CHAPTER
ONE
INTRODUCTION
1.1 Background of the Study
In an increasing
competitive and dynamic business environment, every organization needs to identify,
anticipate, satisfy and care for customers to maximize profit, meet the
requirement of stakeholders and have competitive advantage. Every industry including bank has an
underlying structure or a set of fundamental economic and technical characteristics
which give rise to competitive forces. A firm can clearly improve or erode its
position within an industry through its choice of strategy. Competitive
strategy, then, not only responds to the environment but also attempts to shape
the environment in its favour (Porter, 2005). The strategist must therefore
seek to position his or her firm to cope best within its industry environment
or to influence that environment in the firm’s favour.
Business strategy
development is concerned with matching customers requirements (needs, wants,
desires, preferences, buying patterns) with the capabilities of the
organization, based on the skills and resources available to the business
organization, leading to the issue of core competence (Holmes and Hooper,
2000). The pursuit of competitive advantage is at the root of organizational
performance and as such understanding the source of sustained competitive
advantage has become a major area of study in the field of strategic management
(Porter, 2005, 2001; Barney, 2001). The resource-based view stipulates that the
fundamental sources and drivers of competitive advantage and superior
performance are chiefly associated with the attributes of resources and
capabilities, which are valuable (Barney, 2006; 2001).
Performance is associated
with a firm’s results. Performance indicated the performance of organizations
and revealed the outcome of business processes and accomplishments and the
success of meeting established goals (Zhang & McCullough, 2005). Jouirou
and Kalika (2004) measured organizational performance by a subjective way
including cost reduction, customer satisfaction, improved production, and the
ability to innovate. Wu (2001) used efficiency, sale performance, customer
satisfaction and relationship development to measure of firm performance.
Furthermore, the
resource-based view provides an avenue for organizations to plan and execute
their organizational strategy by examining the role of their internal resources
and capabilities in achieving competitive advantage. Product differentiation is
a positioning strategy that many firms use to distinguish their products from
those of competitors. (Lamb, Hair, and McDaniel 2004).Product differentiation
is pervasive in markets. It is at the heart of structural empiricism and it
smoothes jagged behavior that cause paradoxical outcomes in several theoretical
models. Firms differentiate their products to avoid ruinous price competition.
Representative consumer, discrete choice, and location models are not
necessarily inconsistent, but performance depends crucially on the degree of
location of competition. With (symmetric) global competition, rents are
typically small and market variety near optimal. With local competition,
profits may be protected because entrants must find profitable niches (Anderson
2002).
A company's physical
product offering may be highly differentiated on features not provided by
competitors in the same industry, some also differentiate their product on
performance with basis on power, professional credibility etc. on the other
hand companies may differentiate their physical product on attributes such as
innovation, consistency, durability, reliability and reparability. In addition
to differentiating the physical product, the image of the product can also be differentiated.
The established image should convey a singular and distinguished message that
will communicate the product’s main benefit and positioning.
Pearce and Robinson (2005)
aver that differentiation strategies are based on providing buyers with something
that is different or unique, that makes the company’s
strategic positioning, product or service distinct from that of its rivals.
Superior value is created because the product is of higher quality, is
technically superior in some way, comes with superior service, or has a special
appeal in some perceived way. In effect, differentiation builds competitive
advantage by making customers more loyal - and less price-sensitive-to a given
firm’s
product/service. Additionally, consumers are less likely to search for other
alternative products once they are satisfied. Hernant, Mikael and Thomas
(2007).
Some of the differentiation
strategies adopted by organizations to foster sales performance evolve around
interplay of various elements of the retail mix. These include: offering
quality products, wide selection, assortment, strategic positioning,
after-sales-service, quality service, convenient location, parking space,
attractive design and layout, conducive atmosphere, sales incentives,
convenient operating hours, own branding/value addition and a one-stop-shop.
Carpenter and Moore (2006). Economically valuable bases of product
differentiation can enable
a firm to increase its
revenues, neutralize threats and exploit opportunities.
