How to escape the differentiation proliferation trap

Abstract

Purpose

In our hypercompetitive times, product and service differentiation may start out as value innovation but end up as too many similar choices for customers. The risk of this happening increases when several or all segments of the market are crowded with competitors seeking differentiation. This paper aims to investigate this issue.

Design/methodology/approach

The paper looks at how this brand proliferation currently grips the hotel industry.

Findings

The paper finds that, as illustrated by the hotel industry example, there are three primary ways that companies manage the threats from rivals who introduce similar products.

Research limitations/implications

A hotel industry case is analyzed from a current and historical perspective.

Practical implications

Managers who face this problem can: select certain threats to respond to; overwhelm the threats, choosing to fight on many fronts; and outflanking their rivals by opening new positions or at the extremes of the expected price line.

Originality/value

The paper applies some of the oldest strategic principles to a new challenge – differentiation proliferation:”overwhelm the threats” is a strategy of applying mass or scale to the challenge; “select the threats” is competing where you have the superiority of the defense; and “outflank the threats” is the strategy of the indirect approach.

Citation

D'Aveni, R. (2010), "How to escape the differentiation proliferation trap", Strategy & Leadership, Vol. 38 No. 3, pp. 44-49. https://doi.org/10.1108/10878571011042104