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3.4.9 Differentiation
Due to the high degree of market integration, primarily by reducing
transport and trading costs through the internet, product differentiation and
diversification are becoming increasingly important to ensure a particular
company‘s positioning in the market (Barcelona industry report, 2011).
Essentially, the differentiation strategy involves creating a market position
that is perceived as being unique industry-wide and that is sustainable over
the long run (Porter, 1980). Furthermore, Porter (1980) claims that
differentiation is one of essentially the two means, the other is cost
advantage, by which companies can develop competitiveness. This strategy
is based upon persuading customers that a product is superior in some way
to that offered by competitors and the emphasis is on creating value through
uniqueness, as opposed to lowest cost (Kim et al., 2012). A firm that
pursues a differentiation strategy seeks to create a perception in the minds
of customers that their products or services possess superior characteristics
that are unique from those of its competitors in term of image and
reputation, reliability, design, features, and quality (Kim et al., 2012). In
such context, positioning is the means through which differentiation
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strategy is implemented which in turn leads to the argument that
positioning and differentiation are two sides of a coin.
A differentiation strategy can effectively be implemented through persuading
customers that the product considered is superior in some way to that of the
products offered by competitors. The persuasion can be based upon design
or brand image, distribution, and so forth (Framabch, Prabhu, and
Verhallen, 2003). Besides, through differentiation firms create customer
value by offering high-quality products supported by good service at
premium prices. To this end, a commitment to innovation and new
technologies are key factors for industrial development; new products, new
designs, new formats, new uses and new techniques are the factors which
enables business expansion and access to new markets (Barcelona industry
report, 2011).
However, the commitment of innovation to create entirely unique product
image on the consumers‘ mind may be difficult and even impossible in some
cases. Thus, making a slight difference may in some cases suffice to create
different product image from the competing products which in turn can have
a considerable impact on the perception as the product appears to be
unique. In addition to this, uniqueness can be achieved through service
innovations, superior service, creative advertising, better supplier
relationships leading to better services, or in an almost unlimited number of
ways (Bordean, Borza, Nistro, and Mitra, 2010).
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The key to success of differentiation strategy is that customers must be
willing to pay more for the uniqueness of the product than the firm paid to
create it (Bordean et al, 2010). Such cost benefit analysis is therefore at the
heart of any differentiation strategy. The differentiation strategy appeals to a
sophisticated or knowledgeable consumer interested in a unique or quality
product. In practice, the issue of creating such sophisticated consumer is
mainly the responsibility of firms which wish for appearing or being
perceived unique and different than competitors (Lee & Griffith 2004). On
the other hand, through the rapid expansion of internet and the ever
increasing interest of consumers to information make the differentiation
both challenging and easy in some way. The difficulty is mainly due to
consumers‘ prior knowledge about competing products and in some cases
the knowledge of which product performs better through experience sharing
in social media and other available means. And the easiness due to the
technology sophistication is that firms can reach wide consumers in media
with minimum costs in some cases.
As for the textile industry, although until a few years ago there was a feeling
that almost everything had been invented, new products are appearing that
have made this sector into one of the most active in terms of technological
development (Barcelona industry report, 2011). Thus, companies need not
only focus their business strategies from their traditional lines but also
strive to bring in new strategies for creating added value especially to enter
new markets and compete with new emerging economies (Lee & Griffith
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2004). Furthermore, as the introduction of technological advances improves
the means fabrics are designed with the development of enhanced specific
properties to meet the needs of a particular target market, textile firms
should make use of differentiation strategies to get larger mind share in the
target market (Lee & Griffith 2004). Thus, there are fabrics that provide heat
or coolness, which change color depending on temperature (chromic or
chameleon textiles), fabrics that have a preset ―shape memory‖, ones which
protect against solar radiation, fight bacteria or regulate the distribution of
fragrances, cosmetics, drugs, etc.(Barcelona Industry Report, 2011).
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