There are many ways to differentiate products. Can you think of ways that Nepali entrepreneurs attempt to differentiate products? Please elaborate with recent and relevant examples.
Creating a product that is different from your competitor is important and this is when product differentiation comes in place. Product differentiation helps to increase the appeal of the product in a targeted market segment by making it different for all the other that exist in that market. It helps the product to stand out from its competitor while having a competitive advantage over them. Differentiation is what helps you be noticed in the eyes of customer (Kotler & Keller, 2012). If you’re coming up with the exact same product that’s already in the market and have nothing to differentiate yourself with, why would anyone even shift to choose yours? That is why product differentiation is key to any product success. Like in any part of the world, various strategies of differentiation are incorporated by the Nepali entrepreneurs as well. In this post, we look into few of those strategies devised.
Product differentiation by branding: This is one of the very common way adopted Nepali entrepreneurs to differentiate any product. Brands put their identity in the product they manufacture. Even for goods that are exported to various different parts of the globe, it goes with it. An example of it can be "Everest Hard Wear” keeping their tag and the logo with the cloths they ship both locally and internationally. That helps project the brand identity and also works as a way to differentiate them from their competitors.
With a feature no other product in the category use: A proper example of a company adopting this would be "Khalti”. They’ve made use of Kiosk machine which allows user to load funds into Khalti account using the same and also allows them to person some other transactions. This is something no other digital wallet in Nepal does and thus helps them stand out from the mass.
By highlighting a feature: Toole, a bike-sharing service in Kathmandu valley is collecting all the name for it for all the good reasons. With them only being the ride sharing service where a rider can give a lift to other people using the application while make money as well in the process, it’s something they’ve used to highlight their product with. As they being the sole service provider of this kind, they’ve used the same to differentiate themselves with and market it.
By size: Businesses come up with different size options when you go out to buy a water bottle, the same company manufactures the one of 250ml to over a liter. With their brand name attached along with it, that is something that helps to differentiate as well and appeal to different target customer as per their need. An example of Real juice can be taken in this category which ships in both small and big packet. Comparatively the larger packet juice cost even more than if multiple small packets are bought and collected in a single place - this seems weird but something they have used to differentiate themselves with and take an advantage of.
Kotler, P., & Keller, K. (2012). Marketing management (14th ed.). Upper Saddle River, N.J.: Pearson/Prentice Hall.
With the change in lifestyle of Nepalese in major city areas, people have started dining out more often as compared to before, bringing in a huge flow of new Restaurants mushrooming in every corner street. With so many new startups offering more or less the same thing, food and ambience, product differentiation has been vital for success. Trisara restaurant has been the latest talk of the town. With its success in Durbarmarg, it has opened various branches in Lazimpat and even Pokhara. With a good ambience and regular inflow of local celebrities flocking the place, it has differentiated itself from others as the new go to place.
Packaging is the one of the commonly used differentiation technique of FMCG products here in Nepal. Noodles such as Wai Wai and Rara have very distinct packaging that has not changed over the past decade. Almost everyone know these two competitors in the noodle segment with their distinct packaging. Other fast food and munchies with similar price range have taken packaging as the differentiation strategy eg: kurkure and kurmure.
Price is another differentiation tool used in Nepal. There is a liquor store called "Binayak Liquor Store” in Ekantakuna. This shop has grown tremendously over the past years with their pricing differentiation technique. They offer drinks with just a few rupees difference which has to everyone’s amazement been accepted by many people flocking to the shop which always seems to be packed with customers every evening. For example: They provide a beer at 230 rupees when others are selling it for 240-245 rupees. This differential technique has made it stand out over 4 other liquor shops in and around the area.
Offering Varieties and good service
Another example of differentiation is through varieties. NCELL has come out to be a major competitor in the communication category. With Namaste having the upper hand this has now shifted towards NCELL in the last years as NCELL has been innovative in coming up with various marketing strategies and offering varieties of services such as amount loan, data pack for an hour and whole day etc. and they have delivered good service on these varieties as compared to Namaste which is government owned. "Quality is increasingly important for differentiation as companies adopt a value model and provide higher quality for less money. (Kotler & Kellar, 2012)”
Advertising and Sponsorship
NCELL has painted a whole village in Kurintar with their company color, purple. "This strategy is called Ambient Advertising. Consider it as a kind of a visual bomb, which suddenly attacks our minds! (Reddit, 2017)” Most people talk about this when they think of NCELL advertising. NCELL have been supporting athletes and artists in the past years holding NCELL Football Player of the Year award and sponsoring Art festival.
