Current markets couldn’t be more crowded. And the number of products and services continues to grow.

Compounding that overcrowded problem, the internet allows companies to market their products globally.

Plus, most companies try to make their product better when they should be trying to make them different.

Products are sold on their perceived value. Tim Williams, Ignition Consulting Group,  said

that making your product better isn’t always better; different is better. The primary goal of business isn’t revenue;

it should be profits. Differentiation is the key to profits. Therefore, you need to keep innovating your product offering. 

Standing out from the competition is one of the most difficult challenges marketers face.

Sameness is the combined effect of companies needing to be more similar in their offers, poorly

differentiated branding, and mixed messages. The language they use is identical to that of their competition.

If you visit competing companies’ websites, you’ll find that most offer no meaningful differentiation. They say the same things.

Also, some companies need to restructure

According to Indeed.com, many businesses restructure over time and use various strategies

to advance and distinguish themselves in the marketplace. Consider creating

a differentiation strategy to increase profits without high risk or lower prices.

 

Why A Differentiation Strategy Is Challenging

 

You can only compete on features for a while. Can your incremental differentiation be featured?

Yes, according to CXL.com, but any gradual improvement has the chance of being copied relatively soon.

If you look at any mature category, you’ll find it full of products that are the same.

 

Commoditization is increasing in every category. Once novel features are now table stakes.

A/B testing tools. Or heat map (mouse tracking) tools. Or session replay tools. Or email marketing tools.

They all have similar features, with minor differences.

It’s increasingly more work to say how one tool is different or better than others.

 

Almost all smartphones have great screens. It wasn’t always like that, but you can’t build or sustain

a competitive advantage on screens anymore. You could compete on battery life,

but you can ride that wave for only so long if you make a better battery. They will catch up.

 

What Is A Differentiation Strategy

  

The main objective of a differentiation strategy is to increase competitive advantage.

You will accomplish this by analyzing the strengths and weaknesses of a product, the needs of your customers,

and the overall value it can provide. Then communicate that unique product differentiation

by showing how it differs from your competition.

 

It also requires a value proposition that matches the buyer’s needs and wants.

This product difference should also be in sync with your brand and may help build brand awareness.  

 

How To Create A Effective Differentiation Strategy

 

 Differentiation isn’t as much about creativity as it is Atep m logic. You are going to make a logical argument

that is clear, compelling, and convincing. If you see the logic of your argument,

there is a good chance you have a winner. The following are four basic steps you can take to get started.

One: Make sure your message makes sense in the context of your category. It starts from what the marketplace

already knows about your product and what your competitors have told them.

You will need to do a little research for this information.

Two: Find the unique, differentiating idea that separates you from the competition.

Three: Make sure you can support your differentiating idea and that you can

demonstrate that difference. Claims without proof are simply claims.

Four: Communicate your difference. Every aspect of your communications-

advertising, sales, website, etc.- must reflect your difference.

 

If leadership is involved in the process, you will also find that your differentiating idea greatly motivates your employees.

Product differentiation strategy should show a benefit that is exclusive to that product. Below are a few common strategies

employed to differentiate a product or service. At the same time, a  successful differentiation strategy must align

your product or service with customer needs. An example, Amazon offers two-day shipping.

This differentiation feature was embraced by customers and is one of the reasons they have been so successful. 

 

Two approaches to creating differentiation

 

A broad differentiation strategy, according to Gaussianco.com,  creates industry-wide competitive

advantages that differentiate the offering from competitors. However, customers must widely

value a product with an overall differentiation strategy. Being unique in a

large market, you can increase your price point and improve your profits.  

 

A focused differentiation strategy is used when you want to focus on one specific customer market.

A concentrated approach takes a segment of the previously described broad strategy audience.

It narrows the focus down to those with unique needs. The market should be niche,

but there must still be customer needs to address — because without customer needs, a new offering is unnecessary.

 

A Few Ways To Make Your Product Or Service Different

 

There are many ways to distinguish your product from your competitors. To get started on your plan,

the following are a few suggestions by Jack Trout to get your thought process going.

The magic Ingredient. If you have a different way to make your product or some special ingredients, don’t dismiss them. Make them a big deal. A differential.

High-Technology Product. If you have some high-tech designs, parts, or systems, name them and highlight how they make your product a better choice.

A New Innovation. You should make this the cornerstone of your differentiation. Again, give it a name and promote it.

A System Innovation. It could improve the process of using the product or enable the development to connect to other products and has a specific benefit.

Charge More. If your product is made better or has a better result, highlight it and justify the higher value and price (and added profit).

Help the environment. A product or service that helps the environment is a popular and essential feature for many people. Highlight it.

A different design for an old product. If you can change the design of an old product and make it better, different, or more usable, Make the design itself essential.

 

Benefits Of A Differentiation Strategy

 

Differentiation strategies have several advantages that may help you develop a unique niche

within your industry. Here are the possible benefits from Indeed.com of creating a differentiation strategy:

 

A differentiation strategy allows a company to compete in the market with something

other than lower prices. For example, a candy company may differentiate its candy by improving the taste

or using healthier ingredients. Although its competitors have cheaper candy,

they can’t provide the taste consumers may want from that specific candy company.

 

The benefit of a differentiation strategy is that it builds on the unique qualities of a product.

Your company may create a list of characteristics its products contain that your competitors

need to improve. Those characteristics will differentiate your product;

you may communicate this through effective marketing and advertising.

 

When products are differentiated and turned into higher-quality products, it offers more

opportunities for larger profit margins. Also, This differentiation makes it easier to generate interest and close sales.

 

How Do You Know If Your Differentiation Will Be Effective?

 

Is your differentiation real? Information from Hingemarketing.com Differentiators can’t be fabricated.

It’s too easy to spot exaggerated claims. And to make it work, you have to deliver what you promised.

Any company can claim superior service but do nothing special to make it a reality. No special policies. No special training.

Nothing to ensure it happens. The bottom line is that they are similar to many competitors making the same claims.

 

Is it relevant and part of the buyer’s selection criteria? If your point of distinction doesn’t

matter to your prospects, it won’t bring you more business. Ultimately,

what is most important is what plays into your target prospects’ selection criteria

and decision-making process. Irrelevant differentiators are a waste of time and money. 

 

 Conclusion

The marketplace is very crowded, and as we grow globally, it will get even more crowded.

Therefore,  it is critical that you have either a low-cost strategy.-but only one company in your market

can be the low-cost leader. Or do you have a differentiated product or service –

and several companies can have differentiated products in a market. 

We were told for years that market leadership ad profits came from increased efficiency,

but that is not true today. Differentiated products and services generate significantly more revenues and profits.

Getting a differentiated product or service is complex and may take some time to develop,

but it’s possible. You can differentiate your product or service in many ways..

I will end with this. Michael Porter, Harvard Professor and renowned strategist, said there are only two business strategies: low cost and differentiated.

 

I would love to hear your thoughts on how this differentiation “starter” worked for you.