Current markets couldn’t be more crowded.
Whether a new or established business, you must keep innovating your product offering.
You also have to differentiate your product from your competitors to stand out.
That is why a differentiation strategy is critical. It’s the key to growth in today’s markets,
according to CXL.com. Standing out from the competition is one of the most prominent 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 Critical
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
For an organization to scale beyond this point, the leaders become responsible for designing
and altering the DNA and architecture of the organization to incorporate new things and
remove old parts that allow it to compete more favorably in the industry (Forbes)
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.
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 s 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.
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.
Cheers, Jim Zitek
P. S. You might want to check out this blog post, “Why Business Strategies Are Important”
P.P.S. Check this post out also, “Why Marketing Strategy Is Important?
Innovative strategies that create revenues
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