Summary for 2 articles and answer question for 2 cases
Discovering New Points of Differentiation
by Ian C. MacMillan and Rita Gunther McGrath
Reprint 97408
Harvard Business Review
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JULY-AUGUST 1997
Reprint Number
HarvardBusinessReview W. CHAN KIM AND RENEE MAUBORGNE FAIR PROCESS: MANAGING IN THE KNOWLEDGE ECONOMY 97405
KATHLEEN M. EISENHARDT, JEAN L. HOW MANAGEMENT TEAMS CAN HAVE A GOOD FIGHT 97402 KAHWAJY, AND L.J. BOURGEOIS III
MICHAEL VAN BIEMA AND MANAGING OUR WAY TO HIGHER BRUCE GREENWALD SERVICE-SECTOR PRODUCTIVITY 97410
WILLIAM A. SAHLMAN HOW TO WRITE A GREAT BUSINESS PLAN 97409
DOROTHY LEONARD AND PUTTING YOUR COMPANY’S WHOLE BRAIN TO WORK 97407 SUSAAN STRAUS
PAUL KRUGMAN HOW FAST CAN THE U.S. ECONOMY GROW? 97406
GORDON ADLER HBR CASE STUDY WHEN YOUR STAR PERFORMER CAN’T MANAGE 97401
TARUN KHANNA AND WORLD VIEW KRISHNA PALEPU WHY FOCUSED STRATEGIES MAY BE WRONG FOR
EMERGING MARKETS 97404
RYUZABURO KAKU THINKING ABOUT… THE PATH OF KYOSEI 97403
IAN C. MACMILLAN AND MANAGER’S TOOL KIT RITA GUNTHER MCGRATH DISCOVERING NEW POINTS OF DIFFERENTIATION 97408
ALEXANDRA WYKE BOOKS IN REVIEW CAN PATIENTS DRIVE THE FUTURE OF HEALTH CARE? 97411
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Most profitable strategies are built on differentiation: offering cus- tomers something they value that competitors don’t have. But most companies, in seeking to differenti- ate themselves, focus their energy only on their products or services. In fact, a company has the opportunity to differentiate itself at every point where it comes in contact with its customers – from the moment cus- tomers realize that they need a prod- uct or service to the time when they no longer want it and decide to dis- pose of it. We believe that if compa- nies open up their creative thinking to their customers’ entire experience with a product or service – what we call the consumption chain – they can uncover opportunities to posi- tion their offerings in ways that they, and their competitors, would never have thought possible.
Take the case of Blyth Industries, a candle manufacturer. By differenti-
ating and redifferentiating its prod- ucts, Blyth has been able to grow from a $2 million U.S. producer of candles used for religious purposes to a global candle and accessory business with nearly $500 million in sales and a market value of $1.2 bil- lion. Not bad for a company in an in- dustry that, as CEO Robert B. Goer- gen says, “has been in decline for 300 years.” Blyth’s story is, quite simply, a manifestation of the power of strategic differentiation.
Business history is full of stories of entrepreneurs who stumbled upon a great idea that then became the cornerstone of a successful com- pany. But finding ways to differenti- ate one’s company doesn’t have to be an act of genius or intuition. It is a skill that can be developed and nurtured. We have designed a two- part approach that can help compa- nies continually identify new points of differentiation and develop the
ability to generate successful differ- entiation strategies. The first part, “Mapping the Consumption Chain,” captures the customer’s total experi- ence with a product or service. The second, “Analyzing Your Custom- er’s Experience,” shows managers how directed brainstorming about each step in the consumption chain
M A N A G E R ’ S T O O L K I T
DRAWINGS BY PAUL MEISEL Copyright © 1997 by the President and Fellows of Harvard College. All rights reserved.
Open up your thinking to your customer’s entire experience with your product or service.
Discovering New Points of Differentiation
by Ian C. MacMillan and Rita Gunther McGrath
Ian C. MacMillan is the George W. Taylor Professor of Entrepreneurial Studies and a professor of manage- ment at the University of Pennsyl- vania’s Wharton School in Philadel- phia. Rita Gunther McGrath is an assistant professor in the Manage- ment of Organizations Division of Columbia University’s Graduate School of Business in New York City. MacMillan and McGrath are coau- thors of “Discovery-Driven Plan- ning” (HBR July-August 1995) and “Discover Your Products’ Hidden Potential” (HBR May-June 1996).