When emphasis is placed on activities such as
research and development aimed at identifying and satisfying customer needs
differentiation achieves the desired objective. To add to the above, the effect
of differentiating a product may not necessarily be in terms of money or
financial terms but also certain benefits that enhance the value creation
process of the firm. As globalization
leads to more intense competition among telecommunication organizations, with
increase in customer demands, these organizations tend to seek competitive
advantage by producing products with more valued features, such as product
quality, product flexibility or reliable delivery (Baines and Langfield-Smith,
2003). As such, a differentiation strategy would provide greater scope for
these organizations to produce products with more valued, desirable features as
a means of coping with such demands. This research work therefore, focused on
how competitive advantage can be achieved through product differentiation
strategy and ultimately, how it influences the performance of the organization
in the telecommunication company, using Unilever Nigeria Plc as a study.
1.2 Statement
of the Problem
Despite the need for firms to differentiate their
products in order to create and sustain competitive advantage and the fact that
competitive forces in the organization are determined by the degree of
differentiation, little effort seem to be made by firms in this industry to
harness the benefits associated with differentiating their products.
Evans, (2005), view that the pace at which firms in Port
Harcourt utilize product differentiation strategies to insulate their firms
against competitors and to enhance profitability seem to be relatively slow as
compared to that of firms in other Industries. In order to find answers to
these problems, this study is to investigate or to determine whether or not
there exists a relationship between sales performance and Product
differentiation Globacom Nigeria
1.3 Purpose of the study
The purpose of the study
will determine product differentiation and sales performance in telecommunication
firms in Port Harcourt. The Specific
Objectives are as follows
1. To determine the extent to
which Product quality influences Sales performance in Globacom
Nigeria.
2 To ascertain the extent to
which Product design influences Sales performance in Globacom
Nigeria.
3) To examine how product superiority enhances sales performance in Globacom
Nigeria.
1.4 Research Questions
The following research questions have been formulated and
will be answered at the completion of this work
i) To what
extent does Product Quality enhances sales performance in Globacom
Nigeria?
ii) To what extent does
Product Design enhances sales performance in Globacom Nigeria?
iii) To what extent does product superiority enhance sales performance
in Globacom
Nigeria?
1.5 Conceptual Framework
CONCEPTUAL
FRAMEWORKS OF PRODUCT DIFFERENTIATION AND SALES PERFORMANCE
Source: Conceptualized from literature, 2015
1.6 Research Hypotheses
Here, certain questions are raised; the
provision of answers to them will be controlling the idea of the research work.
The questions pertain the crux of the matter and are statements of major
problems to be encountered as the progress is made on the work. The questions,
which are interdependent, include the following ones:
HO1 There is no significant relationship
between product Quality and Repeat Purchase.
HO2 There is no significant relationship
between Product Design and Sales growth.
HO3 There is no significant relationship
between Product superiority and Profitability.
1.7 Scope of the Study
The general content scope of this study covers Product Differentiation and Sales
Performance. The geographical scope is Port Harcourt in Rivers State of
Nigeria.
1.8 Significance of the Study
Because of the complex nature of some firms, this study
gives a comprehensive approach of firms employing Product
differentiation usage
in Globacom
Nigeria. A thorough understanding and
knowledge of the factors that have impact on Product differentiation are very useful in guiding eateries owners
and managers to design and deliver the right offering and strategies. The
study findings also provide the owners of the Organizations with an opportunity
to further understand available Product differentiation that can be employed to
boost sales performance.
This research
project will therefore be of immense advantage or benefit to the management of
companies, computers and other business organization using product
differentiation. Hence, the theories and concept contained therein can be
infused into their management system.
1.9 Definition of terms
Product differentiation: A marketing process that showcases the differences
between products. Differentiation looks to make a product more attractive by
contrasting its unique qualities with other competing products
Sales
performance: sales
performance is usually for a certain period of time the employee has worked.
Product
quality: The group of features and characteristics of a saleable good which determine its
desirability and which can be controlled by a manufacturer to meet certain basic requirements.
Product design: Product design as a verb is the
process of creating a new product to be sold by a business to its customers. A
very broad concept, it is essentially the efficient and effective generation
and development of ideas through a process that leads to new products.
Market
share: The percentage of
an industry or market's total sales that is earned by a particular company over
a specified time period. Market share is calculated by taking the company's
sales over the period and dividing it by the total sales of the industry over
the same period.
Repeat
Purchase: The buying of a product by a consumer of the same brand name previously bought on another occasion. A repeat purchase is often a measure of loyalty to a brand by consumers and is often taken into account by marketing research professionals to evaluate a business.
