Question

How do organizations use a product differentiation strategy to distinguish their products from competitors? Take the example of GM car company - discuss how the models GMC, Chevy, Buick & Cadillac are positioned.

You should discuss how a company positions its different brands. Take for example - GM. They have different customers in mind for different models - Chevy is for customers who want a car for basic needs, an affordable one. Buick and Cadillac for luxury class and GMC pick-up truck for customers who want a powerful truck to use not only for the commute but also to move heavy items more often,

Answer 1

Answer:-

1.) As there are various method to make your product differentiation from competitors two method are given below:-

Method-1 = Vertical Product Differentitation:-

Where company charged the same price to the customer from both the product A & B then the market share for each one will be positive, according to the Hotelling Model. The major theory in this all consumers prefer the higher quality product if two distinct product are offered at the same price. A product can differ in many vertical attributes suca as OPERATING SPEED. What really matters is the relationship between consumers willingness to pay for improvements . Therefore, the perceived difference in quality is different consumer, so it is objective. A green product might be having a lower or zero negative effect on environment. However, it may turn out to be an inferior than other products in other aspects. Hence, it also depends on the way it is advertised and the social pressure a potential consumer is living in. Even one vertical differentiation can be a decisive factor in purchasing.

Method 2 = Horizontal Product Differentiation:-

When products can't be offerene din an objective way and are different in one or all of its features, then there is horizontal differentiation. For Example, different color versions of the same CAR. And a lemon ice-cream is not superior then chocolate ice-cream, is completely based on user preference. A restaurant may price all of its desserts at the same price and lets the concumer freely choose its preference since all the alternatives cost is same.

Case Study:-

As given in the question that GM car company manufacture car as per the price discrimination that its category is different on the basis of capability of consumer to purchase the car within their own limit. Its, means that GM car company not only manufacture car for rich person but also for middle class person so they can easily buy a car as their choices. Hence, this is also a technique to make your product differentiate from your competitors and lead the market. And this type of techniques help the company to survive in future and for long term growth.