The best way to achieve marketing success is by differentiating your brand, products, or services to best meet your customers’ needs. By effectively utilizing a differentiation strategy, your brand can stand out in your industry with features that enhance your customers’ lifestyles.
This article discusses various types of marketing differentiation, the advantages, and how your company can distinguish itself from the competition. We break it all down below.
What Is Differentiation?
Companies develop a differentiation strategy to provide consumers with something new, exclusive, and distinguished from what their rivals sell in the market. The primary goal of executing a differentiation approach is to gain a strategic edge.
A company can normally do this by evaluating its own capabilities and disadvantages, as well as the desires of its consumers and the potential value it can offer.
What are Different Types of Marketing Differentiation?
While there are plenty of options, not all differentiation strategies are equally successful. What’s successful for your company will depend largely on what you offer, your company’s culture and capabilities and your industry.
As the name implies, product differentiation is achieved by adding or enhancing special features that are unique to your product. Cornering the market on a specific feature or service is a key way to entice customers. When you are the only company offering something, customers will flock to your brand in droves.
The downside to focusing solely on product differentiation is that businesses are constantly changing and evolving. No sooner than you’ve released software that performs a specific function than other companies are improving upon your efforts.
If your only focus is on product differentiation, you’ll likely only see a brief boom in sales because your competitors will quickly move in on the idea and make it their own.
Your employees are the backbone of your business. When they’re happy, your customers are much more likely to walk away satisfied and happy too. Team members must have the tools and communication channels they need to operate efficiently and spot errors before they escalate into major problems.
You can accomplish this by monitoring customer satisfaction metrics like user adoption rate, net promoter score, and churn rate. With concrete data, your team can analyze customer opinions regarding new products, advertisement campaigns, and your brand.
Service differentiation encompasses every supportive aspect of your company.
- Customer service,
- The ordering process,
- Website design,
- And everything that aids in the process of selling your product.
Showing your customers that they will always get great service, fast responses, and helpful advice regardless of what products they order or where they order from is an excellent way to promote brand loyalty.
While this isn’t a customer-facing aspect of your business, ensuring that you can deliver to people in your target audience is essential. This means keeping lines of communication open and delivery smooth for all manufacturers and distributors involved in producing your products.
It also means increasing quality assessment procedures to ensure that all products meet your high standards.
Your brand’s reputation directly impacts customer loyalty and should be tailored to your target audience. Understanding your audience’s expectations and needs will help your brand position its reputation as one that your customers trust and rely on for the products you provide. Customer loyalty is essential for building a solid base of returning customers.
A positive brand image can lower advertisement costs and increase profit by enticing previous customers to return for other products or services and tell their loved ones to do so also. Unfortunately, cultivating a distinctive image within your industry takes time, shrewd marketers, strong products, a large marketing budget, and a bit of luck.
Your brand must stand for something immediately recognizable through a slogan, logo, and name. In addition, your brand must promote your product’s value and follow through by providing the value advertised.
Differentiating your company’s image goes a long way toward overall success.
Price differentiation means finding the sweet spot for your product or service’s price. Many consumers look for less expensive alternatives when first selecting a product from the market, so ensuring that your product is appropriately priced is one way to differentiate your company.
It is also the go-to option for most companies and may not be reliable in the long run.
Reducing the cost for your product necessarily reduces the profit earned, and some other company will undoubtedly find a way to do whatever you do but cheaper, faster, or more efficiently. So you want to avoid a price war with your competitors.
What are the Advantages of a Product Differentiation Strategy?
Product differentiation offers plenty of advantages like increasing profits, heightening your company’s customer retention rate, and positioning your product strategically in the industry.
Creates Non-Price Competition
Pricing competition is not the only way to differentiate your product. Product differentiation also allows your company to stand out by showing that it has other valuable and unique qualities.
If you prove that your product features are better than the competition’s, customers will take price out of the equation when evaluating your company.
The advantage of a product differentiation approach is that it capitalizes on a product’s distinguishing features. Your company can compile a list of features that your products have that your competitors do not.
These features help distinguish the product, and you can express them effectively through promotion and advertisement.
Creates Brand Loyalty
Your brand’s distinguishing factors may become the standard for your entire company. Great customer service, for example, applies to more than one product or service; it’s a reflection of your company’s willingness to put the customer’s needs first.
Customers will become more loyal to your brand if your differentiators are reflected across all of your company’s products.
Eliminates Perceived Substitutes
A good product differentiation strategy could instill the idea that there is no other product in the market that can replace it. Even if alternative products are available, a company can gain a competitive edge in the market because consumers aren’t likely to substitute their product with another.
How can Product Differentiation be Achieved?
There are four specific ways to differentiate your product and position it for success. With these, you can enhance your existing product(s) to better appeal to your existing and prospective customers.
One of the best ways to promote and differentiate a product is to use a distinctive design. Something that is unique and that will stick in your customer’s minds.
Perfume bottles are a good example of this; they are often designed in fascinating shapes and are beautifully decorated in addition to being memorable.
Perception is king. Enhancing your brand and customer perceptions of the products and services you offer can add a lot of value, even if your product is similar to others on the market. Nike is an example of fantastic branding.
Another way of positioning your company is to use social media as an entity that does something different or noteworthy. This also enhances the standing of your products without altering anything in the production process.
Monitoring the metrics of your customers’ experiences is vital when aiming to improve product performance. By knowing what the product currently provides and how much effort it takes to achieve a goal, your teams can find ways to streamline the effort required and improve functionality.
Finding a USP, or Unique Selling Point, is an important aspect of differentiation. Almost anything could be a USP, and what you choose should relate back to the image your brand projects.
For example, if you have positioned your brand as one that frequently donates to a particular charity, your product’s USP could be that a portion of all proceeds goes directly to that charity.
Understanding how various types of differentiation can enhance your brand’s marketing success is a crucial learning point for every company. Measuring your current customers’ perceptions of your products, how they react to implemented changes, and modifying your strategies based on those measurements can assist your marketing team in positioning your brand for success.
Visit the Kissmetrics blog for more information on differentiation and market positioning.