Chapter Seven of our book is all about product differentiation…something DSG excels at!
In DSG's annual report to the SEC, they list some of their strategies and reasons for differentiation.
"Brand Partnerships. We carry a wide variety of well-known brands, including adidas, Callaway Golf, Columbia, Nike, Remington, TaylorMade-adidas Golf, The North Face, Under Armour and Wilson. In addition to the cost efficiencies of shared investments with our brand partners, we seek to leverage our partnerships to offer authenticity and credibility to our customers, while differentiating us from our competitors. We partner with our brands on important marketing initiatives and product launches, in addition to leveraging athletes that the brands bring to us for our marketing campaigns. Our brand partnerships also provide us with access to exclusive products and allow us to collaboratively develop enhancements that differentiate our customers' shopping experience, such as our brand shops, which provide our customers with a wider and deeper selection of products from our key brands, or co-branded microsites to enhance our customers' online experience."
In the list of ways that a firm can differentiate their products listed in Table 7.1 "brand partnerships" covers many all in one step. Making the same product more affordable at DSG than its competitors, consumer marketing, product reputation, product features, linkages with other firms and product mix could all be found in DSG's "brand partnership" strategy.
"Omni-channel Development. We are upgrading site functionality, expanding content, investing in new capabilities and beginning to leverage our store network to provide customers with an enhanced shopping experience that enables our customers to buy and receive products where, when and how they want. We believe that leveraging all of our sales channels to deliver a consistent, seamless and high-quality customer experience across our stores, on the web and via mobile technology will differentiate us from our online-only competitors."
In addition to all of the before mentioned ways to differentiate DSG adds distribution channels to that list. One of the reasons Dick's Sporting Goods has not fallen to the monster Amazon like many other competitors is because it has created and continually improved its online experience.
"Private Brands. We also offer a wide variety of private brands such as adidas baseball, DBX, Epic, Field & Stream, Fitness Gear, Köppen, Maxfli, Nickent, Nishiki, Quest, Reebok (performance apparel), Slazenger (golf and racquets), Top-Flite, Umbro (performance equipment, footwear and apparel) and Walter Hagen. Our private brands and other exclusive products offer our customers products that they cannot find anywhere else. Our private brands also offer exceptional value and quality to our customers at each price point and obtain higher gross margins than we obtain on sales of comparable branded products. Our private brands are designed and developed to offer our customers differentiated assortments from our competitors. We have invested in a development and procurement staff that continually sources products targeted specifically to our customers' needs."
"Private Brands" is the last example I will use. Having the sole right to sell high quality products that have proven themselves in the market is another example of how DSG differentiates itself. This adds to their product mix and will attract loyal customers who have faith in a certain brand.
Sources:
http://www.sec.gov/Archives/edgar/data/1089063/000104746913003238/a2213667z10-k.htm
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