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can elicit numerous ways to differ- entiate even the most mundane product or service.
Mapping the Consumption Chain
As we’ve said, the first step toward strategic differentiation is to map your customer’s entire experience with your product or service. We rec- ommend that companies perform this exercise for each important cus- tomer segment.
To begin, assemble groups from all areas of your company – in par- ticular, those employees who use marketing data and those who have
face-to-face or phone contact with customers. Charge the groups with identifying, for each major mar- ket segment, all the steps through which customers pass from the time
they first become aware of your product to the time when they final- ly have to dispose of it or discon- tinue using it.
Naturally, every product or ser- vice will have a somewhat differ- ent consumption chain. However, a few activities are common to most chains. Consider the following ques- tions, each of which illustrates one of those activities. Then, as the group begins to get a feel for the spe- cial relationship between your cus- tomers and your products, ask ques- tions about more complex activities that pertain to your business.
How do people become aware of their need for your prod- uct or service? Are con- sumers aware that you can satisfy their need? Are they aware that they even have a need that can be satisfied? Your com- pany can create a power-
ful source of differentiation if it can make consumers aware of a need in a way that is unique and subtle.
Consider the problem of differen- tiating an everyday consumer prod-
uct, such as a toothbrush. For many people, brushing is a ritual to which they pay relatively little attention. As a consequence, many brushes are used well past the point when their bristles are worn and are no longer effective. Toothbrush maker Oral-B discovered a way to capitalize on this widespread habit. The company, by introducing a patented blue dye in the center bristles of its tooth- brushes, found a way to have the brush itself communicate to the cus- tomer. As the brush is used, the dye gradually fades. When the dye is gone, the brush is no longer effective and should be replaced. Customers are thus made aware of a need that previously had gone unrecognized. So far, the idea sounds like some- thing out of Marketing 101. What gives it particular value is that the need can be filled only by Oral-B’s patented process. The company turned differentiation into a com- petitive advantage.
How do consumers find your of- fering? Opportunities for differenti- ating on the basis of the search process include making your prod-
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4 HARVARD BUSINESS REVIEW July-August 1997
Oral-B created a powerful source of differentiation with a toothbrush that tells customers when they need a new one.
The first step is to map your customer’s entire
experience with a product.
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uct available when others are not (24-hour telephone-order lines), of- fering your product in places where competitors do not offer theirs (the mini McDonald’s outlets in Wal- Mart stores), and making your prod- uct ubiquitous (Coca-Cola). Making the search process less complicated, more convenient, less expensive, and more habitual are all ways in which companies can differentiate themselves. And when competitors can’t or won’t do the same – at least, not right away – you have the poten- tial for a strategic advantage.
One example is the rapid growth of catalog sales in channels formerly dominated by retail chains. Con- sumers now can obtain detailed, up- to-the-minute information about a breathtaking range of products over the telephone or through the Inter- net, without enduring the inconve- nience of visiting a showroom and the often inadequate knowledge of the floor sales staff. The PC Connec- tion & Mac Connection, a company that sells computers through its catalog, operates a 24-hour-a-day, seven-day-a-week toll-free phone number for people wanting informa- tion about computers, software, and related products. When a caller ex- presses an interest in buying a com- puter system, a company representa- tive asks a set of questions to narrow
down the possibilities to a few good candidates. The rep and the con- sumer then can discuss each option in detail. What is remarkable about this approach is that, in effect, it allows consumers to tailor the search experience to their own needs.
How do consumers make their fi- nal selections? After a consumer has narrowed down the possibilities, he or she must make a choice. Can you make the selection process more comfortable, less irritating, or more convenient? Look for the ideal situa- tion, in which competitors’ proce- dures actually discourage people
from selecting their products, while your procedures encourage people to come to you. Citibank for years cap- tured a significant share of the col- lege student market for credit cards simply by making it easy for stu- dents to obtain a card while com- petitors made it difficult.
