One of the most important aspects for a company that wants to be competitive is to know how to differentiate itself.
One can conceptualize differentiation as identifying and establishing one or a set of significant differences, in order to distinguish the company’s offering(s) from those of its competitors. The company must choose the way it will distinguish itself from its competitors with care. It is essential that the parameters chosen to establish differentiation are credible from the client’s point of view. The more credible the parameters, the greater the success of the differentiation strategy. If the customer does not believe what a company claims, differentiation is not established. It makes no sense, for instance, for a health plan to show images of healthy elderly people running in a field, if the plan’s exorbitant monthly fees drive most elderly people away.
Differentiation has gained importance in recent years, and now we talk about marketing differentiation. Marketing differentiation is an approach that aims to bring recognition and admiration to a brand or company for its particularities vis-à-vis the competition.
To achieve this, there are several ways in which a company can differentiate its offering from that of competitors. For example:
- Product attribute differentiation provides consumers with products that can be differentiated by design, attributes, options, style, durability, reliability, color, flavor, aroma, warranty, outstanding technical assistance, etc.
- Price / Payment term differentiation consists of establishing a more attractive price for an equivalent or better product, or more favorable payment options or conditions. One must be very careful with this strategy, so as avoid a predatory price war. Prices incompatible with production costs are not sustainable.
- Provision of services differentiation can be accomplished through efficient customer service, faster delivery, greater convenience, time available, installation, and by company image or brand.
- Distribution channels differentiation is where a company’s competitive advantage is established by its distribution channels that provide easy access and convenience for the customer.
- Image / advertising differentiation occurs when a company differentiates its offering from competitors’ similar offerings by presenting the image of the brand in a way that conveys added value to the product.
According to Jack Trout, author of Differentiate or Die: Survival in Our Era of Killer Competition, “a company does not have to be creative or funny to differentiate itself, just act with logic.” It’s not about being creative or cute or imaginative. It’s all about logic.”
A key creator of marketing concepts, including positioning, Jack Trout says, “Lack of logic is why so many outreach programs fail.”
According to him, to establish proper differentiation, it is necessary to develop a four-step process:
Step 1: Look for meaning in context. Arguments are never made in a void. There are always competitors trying to convince customers with arguments. Your message has to make sense in the context of the sector.
Step 2: Discover the differentiating idea. Being different is not being the same. Being unique is being special. You need to look for some aspect that sets you apart from the competition. The key is to understand that your differential does not necessarily have to be related to the product.
Step 3: Have your credentials in hand. To construct a logical argument to evidence your difference, it is essential to have credentials that reinforce the idea of your differential, that make it credible.
Step 4: Advertise your difference. Just as you wouldn’t hide your personal positive attributes, you shouldn’t keep your company’s differential hidden. Developing a differentiated product is not enough to bring the world to your door looking for it. The best products / services don’t always win. Perceptions of the best make winners. Remember: Being something is not enough; you have to be perceived as being that thing.
If you are interested in this subject see my other MANAGEMENT TIPS that address market segmentation and positioning.