Product Differentiation (Ch 7)

Introduction

There are a number of ways firms can differentiate their offerings, but two of the more difficult-to-achieve methods are:

• Linkages between functions 
• Service and support 

I'd like to take a look at LG through the prism of these to differentiators - one based on my observations and the other based on personal experience.

Linkages between Functions - Observations

 LG Curved TV

 LG Curved Smart Phone

I've discussed these new, innovative products in previous posts, but in the context of Linkages between Functions, we can see some shared design ideas between disparate divisions at LG. These linkages also manifest themselves in the internet capabilities of many of LG's connected appliances. The general managers of the mobile and appliance divisions have committed themselves to sharing information, designs and best practices.

LG also uses linkages and coordination to support cost leadership. As I discussed last week, all of LG's purchasing is centralized. But strategic supply management may also have a product differentiation effect. Different LG divisions work the same supply chain, push their vendors on innovation and then share information. This is a hallmark of a firm with good interdivisional connectivity.

However, the next part - my personal observation on LG's customer service - was not so positive.

Service and Support - Personal Experience

I got myself one of these LG Bluetooth stereo headsets. In terms of product differentiation, it offered the most comfortable design for wearing. It sits under your collar and you barely notice it. It's easy to put in the earpieces and put them away (instead of dangling, they fit snugly into magnetic receptacles at the ends of the device). The sound quality is good, you can pair it with two phones, and you can listen to while dealing with phone calls.

I thought it would be perfect for working out. I could listen to my favorite music and take calls if needed, even in the middle of a workout because the controls are so easy to operate. The problem with this device is that it's not sweat-resistant. So after a few weeks of use in the gym, the controls stopped working.

Here's where the customer service piece comes in: I set up an online chat with LG, and it took over 30 minutes of interaction before we got to a point where they gave me a return authorization and instructions for sending the device back to their service department. I had to pay for the shipping.

After a week, I started online chatting and calling them to find out the status of my repair. The could only tell me the generic "in progress" status and the due date, which, after several attempts at chatting and calling, started fading weeks into the past.

The online rep said they had no way of reaching out the technicians, or even of knowing where the device was. This is a very poor example of Linkages between Functions.

After four weeks, I received my device (most likely a refurbished replacement).

All in all, a very poor experience with a company that in other ways seems to be so well coordinated among its divisions.