Another example of this dynamic is playing out right now in the used- car business. For many potential customers, the experience of choos- ing a used car is an ordeal – to the point where one CEO of a major automaker ob- served that some peo- ple would rather have a root canal. But a new method of selecting cars is transforming the industry. Compa- nies such as CarMax Auto Super- store and AutoNation USA have tar- geted the selection experience as their competitive focus. At a Car- Max showroom, customers sit in front of a computer and specify what features they are looking for in an automobile. They can then, in pri- vate, scroll through detailed descrip- tions of cars that might meet their needs. The final (and only) price for each vehicle is listed. A sales assis- tant then lets the customers inspect the autos that interest them and
handles all the paper- work if they decide to buy one. The “selling” is done not by the salespeo- ple but by the selection process the customers create for themselves.
How do customers or- der and purchase your product or service? This question is particular- ly important for relatively low-cost, high-volume items. Can a company differentiate itself by making the process of ordering and purchasing more convenient?
American Hospital Supply revolu- tionized its industry by radically simplifying the ordering and re- stocking process for such products as bandages, tongue depressors, sy- ringes, and disinfectants. The com- pany installed computer terminals at each hospital and medical supply store with which it did business.
The terminals connected those cus- tomers directly to the company’s system, allowing direct drop ship- ment and automatic restocking whenever supplies fell below a cer- tain level. Hallmark uses a similar approach for its greeting cards.
Many companies, including ice- cream makers and pet-food manu- facturers, are also using this method to stock supermarket shelves, reap- ing the benefits of preferred access
to these crucial outlets as well as of superior displays. Another, more subtle benefit of this form of dif- ferentiation is that it imposes a switching cost on customers that might be tempted to try another supplier. Once customers have signed on, it is expensive for them to switch; this deterrent creates a barrier to competition and, once again, a potential strategic advan- tage for the supplier.
How is your product or service de- livered? Delivery affords many op- portunities for differentiation, espe- cially if the product is an impulse purchase or if the customer needs it immediately. Let’s return to our catalog computer dealer, the PC Connection. Customers can call its toll-free number as late as 3 A.M. to receive “next-day” shipments of items in stock. How does the com- pany do it? The amazing turnaround times are possible because the ware- housing and distribution facilities are conveniently located near an Airborne Express hub. Packages can be picked up at the warehouse, transferred to Airborne, and shipped to the customer in a matter of hours. Not only does this delivery strategy constitute a real benefit for cus- tomers, but, because there are a lim- ited number of opportunities for such a warehouse-hub connection, competitors will find it hard to adopt the same strategy.
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CarMax and AutoNation “sell” cars by letting customers create their own selection process.
Can you make the buying process more convenient
and less irritating?
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What happens when your product or service is delivered? An often overlooked opportunity for differen- tiation lies in considering what has to happen from the time a company delivers a product to the time the customer actually uses it. Opening, inspecting, transporting, and assem- bling products are frequently major issues for customers.
That applies even to the delivery of services. Consider how difficult it can be to get an auto accident claim processed and paid by an insurance company. Now consider how Pro- gressive Insurance of Cleveland, Ohio, tackled the problem. The company has a fleet of claims ad- justers on the road every day, ready to rush to the scene of any auto acci- dent in their territory. There they can record all the information they need and often settle claims on the spot for policyholders. The process has greatly increased customer satis- faction by eliminating the hassle and delay that so often accompany conventional reporting, inspection,
and assessment methods. A side benefit for the company is that its approach also has decreased the inci- dence of fraud by reducing the op- portunity to file false claims and in- flate repair bills.
How is your product installed? This step in the consumption chain is particularly relevant for compa- nies with complex products. For ex- ample, installation has presented an enormous barrier for computer man- ufacturers trying to break into the novice-PC-user market. Computer beginners are notoriously intolerant of such on-screen messages as “Disk Error 23.”
