quality with product design is associated with increased sales while creating products with distinctive features which are associated with increased customer happiness. According to the evidence in the reviewed empirical studies, most of the studies focused on large manufacturing firms, owing to their financial and operational capacities to remain competitive within the industry; thus, there is a gap in empirical studies because few studies exist on product differentiation as it affects sales performance of small scale industries.
DETERMINANTS
Product Differentiation Determinants
Innovation
Innovativeness demonstrates the potential to differentiate products/services and is considered a viable differentiation approach in a competitive environment. A company must examine the product's technology and customization in contrast to competitors throughout the differentiation process, as it represents the firm's willingness to innovate.
Customer Satisfaction
In the service literature, customer satisfaction is described as a personal sensation of delight or dissatisfaction resulting from an evaluation of services delivered by a business to consumers in proportion to their expectations. In service sectors, client retention is a critical aspect in maximizing business performance, and it is critical to satisfying customers by providing their needs. A service organization must focus more on planning and implementing client retention strategies.
Service Quality
Service quality is regarded as one of the most critical variables influencing a company's total profitability. Two essential functions explain this significance. First and foremost, service quality is one of the few elements that distinguish services and allows service organizations to achieve a competitive advantage by attracting more consumers and increasing market share. Second, customer satisfaction is seen as a critical factor in client retention. There has been a lot of research done on the topic of ‘quality over the last two decades, but it is crucial to highlight that there are several various ways to think about it.
Customer Value
In the service industry, client value is critical for businesses to stay competitive. Because customers are growing more demanding, competition is becoming more severe, and technology is rapidly evolving, businesses are looking for new ways to obtain a competitive advantage. Delivering exceptional customer value is one of the most significant components of a company's success because it affects the customers' behavior intentions to a large extent. Companies are now focusing on internal transformation through enhancing procedures. As a result, when soap/detergent producers make products that are distinctive through the use of uncommon and difficult to replicate or substitute features and quality, customers become loyal and prefer their products over those of others.
Price
Price is another phenomenon that companies use to differentiate their products in the service economy. It can become a complicated topic because it increases the risk for the seller who is selling the same or similar products or services at different rates. Furthermore, customers care more about a company's prices than its costs, therefore prices are more likely to be differentiated, which is why pricing is also a role in product differentiation.
The study's findings revealed that product differentiation strategy for detergent powder and sales performance has a strong, favorable, and substantial link. This means that increasing product differentiation techniques, such as specialized product qualities relevant to competitors and diversification of products to meet the needs of different customers, will result in improved performance. As a result, businesses must consistently produce new items at competitive prices employing unique materials. This can be accomplished by obtaining raw materials from vendors who are constantly monitoring and improving the quality of the resources they provide. This would result in higher overall returns because the firm would be justified in charging a higher price than the average market price due to the product's quality. Resources should be made aside for product development and research. Market research is critical for any company, especially at times when more market orientation is required. Market research may assist businesses in developing product differentiation strategies that are tailored to the specific needs of their customers, resulting in increased customer loyalty and satisfaction.
CHAPTER- 3: RECOMMENDATION AND SUGGESTIONS
Firstly, manufacturing organizations face domestic and international rivalry, as well as quick variations in customer needs, and many manufacturing firms have realized that to be competitive, a product differentiation strategy may be a more feasible option than efficiency and pricing strategies. This research study also shows how product differentiation may be leveraged to gain a competitive advantage and can improve the organizational performance of products associated with detergent powder. The results reveal that there is a significant association between factors (preference, product knowledge perception, and cost of distinguishing products) and sales performance, implying that product differentiation strategy contributes positively to sales performance.
To understand more, given the dynamic nature of the business environment and the ever-changing wants of customers, it is logical to assume that executive management must ensure that their customers are adequately satisfied. In other words, executive management should pay greater attention to customer happiness, because their capacity to keep a larger client base than their competitors is critical to their survival in this dynamic economy.
Furthermore, executive management should place a higher emphasis on product differentiation, since it is a crucial tool for gaining a competitive advantage that leads to improved organizational performance and also places a greater emphasis on product differentiation, as it may be used as a major competitive advantage weapon against industry competitors and can ensure the organization's long-term existence. Also, product differentiation appears to be a crucial driver of organizational performance, and it may operate as a link between the positive impact of customer satisfaction and organizational performance.
CHAPTER 4: CONCLUSION
In conclusion, the research study shows that, regardless of how minor product difference is in respect to organizational performance, there is a favorable association between the variables. This means that manufacturing companies must pay more attention to the items they make in terms of design quality, innovation, and distinctive characteristics. Thus when going ahead with differentiating the products one should thoroughly understand the determinants of the product differentiation and make changes accordingly to them. According to the findings, increasing the use of a product differentiation approach enhances customer loyalty to the product. When businesses focus on the quality of their products, they will develop a loyal consumer base who will prefer their goods and services. However, it can be shown from the descriptive analysis utilizing frequency and mean that number plays a large impact in customer preference, therefore businesses should invest in quantity while differentiating with quality.
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AUTHOR:
NAME- PRATIK MAITRA
COURSE- BBA-LLB
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