These are some ways how Nepali products have been differentiating as a marketing strategy to brand themselves to the customers.
Kotler, P., & Kellar, K. L. (2012). Performance Quality. In K. L. Philip Koter, Marketing Management (p. 329). New Jersey: Prentice Hall.
Reddit. (2017). Did Ncell sponsor this town to be painted purple?! Retrieved from Reddit: https://www.reddit.com/r/Nepal/comments/4wozvu/did_ncell_sponsor_this_town_to_be_painted_purple/
Product differentiation and market segmentation are both consistent with the framework of imperfect competition. Imperfect competition assumes lack of uniformity in the size and influence of the firms or individuals that constitute the demand or supply sides of a market (Bezawada, 2013).
In its simplest terms, product differentiation is concerned with the bending of demand to the will of supply. It is an attempt to shift or to change the slope of the demand curve for the market offering of an individual supplier, this strategy may also be employed by a group of suppliers such as a farm cooperative, the members of which have agreed to act together. It results from the desire to establish a kind of equilibrium in the market by bringing about the adjustment of market demand to supply conditions favorable to the seller (Bharadwaj, 2011).
Segmentation is based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer or user requirements (Bezawada, 2013).
While successful product differentiation will result in giving the marketer a horizontal share of a broad and generalized market, equally successful application of the strategy of market segmentation tends to produce a depth of the market position in the segments that are effectively defined and penetrated. The differentiator seeks to secure a layer of the market cake, whereas one who employs market segmentation strives to secure one or more wedge-shaped pieces (Davcik, 2014).
Many examples of market segmentation can be taken in Nepal ; the cigarette of Surya Nepal and Chaudhary Group and Gorkha Brurary Beer are well-known illustrations. Similar developments exist in greater or lesser degree in almost all product areas. Chaudhary Group is most popular for Noodle Industry and they provide high-quality noodle all over the world so they have different types of products WaiWai Quiz, Veg, Nonveg. To target the customer. They have the Noodle product for Children too old age people. Their focus is for all personnel from different demographics. So this one is an effective example of Production differentiation. Another popular example of the refrigerator is, the recent introduction of a refrigerator with no storage compartment for frozen foods was in response to the distinguishable preferences of the segment of the refrigerator market made up of home freezer owners whose frozen food storage needs had already been met.
Bezawada, R. a. (2013). What is Special About Marketing Organic Products? Journal of Marketing, Vol. 77 No. 1 , 22-24.
Bharadwaj, S. T. (2011). "The Impact of Brand Quality on Shareholder Wealth. Journal of Marketing , 108-112.
Davcik, N. S. (2014). Impact of Product Differentiation, Marketing Investments and Brand Equity on Pricing Strategies: A Brand Level Investigation. ISCTE Business School, University Institute of Lisbon (ISCTE-IUL) , 6-8.
Product differentiation is the process of making a product or service different from others to increase the attractiveness of the product in a certain market. It focuses on Unique Selling Proposition (USP) that helps to distinguish the products from the competitors and gain competitive advantage (Kotler & Keller, 2016). Product differentiation aims of creating distinct image of the product in the mind of customers by offering something than that of the competitors.
The product can be differentiated in various ways. The quality, product design, pricing, product aesthetics, packaging, customer service, technology and innovation, user experience and product form can be used as basis for product differentiation. In addition to these, product differentiated by origin, branding, adding on feature or ingredient, offering a bonus, highlighting a certain feature or exposing the weaknesses of competitors (Sales Backer).
Some of the Nepali products and the ways they have attempted to differentiate their products are:
1.Goldstar shoes: Goldstar shoes is a brand known for quality, durability and affordability. Recently, it has been incorporating the style element too in order to make the product suitable for providing variety (Puri, 2017). The pride of wearing the product made in home has helped in increasing the customer base of this brand. Thus Goldstar is using the price, quality and origin to differentiate its products.