Compaq Computer, with its Pre- sario line, was among the first to tar- get installation as a source of differ- entiation. Instead of providing an instruction book filled with techni- cal terminology, Compaq offers its customers a poster that clearly illus- trates the ten installation steps. The company uses color-coded cords, ca- bles, and outlets to simplify installa- tion further and also has rigged its
computers so that a cheerful video and audio presentation leads new users through the setup and registra- tion process when they first turn on the machine.
How is your product or service paid for? Many companies unwit- tingly cause their customers major difficulties with their payment poli- cies. Here’s a test to see whether payment might be such an issue for your customers: Take a walk over to your accounts-receivable depart- ment and ask to see a copy of a re- cent invoice. If your company is anything like about 80% of those we have worked with, the invoice will be virtually incomprehensible. Why? Because invoices are generally designed by systems people for sys- tems, not customers. Given the prevalence of this situation, your company may find opportunities to set itself apart by making the whole payment process easier for cus- tomers to understand.
You may discover even greater op- portunities by rethinking why your company uses its current payment policy in the first place. We once worked with a company in the ener- gy control business that was having a hard time selling its services to res- idential co-op owners. At every co- op, the company ran into opposition from a hard core of owners who re- sisted the capital outlay involved in installing an energy management system. The company eventually won a huge share of the co-op mar- ket by altering its policy. Customers no longer pay an up-front installa- tion fee; instead, they pay over time, out of the energy savings.
How is your product stored? When it is expensive, inconvenient, or downright dangerous for customers to have a product simply sitting around, the opportunities for differ- entiation abound. Air Products and Chemicals, a producer of industrial gases, grew to dominate its market segments by addressing the prob- lem of storage. Realizing that most of its customers – chemical compa- nies – would rather avoid the burden of having to store vast quantities of dangerous high-pressure gases, Air Products built small industrial-gas plants next to customers’ sites. The
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6 HARVARD BUSINESS REVIEW July-August 1997
Compaq discovered a valuable way to differentiate itself: it provides customers with a user-friendly installation video.
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move pleased customers; it also gen- erated switching costs. Best of all, once an Air Products plant was in place, competitors had little oppor- tunity to move in.
How is your product moved around? What difficulties do cus- tomers encounter when they must transport a product from one loca- tion to another? Whether the jour- ney is across a room or across a state, this step in the consumption chain is another often-overlooked oppor- tunity for differentiation. Ask your- self the following questions: Does the customer find the product frag- ile? Difficult to package? Awkward to move?
Consider how John Sculley’s mar- keting team at Pepsi-Cola used packaging as a way to differentiate Pepsi from Coke. Sculley’s team cre- ated a distinct–if temporary–advan- tage for Pepsi in the early 1970s by designing plastic bottles that were lighter, and thus easier for cus- tomers to carry, than the heavy glass bottles of the time. The beauty of the move was that it not only made carrying soda easier, but it also re- duced the advantage of Coke’s well- known contoured glass bottle. At the time, it was difficult to produce plastic bottles in that shape.
What is the customer really using your product for? Finding better ways for customers to use a product or service is a powerful differentia- tor. And such opportunities abound, especially for companies whose products are expensive and used relatively infrequently. General Elec- tric’s Transportation Systems divi- sion, which manufactures diesel- electric locomotives, used this step in the consumption chain as the ba- sis for rethinking its business.
With few exceptions, the railroads that are the customers for GE’s loco- motives are not all that attached to a particular unit. What they really want to know is, if they have freight to ship, will a locomotive be there to haul it? GE is working on an arrange- ment through which the company will guarantee that a locomotive will be available on demand. Under that arrangement, GE will take over the management of all the engines in the customer’s system. It will re-
lieve the customer of repair and maintenance concerns, and also will gain economies of scale by managing an entire network. What’s more, the entry barrier created by such a sys- tem can be formidable.
What do customers need help with when they use your product? The company with the most helpful response has a significant advantage here. GE, for instance, has an enor- mously popular 800 number that is available 24 hours a day to help peo- ple who have difficulty using any of the company’s consumer products. Similarly, Butterball Turkey’s 24- hour hot line fields cooking ques- tions from hundreds of customers every Thanksgiving. Butterball has recently supplemented its hot line with an Internet home page and a turkey-cooking guide that its cus- tomers can download.
