When you create your own brand and enter an established industry you find yourself questioning how would you acquire market share from establish companies. Differentiation allows you to provide superior value to customers at an affordable price, creating a win-win scenario that can boost the overall profitability and viability of your business. In this article you will find different ways to differentiate yourself from other competitors.
However, not all differentiation strategies are equally effective, and some methods may be more important to invest in than others in order to stand out from the competition.
Product differentiation is probably the most visible. It includes actual physical and perceived differences, of which the latter can be acquired through advertising. Product differentiation may take the form of features, performance, efficacy (or the ability of the product to do what it is purported to do), meeting specifications, or a number of other criteria. This is the general area that most B2B marketers — and probably most consumer marketers as well — spend the majority of their time and dollars.
The problem, though, is that product differentiation is short-lived. It is remarkably easy to duplicate almost any product innovation. Of course, the western world has a sophisticated intellectual property rights ethic and legal system that provides copyright and patent protection. From a practical standpoint, though, these do not present challenges. In fact, many businesses choose strategically not to patent since it tells competitors exactly how to duplicate the advantage. At best, a product innovation is protected for the life of the patent. At worst, when a patent does not exist, anyone with enough capital to buy a machine may be a competitor in a matter of days or weeks.
Differentiation of service includes not only delivery and customer service, but all other supporting elements of a business such as training, installation, and ease of ordering. To many, these seem like the simple components of a business — the blocking and tackling or the foundational elements that do not require sophistication. But think about a business like McDonald’s. Like their Big Mac or not, they know how to differentiate on service. With very few exceptions, you will get the same product and the same service at a McDonald’s in Texas that you will get in Georgia, Connecticut, or California. And in each location, the fries will be cooked the same, have the same amount of salt, and be served up equally as fresh from the fryer.
Channels of distribution can also be an effective means of differentiation. Distribution can provide coverage or availability, immediate access to expertise, and greater ease of ordering, and higher levels of customer or technical service.
For many manufacturers facing a fragmented market, it is not feasible to reach the end user without the distribution function. Building materials, for example, have to somehow move from factory plant to contractor. Such products typically move through two stages of distribution including master distributors, specialty dealers, and retailers.
With sufficient support — that is training, joint sales calls, supporting literature, lead sharing, etc. — a distributor can become a staunch ally and partner of the manufacturer.
Even in a non-exclusive relationship, a committed distributor can create advantage through joint promotions, bundling, warranty and service support, and technical service. It is time-consuming and extremely expensive for a competitor to pre-empt or duplicate this level of differentiation.
An often overlooked means of differentiation is through company personnel. Employees, associates, or team members with customer interface can provide and demonstrate competence, courtesy, credibility, reliability, and responsiveness. Responsible for executing day-to-day client-facing communication, they are the linkage between the product and customer. If that linkage breaks down, the business is destroyed.
In many businesses, the sales representative, CSR, or the technical service representative becomes a trusted member of the customer’s team, ensuring that the product is delivered on time and works as it is supposed to, while resolving any issues quickly and accurately. Performance like this creates emotional bonds between the vendor and customer.
This avenue of differentiation is closely related to service, but focuses specifically on the people. Customers want to conduct business with people, not an institution. Building this relationship takes time, but establishes a highly differentiated position.