A Fresh Look at Differentiation Strategy

September 21, 2022
# min read
Nina Tucker

Establishing and Maintaining a CompetitiveAdvantage

Standing out from the competition is one of the biggest challenges businesses face. A differentiation strategy defines how to stand out from the plethora of similar businesses out there. It solidifies the reason people choose one business over another. Companies all too often default to a generic strategy.

A generic strategy leads to similar offers, poorly differentiated branding, and indistinct communication. When this happens the product or service offered is like any other, and the marketing messages pretty much say the same thing. The value proposition may sound like it is unique but it’s not.

Establishing and maintaining an effective differentiation strategy can be challenging for new businesses as well as long-established enterprises. Here are a few reasons why differentiation strategies are difficult to pinpoint and sustain over the long term:

• One of the hardest things to do is be creative. Companies often lack original thinking on how best to serve the customer.

• Creating real brandand product differentiation through messaging is arduous. Pitching a product or service like it’s the only game in town (when it’s not) will be ineffective.

• Over time competitors become more similar. As the number of products within a category grows, the differences among competitors shrink.


Effective Differentiation Strategies

Be first. Entering the market with a new idea, product or benefit is an enormous advantage. However, staying first only lasts so long so continued innovation is a must.

Focus on one attribute. Be known as the best for one aspect or use. This includes product features, price, or customer service. Seek an attribute that no competitor owns.

Specialize in a target market. Focusing on a target user or use will make you a specialist and be perceived as more knowledgeable, experienced, and understanding of that area. 

Be the preferred provider. Highly favorable reviews and endorsements help a business stand out from the rest of the industry. Connect what customers say about the business with your marketing messages.

Differentiate through exceptional customer experience. Customer experience can be a powerful, true differentiator among companies. Most companies focus on customer acquisition, not providing the best experience. 

Compete on brand. Most recently, rather than compete on features, benefits, and experience, many businesses are competing on what their brand stands for. Functional differences are replaced by values, ideals, and identity. Soft innovation and emotional points of difference go a long way in a world of endless features and benefits.

Create a new category. Creating a new category educates the market not only about a new solution but often about a new problem that isn’t top of mind. Category creation sells the problem, not the product, and thus positions innovation as the best solution to the problem.


How To Get Started 

The first step in determining the optimaldifferentiation strategy is mapping the customer’s entire experience. Involveyour entire team to answer these questions:

• How do people become aware of their need for your product or service?

• How do customers find your offering?

• How do customers make their final selection?

• How do customers order and purchase your product or service?

• How is your product or service delivered?

• Is there an opportunity to make the buying process more convenient?

• What happens when the product or service is delivered?

• How is the product or service paid for?

• What is the customer really using your product for?

Analyze the customer’s experience to gain insight into what the key differentiator is or can be. Once the key differentiator is selected, develop, and implement a plan to adopt the key differentiator and how it will be inculcated into the business. Make sure you deliver on that promise. 

Share it through all marketing channels ensuring that the firm’s expertise in this area is seen in the marketplace, or more specifically your target audiences. Track your efforts and their impact.Monitor the new business pipeline and the effectiveness of the plan. Test and adjust as needed. If implemented correctly, your differentiator strategy will create and sustain business growth and greater customer loyalty. 

How well do you stand out from your competition? Are you well equipped to assess your customer's experience and determine your key differentiator?


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