What about returns or exchanges? Too many companies put all their efforts into the selling side of the product life cycle, forgetting that long-term loyalty requires attention
to customers’ needs throughout their experience with a product. Handling things well when the prod- uct doesn’t work out can be as pow- erful as meeting the need that moti- vated the initial purchase.
Nordstrom is an excellent exam- ple of a company that has taken this issue to heart. The clothing retailer captured national publicity in the 1970s when one of its store man- agers “took back” a set of tires from a customer despite the fact that Nordstrom did not sell tires. By fo- cusing on and aggressively promot- ing its no-questions-asked return policy, Nordstrom has enhanced its position as a company that provides unique customer service. Customers may be unhappy with the brands they return, but they are not un- happy with the store.
How is your product repaired or serviced? As many users of high- tech products will attest, repair ex- periences – both good and bad – can influence a lifetime of subsequent purchases.
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HARVARD BUSINESS REVIEW July-August 1997 7
Nordstrom takes its no-questions-asked return policy seriously, and the result is strong customer satisfaction.
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An ideal solution, used by Tan- dem Computers – a company that makes computers with parallel cen- tral-processing units for applications in which downtime is a major prob- lem – is to try to repair a product even before the customer is aware that such service is needed. Tandem staff members can spot a malfunc- tioning component through remote diagnostics, send the appropriate part and instructions to the cus- tomer by express mail, and walk the customer through the repair process on the phone. This approach has al- most completely eliminated expen- sive and inconvenient downtime for the company’s customers; it also has eliminated their need for a costly on- site service force.
Otis Elevator uses remote diagnos- tics in a different way. In high-traffic office buildings, where servicing ele- vators is a major inconvenience to occupants and visitors alike, Otis us- es its remote-diagnostics capabili- ties to predict possible service inter- ruptions. It sends employees to carry out preventive maintenance in the evening, when traffic is light.
What happens when your product is disposed of or no longer used? In a world in which it is becoming increasingly economical simply to replace many products as they age rather than spend the money to fix them, what do customers do with the obsolete goods?
Canon offers an interesting exam- ple of how a company can differenti- ate itself at this step in the chain. It has developed a system that allows customers to return spent printer cartridges at Canon’s expense. The cartridges are then rehabilitated and resold as such. The process makes it easy for customers to return used cartridges: all they need to do is drop the prepaid package off at a United Parcel Service collection station. At the same time, it enhances the im- age of Canon as an environmentally friendly organization.
Analyzing Your Customer’s Experience
Although mapping the consump- tion chain is a useful tool in itself, the strategic value of our approach
8 HARVARD BUSINESS REVIEW July-August 1997
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lies in the next step: analyzing your customer’s experience. The objec- tive is to gain insight into the cus- tomer by appreciating the context within which each step of the con- sumption chain unfolds. It is crucial to remember that the customer is al-
ways interacting with people, places, occasions, or activities. Those interactions determine the customer’s feelings toward your product or service at each link in the chain. When they are viewed strate- gically, they can shape the dynamics of competition for that custom- er’s business.
Essentially, this step involves con- sidering how a series of simple ques- tions–what, where, who, when, and how – apply at each link in the con- sumption chain. We have found that the most rewarding way to approach this exercise is to have a group of people from a company start down a path with any of their questions and brainstorm until their ideas dry up. Sometimes a given question will not lead to any particular insight. That’s not a problem; the goal is to assem- ble an inventory of possible points of differentiation. Once the ideas are on the table, you can assess each one and select those that are most promising for your situation.
Blyth Industries, the candle manu- facturer we mentioned earlier, pro- vides a good example of how analyz- ing your customer’s experience works in practice. By exploring the options raised by their analysis, Blyth employees were able to take a prosaic product that is easy to imi- tate and create a profitable competi- tive advantage. What is important to understand here is that Blyth makes no pretense of being able to create the fabled “sustained competitive advantage” – so beloved of strat- egy texts – in any single segment of the candle market. Rather, what the
company seeks to do is be the first to create and then dominate many small niches in rapid succession over time, gaining economies of dis- tribution and scale by the sheer number of products it has in the marketplace.
