Most everything I’ve done I’ve copied from someone else. Differentiation strategy definition Differentiation strategy is one of the most important marketing strategy in today’s business environment. I buy CXL Institute because I think of myself as a go-getter who’s going places. Sometimes, people don’t know you’re the leader, so make sure they know. Apple had Steve Jobs. Hostile brands play hard to get. Standing out with a better customer experience is relatively low-hanging fruit as a differentiation strategy. If 10 startups launched tomorrow tackling the exact same space—but they couldn’t see what others were doing—what would happen? Her experience stems from a marketing background, with more than 12 years of experience consulting fashion-forward entrepreneurs. According to Porter’s generic strategies, the differentiation approach involves the creation of new and unique products (or services) that create exceptional value for their customers. Cutting prices is insanity if the competition can go as low as you can. Can you become the preferred tool/service of a particularly influential market segment? This can be a secret ingredient or a branded methodology. Constant comparison and benchmarking leads to conformity, and competitors become less differentiated over time. The problem is, any feature that’s meaningful and popular gets copied. Your Differentiation Strategy is at Risk It sometimes seems that many businesses have more measurements, controls, and processes than NASA. But you get great design at affordable prices. This is why most brand messaging is nearly identical. 6. So what is differentiation strategy? The antithesis of “feel-good brands,” hostile brands defiantly demand a decision—love me or leave me. Radically different is not a safe choice. Copyright 2021 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Category creation sells that problem, not the product, and thus positions your innovation as the best solution to the problem. Innovative stuff does poorly in focus groups and user surveys. Another implication of product differentiation is that very often, it brings brand loyalty into the picture. The differentiation strategy of product leaders is to deliver superior value through leading-edge products that enhance customer benefits. They spend way more money getting the customer in the door than keeping and delighting them. History has the power to differentiate your product. The more popular you are, the more popular you get. It can’t be delegated to low-ranking marketers. This is often seen in luxury or heavily branded goods. 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). It originated from a study that took place over 10 years and analyzed company successes and failures in more than 30 industries. When you ask people to recommend a tool, you inevitably hear the biggest, most popular names in the category—not necessarily ones that score best on a spreadsheet. Continued innovation is a must. (This works only if the competition can’t match that due to your unit economics or a structural advantage.). So, reverse brands remove certain aspects from a product that customers might expect and add in new, unexpected things. Well I had breakfast with Brian Massey, The Conversion…, If you want to double your results, you can either double the number of visitors (very…, Right now, there is a tsunami that’s coming to wipe out thousands of SaaS companies.…. A differentiation strategy is a way to stand out from the noise and give people a reason to choose your business over others. Here are 10 companies that brilliantly differentiated their brands from the competition. No. People perceive those businesses to have more knowledge, experience, or understanding of their area, giving customers a reason to choose them. Momentum becomes the reason to choose you. I’ll give Sparktoro a spin because I like Rand. The purpose of branding is to gain and retain customer loyalty by assigning values to the brand--and in some cases, an entire subculture. Google. Today it is a necessary tactic to differentiate a business and establish a competitive advantage. Blue ocean strategy is about pursuing both differentiation and low cost, while traditional competitive strategy differentiation is achieved by providing premium value at a higher cost to the company and at a higher price for customers. If you only read what everyone else is reading, you will likely think just what everyone else is thinking. This strategy depends on cost of production; if production costs are low enough, the business will reap the revenue rewards of undercutting the market. The barrier of entry to starting new businesses has never been lower. That means that brand reach and awareness is key. Sameness is the default for most companies today. Social stigma was gone, and profits soared. The customer experience is how customers perceive their interactions with your company. Unfortunately, it’s not a problem that’s easy to solve. Your brand is your defense against commoditization. Red Wing Shoes were the primary suppliers for the U.S. Army during both World Wars. The more competition, the stronger the commitment to differentiation should be. Optimizely is the leader, after all—there must be a reason for it! It’s tempting to be a safe and boring company. I send a weekly newsletter with what's on my mind on this stuff. A branded product, such as Kleenex, can be so influential to popular culture that its name replaces the actual term in everyday conversation. Look at what Dave Gerhardt did with Drift when he was the VP of Marketing there. Your competitor has feature X, you need feature X. Business Differentiation Versus Marketing Differentiation A robust differentiation strategy incorporates both business and marketing elements, which can be broadly defined as the actions your business takes, and the way in which it communicates with its target audience. Instead of differentiation, Sharp and his colleagues advocate distinctiveness, which is about increasing the visibility and recognition of a brand in its competitive environment. It’s just much easier to be a copycat. It provides a superior level of value to your customers and helps your company to distinguish itself in the marketplace. It’s increasingly hard to say how one tool is different or better than others. Take the Freshworks example, I am assuming they are targeting the keywords ‘Email Marketing Software and ‘Email Campaigns’. I buy jewelry from Tiffany’s—and pay a premium for that diamond—because I value the best. It doesn’t matter if anyone understands it as long as it sounds impressive and credible. 4. Setting prices significantly lower than the competition's is known as penetrating the market. Roam Research has a cult. We expect things to be long-lasting, support to be fast, and service to be courteous. A strong brand is your best, most sustainable long-term marketing asset. Their priority is to deliver the best new product, at any cost. Companies pursue various marketing strategies to attract customers to them rather than to competitors. Nike vs. Adidas vs. New Balance. Hostile brands may make us uncomfortable (like some clothing brands being made exclusively for skinny people), but in the end, their polarizing nature makes them stand out in the sea of sameness. That’s what a unique value proposition (or unique selling proposition, USP) should do, right? Over time, every blue ocean can turn into a red one as it matures, attracting more and more competitors. 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