Differentiation and Positioning are the last steps of the marketing strategy.
We will now look at the process of differentiating in more detail.
To achieve a strong position in the segment the company has chosen, it has to find ways to set itself apart. But how do we do this?
Thus, we have to deal with competitive advantages. In other terms, each firm must differentiate itself and its offer by building a unique bundle of benefits, which makes it different from competing offerings. This bundle of benefits should appeal to a substantial group within the chosen and targeted segment.
You see that using this differentiation, the right position in customers’ minds can be achieved, leading to a strong correlation between differentiation and positioning.
The firm must differentiate itself by identifying possible value differences and competitive advantages and then choosing the right ones. But what can be a competitive advantage? In effect, a competitive advantage is a value difference between the offers of one company as opposed to competing offers on the market. Therefore, we have to understand customer needs better than our competitors do and simply deliver more customer value.
The extent to which we can differentiate ourselves from competing offers is called competitive advantage. Thus, the definition of competitive advantage is an advantage over competitors gained by offering greater customer value. More customer value can be provided by offering either lower prices or by providing more benefits which justify higher prices.
However, you will see that having identified competitive advantages and even promoting them is far from sufficient. The important thing is to live the competitive advantage, to live the differentiation. This is to say that if you want to differentiate your offer based on lower prices, then you have to deliver this promised difference.
It is safe to say that the more differentiated you are, the more you can charge for your products or services.
When a product stands out from the competition, it often commands a premium price. Consumers are typically willing to spend more on items that align closely with their needs or preferences.
If you want an iOS device, you can only go to Apple. Therefore, they’re the most expensive phone brand.
When you differentiate your product, you can also access different market segments than your competitors.
Let’s say all your competitors sell normal bread and you’re the only one who sells gluten-free bread. The ‘gluten-free’ segment of the market is going to flock to you since your competitors can’t access that segment.
Let’s continue with the gluten-free segment. Wherever they go, they look for gluten-free food and often get disappointed. But finally, they found you and your business, which is exactly what they’ve been looking for.
The likelihood of them being repeat customers and advocating your brand is quite high. That’s the power of differentiation.
When you access a different segment than your competitors with your differentiated product, your brand presence will get stronger, and your customers will be more loyal.
In what way can a company differentiate itself from competitors? To find that out, you should adopt a customer’s perspective. A company can differentiate itself based on its product, services, channels, people, or image.
Product Differentiation refers to differentiating the market offer based on features, performance, style, or design. A sandwich maker could differentiate itself by offering healthy, low-fat products. A car manufacturer might use extremely large engines as a point of differentiation. Thus, your product is better, faster, cheaper, healthier, greener, etc.
Clearly communicate why your product stands out and how it addresses specific customer needs.
Service Differentiation is based on aspects such as speedy or careful delivery, opening hours, customer care, etc. Thus, the service is differentiated. For instance, an airline could differentiate itself through extraordinary customer care and very attentive and graceful stewardesses. This type of differentiation may then become experience differentiation.
To do this, you could try using testimonials, case studies, and customer stories. Make sure to “show, not tell” for maximum effect.
A firm can also gain a competitive advantage through channel differentiation. This means that the firm differentiates itself by differentiating its channel’s coverage, expertise, and performance. So how does the firm get goods to the customer? It might be through a smooth-functioning, speedy direct channel.
Make it clear how easy and frictionless your service delivery is. People value that, a lot.
Companies can also differentiate themselves by people differentiation. People differentiation means nothing else than hiring and training better people than competitors do. Staff can be more friendly, competent, courteous, etc. Certainly, this mainly appeals to customer contact staff.
Use employee stories and profiles to humanize your brand and build trust with your audience. For example, you can have a “Our Team” section on your website.
Image Differentiation refers to the image a company or a brand has in consumers’ minds. The development of a strong and distinctive image requires creativity and a lot of work. Only over a long period, an image in consumers’ minds can be attained. If you want to differentiate your company by high quality, this image must be supported by absolutely everything your company does. An aid for image differentiation is symbols, such as the Nike swoosh or Apple’s logo. These provide a strong brand recognition and thereby contribute to image differentiation.
Also, famous persons may be of help. For instance, H&M built a brand around a famous person, David Beckham, to develop its image differentiation. The chosen symbols, characters, or other elements such as color associated with a brand must be promoted and communicated through advertising.
Image differentiation may be the hardest form of differentiating a company. However, there is also no stronger type of differentiation. The company has to build a personality around a brand that everybody knows and immediately thinks of.
Marketing your image differentiation requires consistency across all platforms and touchpoints. If you want your customers to have a certain perception of your brand, they have to see the same image wherever they look.
Superior quality can be a great differentiator in markets where customers are willing to pay a premium for better performance. Just think about how you buy products, how often are you willing to pay a little bit more because you know the quality is top-notch?
I believe this is something every business should be striving for. Never stop putting in the work, thinking about your weaknesses, and innovating.
When you do develop superior quality, make sure to market that. If you’re better than your competitors, don’t be afraid to show that. You’ll get more credibility and authority.
Innovation implies being different by definition. If you can’t find ways to be better than your competitors, why not look for areas they haven’t even addressed?
By filling gaps in the market or addressing unmet needs, innovative products can carve out significant market share. People often (mistakenly) think that every idea is already taken or that it’s impossible to be truly different in today’s market.
That couldn’t be farther from the truth. There will always be unmet consumer needs and opportunities to redefine industry standards. You too can be the next Apple or Tesla.
If we have found one or several potential points of differentiation that provide a competitive advantage, we must now choose the right ones. Because of these differentiation points and competitive advantages, it will build its positioning strategy. But which competitive advantages are the right ones? And how many should be promoted?
You might think that it would be best to promote every single differentiation point you can find for the company. Doing that would not be wise. Companies should focus on only one benefit, the most important one, to promote to the target market. In other terms, a company should develop a Unique Selling Proposition (USP) for each brand and stick to that USP. Why is that important? A brand should choose one attribute and tout itself as the number one on that attribute.
Trying to promote every difference is far less effective since buyers will be better able to remember one outstanding difference for which your brand stands. In addition, the company could risk disbelief and a loss of its clear position in consumers’ minds if it promoted too many differences. Certainly, Burger King is special in many ways. It could differentiate itself on more than one aspect. Yet, it follows the Unique Selling Proposition theory: It promotes personal choice as a competitive advantage: “Have it your way”.
However, if several firms claim to be best at the same attribute, the concept may not hold. Then, choosing more than one differentiation attribute, thus several competitive advantages may be the wisest option.
It is rather obvious that not every difference or competitive advantage is equally valuable. The reason is that each difference can both create costs and at the same time lead to customer benefits. A difference should be promoted if it is:
It may be difficult and tempting to find competitive advantages and differences that meet all these criteria. But a company should try to find one on which its position can be built. That is simply crucial to success.
As you see, positioning is based on the differences we found. If the difference is that you can offer cheap products, you should obtain that position in consumers’ minds.
Email subscription is available ONLY TODAY (oh, okay, and tomorrow).
Surely, we respect your inbox! Unsubscription works every day.