Consider some of the possibilities that Blyth em- ployees uncovered when they applied the questions to their business:
What? What are cus- tomers doing at each point in the consumption chain? What else would they like to be doing?
What problems could they be experi- encing? (These problems may not be directly related to your product or service.) Is there anything you can do to enhance their experience while they are at this stage of the chain?
Candles, when you think about it, can play a role in everyday life in a host of different ways. Among other things, they are used to celebrate birthdays, create a festive atmo- sphere for dinner parties, warm buf- fet dishes, cope with power outages, and set the mood for romantic evenings. Candles can be pur- chased in specialty shops, at crafts fairs, in supermarkets, and at card stores. Further, their use can be ac- companied by a huge variety of containers, displays, accents, and mood-creating products. All this suggests that can- dle makers might do well to explore the possibility of offering a complete “candlelight experience” by produc- ing or marketing complementary products as well.
Where? Where are your customers when they are at this point in the consumption chain? Where else might they be? Where would they like to be? Can you arrange for them to be there? Do they have any con- cerns about their location?
Because candles can have so many uses, it isn’t surprising that there are as many potential places for their use. Candles can be found at the beach, on picnics, at proms, at wed- dings, at home, in restaurants, at
children’s birthday parties, and in places of worship. What quickly be- came evident to Blyth was that the concerns and behavior patterns of its customers were likely to be different in each location. That insight sug- gested the potential for differentia- tion on the basis of location.
For example, consider how can- dles are used in the home. Virtually every room in the house has poten- tial: the dining room, living room, kitchen, bedroom, bathroom, and basement can all conceivably pro- vide a setting for candle use, each for a different reason.
Who? Who else is with the cus- tomer at any given link in the chain? Do those other people have any in- fluence over the customer? Are their thoughts or concerns important? If you could arrange it, who else might be with the customer? If you could arrange it, how might those other people influence the customer’s de- cision to buy your product?
Honing in on the line of thinking Blyth used about domestic candles, consider the use of candles in the dining room. Who else is going to be
there? The other people could be members of the immediate or ex- tended family, business associates, close friends, or a suitor. Each type of person means a possible point of differentiation; each type means a different experience, a different mood, and a different time.
When? When–at what time of day or night, on what day of the week, at what time of the year – are your cus- tomers at any given link in the chain? Does this timing cause any problems? If you could arrange it, when would they be at this link?
Take the scenario of a dining room with the family. Blyth found that the question when uncovered a wealth of opportunities for differentiation. Candles are used in the dining room
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HARVARD BUSINESS REVIEW July-August 1997 9
Candle makers might explore the possibility of offering a complete “candlelight experience.”
To analyze your customer’s experience, consider how
five simple questions apply at each link in the chain.
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with the family on birthdays, an- niversaries, holidays, and graduation days, and at meals marking other special occasions. Each occasion provides a distinct experience. Im- portant for a candle maker, each also triggers distinct emotions. Blyth em- ployees were able to identify what became several successful new areas of differentiation by exploring how
their candles might be designed in special shapes, colors, or scents. They also came up with a variety of ways to package the candles and combine them with such accessories as napkins to suit each situation.
Candles intended for use with fami- ly members at Thanksgiving, for ex- ample, might be scented with cinna- mon, colored in tones associated with the holiday, and sold with spe- cial holders.
Because there are many holidays and other occasions when families get together in the dining room, you can begin to get a sense of the oppor-
tunities available for dif- ferentiation. Moreover, the process can be repeated for as many different compan- ions and settings as the imagination of your em- ployees can contemplate. Blyth, for example, also
has found a tremendous opportunity to differentiate its products for roman- tic meals. CEO Goergen has worked hard to design scented candles in vari- ous shapes in order to influence the ambience of such occasions so that, as
he says, “eating becomes dining, and dining becomes romance.”
How? How are your customers’ needs being addressed? Do they have any concerns about the way in which your company is meeting their needs? How else might you at- tend to their needs and concerns?