2.eSewa: eSewa is focused on establishing electronic payment system. Though a lot of financial institutions have also integrated electronic banking, people prefer eSewa because of its goodwill. The easy to use interface and the ease of making utility payment from the place of our comfort has made eSewa the first choice of many people for making payment. The innovation and technology is used by this company for differentiation.
3.Tootle/Sarathi: Tootle and Sarathi have incorporated the technology to help people book a ride on the two wheeler or four wheeler respectively. The fair charge and ease to book has made it a choice of lot of people over public transportation. The struggle to get public vehicles and reach the desired destination on time has been addressed by the entrepreneurs starting these services.
4.Phalano Luga: This brand is differentiating itself as a company that sells t-shirts made in Nepal with creative designs.
In addition to these, Latido, Nepal Ice are some of the companies that are successful in differentiating their products from the competitors and create a unique image of their products in the market. The strategies used by these companies has helped in increasing the sales volume by gaining competitive advantage.
Kotler, P., & Keller, K. L. (2016). Marketing Management. London: Pearson.
Puri, M. (2017, October 9). How Goldstar has set a benchmark in the footwear industry that other brands strive to meet. MnS Vmag . Retrieved from http://mnsvmag.com/news/2017-10-09/goldstar-business-vidushi-rana-marketing-shoes
Sales Backer. (n.d.). 8 Ways to Differentiate Your Product from Your Competitors. Retrieved from Salesbacker: https://www.salesbacker.com/blog/58/8_Ways_to_Differentiate_Your_Product_from_Your_Competitors
Kotler & Keller (2016), in their book Marketing Management, product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Products can be differentiated in form of the size, shape, or physical structure of a product. Here, most products can be offered with varying features that supplement their basic function.
We analyze the relationship between product differentiation strategies and profitability for different categories of producer goods industries classified according to the extent of buyer search (Sashi & Stern, 1995). There are many ways to distinguish products and ways that Nepali entrepreneurs attempt to differentiate products are explained below.
Performance Quality, most products occupies one of four performance levels: low, average, high, or superior. Performance quality is the degree at which the product’s primary characteristics operate. For instance, Alpine Coffee Estate, situated in the foothills of Nuwakot, 35 Kilometers north from Kathmandu, is the farm focused on producing the best caliber, single Estate coffee in Nepal. Filter Grind Coffee, Whole Beans Coffee and Espresso Grind Coffee are some product differentiation of Alpine Coffee Estate.
Conformance Quality Buyers expect a high conformance quality, the point to which all produced units are identical and meet promised specifications. For instance, Sherpa Adventure Gear was established in May of 2003 by Tashi Sherpa, weaving together the latest patterns and technology with the rich heritage and time honored beliefs of Nepal. From the highest heights of the Himalayas, they promise on saying that they lead the world of mountaineering with warmth, good will and honest temper.
Strength, a quantity of the product’s expected operating life under natural or stressful conditions, is a valued attribute for vehicles, kitchen appliances, and other long-lasting goods. For instance, Nepal made Goldstar shoes seem to be more popular among people inside and outside Nepal. They promise on their shoes that are very comfortable, light weight, durable and cheap.
Reliability, buyers normally will pay a premium for more reliable products. It is a measure of the probability that a product will not malfunction or fail within a specified time period. For instance; Daraz is Asia’s fastest growing online marketplace, offering an unparalleled shopping experience in Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal. Daraz delivery is also very reliable. It ships products to most of the cities of Nepal.
Style describes the product’s look and feel to the buyer and creates distinctiveness that is hard to copy. For instance, Phalano Luga is distinctly Nepali. They produce quality 100% cotton; organic cotton and cotton blend t-shirts which are made in Nepal. They also have created over 700 different designs ranging from creative drawings of the Nepali flag to witty catchphrases and colloquialisms.
Customization or say customized products and marketing allow firms to be highly relevant and differentiating by finding out exactly what a person wants and doesn’t want and delivering on that. For instance, Foodmandu.com is the first online shopping site in Nepal for food. They deliver foods from popular restaurants in Kathmandu to our doorsteps. You can order our favourite foods and cuisines through online ordering from Foodmandu’s site or mobile app.
Kotler, P., & Keller, K. L. (2016). Marketing Management . Boston: Pearson.
Sashi, C. M., & Stern, L. W. (1995). Product differentiation and market performance in producer goods industries. Journal of Business Research, 33 (2), 115-127.