Page 66 - Marketing the Basics 2nd

58 Marketing: the Basics
ownership, that is, the cost of buying the product, called capital expenditures (CAPEX) but also installing (IMPEX) and operating (OPEX) it. In the case of the infrastructure of cell stations necessary to run a national cell phone network, the cost of maintenance or operating it may be equal to the cost of buying it over a ten-year period. To ignore the cost of operating the system would obviously be a poor away of analysing the true cost of the project.
A sixth is to offer a product that is easy to repair. One of the main attractions of the original VW Beetle was that general repairs did not require a mechanic. Often a garden hose and duct tape sufficed. Finally, changing the design and style of the product differentiates the product from the competition. Fashion items, such as haute couture clothing or high-end athletic shoes often have a yearly or even seasonal life to them. One would not want to be seen in last year’s Dior frock!
SERVICE DIFFERENTIATION
In segments such as commodity markets where consumers do not easily recognize differences between products, offering specialized services translates into a competitive advantage, and thus differentiates one firm from another. Simplifying the ordering process or offering delivery services are two such methods. Air Canada has simplified the buying process for many of their customers by reducing from hundreds of potential fares for a flight to just five. They have also moved online and eliminated the need for paper tickets in the vast majority of cases. Providing installation and maintenance expertise are another two ways to differentiate. Many high-tech firms will have maintenance personal located at their key customer’s site in order to cut travel time to zero, resulting in great service and reduced down-time for their customer. Customer training programmes and after-sales service also leaves a positive impression in the customer’s mind.
PERSONNEL DIFFERENTIATION
Companies can differentiate themselves by hiring highly trained and knowledgeable staff. Their employees’ overall competence,