Consider using promotions to increase value-based differentiation. Differentiation Strategy is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. Having been acquired by Amazon for $13.7 Billion, Whole Foods now operate with an economic moat around their differentiation strategy, which allows them to dominate due to scale. No brand owns a feeling better than Coke. A differentiation strategy advocates that a business must offer products or services that are valuable and unique to buyers above and beyond a low price. The ability for a company to offer a premium price for their products or services hinges upon how valuable and unique these offerings are in the marketplace. What an informative and educational article. Differentiation leadership focuses in providing perks that add value for consumers, while higher prices are a sort of “make up” for their higher costs. Building a strategy on a differentiation requires a company to continuously invest in and develop: Differentiation, in marketing, means creating specialized products, services, or experiences that position your brand at a competitive advantage within a specific market segment or segments. The marketplace is getting more competitive by the day, which means it’s more challenging than ever for your prospects to see how your product or service stands apart from others like it. Download this FREE BluePrint to get the exact strategies used by top agencies to build brand strategies for their clients. As a side effect, these industries have seen substantial increases in competitive products. Focus. Across all of Virgins’ Brands their differentiation strategy is aligned from one brand to the next, all the way up to their infamous founder Richard Branson. A well-executed differentiation strategy helps your business to stand out in a competitive marketplace and convince potential customers to buy from you, rather than engaging competitors. Curiously, not so much. What are the 3 generic strategies? There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. In many industries, the barrier to entry has dropped significantly in recent years. This strategic approach yields high margins but is hindered by a low market share. 1. Differentiation strategy is a way for a business to distinguish itself from the competition. Virgin is a global brand providing services from air travel to financial planning. Differentiation can be done on the design of company’s products, innovation, brand image, features or customer services (Teece 2010, 174). Make small, gradual changes to your product, brand identity, and marketing efforts so know what works and what doesn’t. This has been the philosophy of the Virgin Brand since their first record store and remains a consistent thread throughout their overarching brand strategy. Coke’s entire positioning strategy is based around the emotion of “Happiness” and they remind you to “Enjoy A Coke” in every beautiful destination in the world, at every time of year. A product differentiation strategy should demonstrate that … Can you ruffle the feathers in your market with a bold new category name? It’s usual to be confronted by these questions, especially when you are in the business world. Aha! Can you niche down and make a unique offering? - Who is it best for?This is one of the main tools businesses use to bid for their industry's customers. Differentiation simply means using product features or functionality, innovation, brand image or customer service to make products and services more attractive to the potential consumer. TOMS did it effectively, though they were one of the pioneers. But of course, saying you’re high quality doesn’t exactly mean much, since anyone can say the same. Zappos goes above and beyond for their customers and this is a great differentiator for brands in crowded marketplaces or with low budgets. Finding a unique differentiator is a creative game and you need to get your mind thinking outside the box in order to find one that is unique enough for your brand to stand out. Diversification strategy, as we already know, is a business growth strategy identified by a company developing new products in new markets. A well-executed differentiation strategy helps your business to stand out in a competitive marketplace and convince potential customers to buy from you, rather than engaging … You can always do more research, add or change a feature, or try a new marketing strategy. A differentiation strategy is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. Yes, there may be other well-designed products but none are quite like yours. They took on a faceless giant brand (Lexington) who controlled 80% of the market, to offer stylish designer glasses as a fraction of the price. If a business decides to follow a cost leadership strategy as well as a differentiation strategy simultaneously, it has to plan it dual strategy very carefully. Dollar Shave Club broke into the market as an unknown start-up on the Mens Razor Blade market. As indicated, a differentiation strategy serves a broad market. Which of the above examples was the most inspirational and did any spark an idea? Can you identify a moment of feeling your audience loves to align your brand to? Mailchimp had already established itself with broad brand awareness by being one of the first user-friendly email marketing software options. Conduct complete research about how your competitors differentiate their businesses from others. These brands are everywhere and their approach only succeeds in making their audience feel even more uncomfortable about buying insurance than they already did. Can you bundle up your unique value with an aligned purpose? throughout the entire brand development process that is more critical than the differentiation strategy. When making decisions regarding horizontally differentiated products, it … So to get those creative juices flowing, here are 12 unique differentiation strategy examples. What are the 3 competitive strategies? Differentiation Based on Price Consumers love getting the same product for less. Product differentiation is economically advantageous to a company. Although there were many small stores providing organic and natural food options to that market segment, there was a gap wide open for a brand to come in and offer such a service on scale (in the mould of traditional grocery store chains). It distinguishes your brand from all others. Almost all the good sides have their “bad” counterpart as they all come with certain limitations. Geico goes against the grain and lightens the mood with a funny looking talking gecko and a fun and light-hearted communication strategy. An example of this is a lawn-care company that will do weekly maintenance guaranteed to cost less than any other advertised price. New York, NY 10016, Beijing Headquarters Differentiation is about setting your company, product, or service apart. So put your thinking hat on and find a unique differentiator for your brand. If you want to create an effective differentiation strategy, it’s necessary to explore and assess similar businesses that work in the same marketplace and identify those that provide similar products and services. Differentiation Based on Price Consumers love getting the same product for less. For example, by focusing your strategy on quality, your product may be seen as a status symbol for those who buy it. Communicating a brand story to your customers is one of the best and most effective ways of highlighting what makes your business different. Best practice creates the You’d think companies would be all about that. This differentiation strategy does not mean to compete with generic or low-priced products, but rather provide customers with the best overall value out of all your product competition. Take control of the strategy conversation with these strategically structured questions. Differentiation focus strategy … Identifying attribute of a product which are unique from competitors in the industry is the driving factor in the differentiation leadership strategy. Brand loyalty: When your differentiation strategy brings customers back for more, it creates brand loyalty. Product differentiation strategy helps Product Managers answer these key questions “Why should a targeted customer buy my product?” and “How can I make my product stand out from the rest?” The seemingly easy answer is: because my product is different from the others on the market. The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other competitors copy your cost reduction strategies. No.11 Huixin Dongjie ,Chaoyang District,Beijing 100029, PRC, Differentiated Strategy: How to Build Competitive Advantage? Successful use of a differentiation strategy depends on not only offering unique features but also communicating the value of these features to potential customers. See if you can take inspiration and apply any of these ideas (with a twist of course) to your industry. The most important element of any successful differentiation strategy is sharing the things that make your brand unique. 12 Unique Differentiation Strategy Examples, So to get those creative juices flowing, here are. And the flipside of this is true, too. Geico provides a stand-out option for that exact group. (So if you use lower cost as your differentiation strategy, have a long term plan). Avoid the mistakes that 95% of amateur brand builders make and build brands to succeed. Differentiation Strategy. As a result, advertising in general and brand building in particular are important to this strategy. What is a differentiation strategy? They’re hiding and can only be found with creative thinking. 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