The differentiation strategy in marketing is currently one of the most renowned sales tactics
Product differentiation is economically beneficial for a company. It lets consumers know why it is worth investing in their product. It is thus opposed to all other substitute products available on the market.
What is differentiation strategy?
Differentiation strategy is an approach that aims to distinguish a product or service from other similar products offered by competitors on the market. It involves the development of a unique product or service for customers. It concerns the design of the product, its characteristics, brand image, quality or customer service.
In other words, the main goal of implementing a differentiation strategy is to increase competitive advantage . A differentiation strategy is a tactic that businesses develop in order to provide customers with something unique .
There are two main types of differentiation strategies that a company can implement: a general differentiation strategy and a targeted differentiation strategy.
A general differentiation strategy involves creating a brand or business that stands out in some way from its competitors. It is applied to industry and is aimed at a wide range of consumers.
A focused differentiation strategy requires that the company offer unique characteristics to a product or service, and meet the requirements of a niche or narrow market.
The benefits of applying a differentiation strategy
Differentiation strategy has several benefits that can help you develop a unique niche within your industry. Here's what you'll gain from implementing a good differentiation strategy.
Reduced competition
Differentiation strategy allows a company to compete in the market with other than lower prices. It lets consumers know why their product is worth investing in, as opposed to all the other substitute products available on the market. A successful differentiation campaign significantly increases a company's sales and gives it a competitive advantage in the market . Concretely, it allows them to understand why it deserves a consumer's investment more than others.
Unique products
The advantage of a differentiation strategy is that it builds on the unique qualities of a product . Your company can create a list of features that its products contain that your competitors lack. These features will help differentiate your product, and you can communicate this through marketing and advertising . The distinct features introduced in the product sometimes make it better than its substitutes.
Better profit margins
When products are differentiated and transformed into higher quality products, it provides more opportunities to achieve higher profit margins . For example, if your target market is willing to pay a higher price for higher quality or better value, you can generate more revenue with fewer sales .
Consumer brand loyalty
Effective differentiation can create brand loyalty among customers if a company maintains the perceived quality of your products . For example, if you have a brand marketed by a sports figure, this will likely increase loyalty to the sports figure because it reinforces your brand value .
Steps to creating a differentiation strategy
There are several ways for a company to create a competitive advantage based on differentiation for a single product or for the company as a whole. Here are some steps to creating a differentiation strategy.
Decide What You Want to Be Known For
You need to have an idea of your expertise in your business . You will need to assess what is important to you and your business and where your organization is succeeding. Note the strengths and weaknesses of your overall brand or specific products.
Research your target audience
Research will help you align your company's offering with the wants and needs of current and potential customers. It will also help you select differentiators that will make your expertise more attractive. For example, you may decide to send a survey to those who purchase your products or use your services and collect data to get a clear idea of what they are looking for.
Develop differentiating factors
This step is important so that you can find elements that make your brand or products different. Each differentiator may be broad to begin with, so you can try to write them down and then create smaller subsections that narrow them down. Here are some common differentiations:
- Price
- Image or reputation
- Relationship
- Service
- Product
- Distribution
Tell your story
When you tell your company's unique story , it can automatically help you with your differentiation strategy, because your competitors likely won't have a story like yours. Evaluate your mission, vision, and values, and you'll be able to craft an overarching story about what sets you apart, which will turn your target audience into customers.
The best way to tell your story to your target audience is to create a bio section on your business website You can also use social media to engage with your customers and let them know about your products and services on a more personal level.
5. Create a brand image
Implement your strategy and create a brand image by ensuring better quality . Try to be creative and come up with new branding, if necessary. This will help attract new customers and consumers within your target audience.
Many companies choose to restructure over time and use different strategies to advance and differentiate themselves in the market. If you want to increase your profits without taking on high risks or lowering your prices, consider creating a differentiation strategy .