Think about how candles are used outdoors – say, at a company barbe- cue. Citronella candles come to mind. In addition to creating a fes- tive atmosphere, they are an attrac- tive way to protect people from in- sect bites.
As we’ve seen, there is consider- able potential for differentiation even in products so simple that at first blush they seem like commodi- ties. Candles are but one. Gasoline is another. (See the exhibit “Is There a Way to Differentiate Selling Gas?”) Understanding the customer’s expe- rience at any link in the chain for
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10 HARVARD BUSINESS REVIEW July-August 1997
Consider the “purchase link” of the consumption chain.
What else are your customers doing when they buy gasoline? Among other things, they might be commuting, on a leisure trip, on a business trip, on vacation, shopping, or planning to use equipment (such as a mower or a tiller).
If you pursue the business-trip option, the next question is, Whom are they with when they buy gasoline on a business trip? Your customer could be alone or accompanied by a colleague. He or she could be with a spouse or significant other. Your customer also could be traveling with a group of people.
If you pursue the idea that your customer is alone, the next question is, Where does your customer buy gasoline while he or she is on the business trip? Your customer might stop first at a local gas station, then again between cities along the way.
Even a simple product such as gasoline can be
differentiated.
Is There a Way to Differentiate Selling Gas?
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any product offers companies the op- portunity to identify and explore many nontraditional ways to create value. The task then becomes select- ing from among this wealth of possi- bilities; considering how each idea
meshes with a company’s particular skills, assets, and systems; and fo- cusing only on those that can gener- ate a competitive advantage. Each idea also may open up an opportuni- ty to develop a new competence.
Too many companies pursue what seem like great new ideas without carefully assessing whether their organizations are well suited to do
so and how quickly competitors can respond. Robert Goergen knows that Blyth Industries has certain strengths its competitors do not, in- cluding several unique production techniques and, more important, a
deep knowledge of fra- grances. Those special strengths, coupled with a solid understanding of customers based on mar- ket research, give Blyth an edge. Goergen thus evaluates opportunities
for differentiation based on those considerations and moves forward only with the ideas that promise the strongest returns.
Focused Creativity Virtually every company we have
ever worked with has within it scores of people of considerable cre- ativity and imagination. Unfortu-
nately, all too often, the company never benefits because that talent isn’t appropriately focused. It may even be squelched by the homoge- nizing pressures that any large orga- nization tends to impose.
An important benefit of the pro- cess we’ve outlined above is that it unlocks the creativity in an organi- zation so that the insights of particu- lar individuals can contribute to a shared understanding of the cus- tomer – so that the company, in ef- fect, knows its customers almost better than they know themselves. Companies that do this successfully find themselves deeply attuned to their markets. And, like entrepre- neurs, they spend the imagination they have in lieu of the money they may lack to outperform competitors where it counts. Reprint 97408 To place an order, call 800-988-0886.
M A N A G E R ’ S T O O L K I T
HARVARD BUSINESS REVIEW July-August 1997 11
If you consider in depth the concern about personal security, one way to differentiate the process of selling gasoline would be to reconfigure the structure of your gas stations along those highways that are principal business routes. For example, you could � ensure that your station is well lit and monitored; � provide an attendant to pump the gas; � provide a “travel adviser” at each station who has a detailed knowledge of the area; such a person might be able to advise your customer about the safest routes, areas under construction, congested areas, and good restaurants and hotels; � arrange for customers who buy gas to rent a mobile phone at the gas station, possibly negotiating with the phone company to share usage revenues.
Which leads to: Does your customer have any concerns in any of those situations, and how is your company addressing them? Among other things, your customer might worry about getting lost or running out of gas. Or he or she might be concerned about personal security. Also, your customer certainly doesn’t want the car to break down.
Keeping those ideas in mind, consider: When does your customer buy gasoline? Anytime: during the day or night; during the week or on the weekend.
Consider how each idea meshes with your company’s skills,
assets, and systems.
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For the exclusive use of S. Wang, 2023.
This document is authorized for use only by Si Yu Wang in BUS 690-Winter 2023 taught by Manely Sharifian, San Francisco State University from Dec 2022 to Jun 2023.