What is Competitive-Differentiation?
Competitive differentiation refers to a process of presenting a brand or its products in such a way that would influence customers’ intention to select that particular brand amongst others in the market. Not all strategies of differential might be equally effective for a business. Hence, it can be a challenge to determine which strategy to make an investment in for successful differentiation.
Why is it necessary to attempt to stand out of the crowd?
The world of business and marketing is becoming fiercely competitive day by day and this has made differentiation more important as compared to earlier. Businesses often get one thing wrong that a good quality customer service or a superior quality product can help in differentiating themselves from their competitors in market. It is integral to ensure good quality product and customer-service for retaining the existing customers and attracting the new ones.
According to Thealternativeboard.uk, it is essential for businesses to understand that differentiation lies in the ways they highlight the uniqueness of their services or products. It is because all the brands are aware of the competition and are striving for improving their product quality or customer services. Thus, you are likely to face huge difficulties in grabbing customers’ attention towards purchasing your products due to this stiff competition in case you are not aware of the ways of presenting your brand differently from others. You must be aware of the term USP that can drive competitive differentiation by making customers understand how your business is unique and why the customers should select you from other players in market.
What factors should you keep in mind while devising your differentiation strategy?
Development of Sales Differentiation strategy could be a bit challenging for you if you rely only upon product innovation or customer-service improvement as most of your competitors are also trying to enhance their competitive edge through innovation to survive successfully. The first thing before you move on to developing your differentiation is identification of your strengths. For this, you should consider asking yourself a few set of questions:
- What special your customers get from you that they cannot avail in case they select other brands?
- How are your products superior in market?
- Why should the customers remain loyal towards your products?
While asking these questions to yourself you need to put yourself in shoes of your customers to get unbiased replies. Asking these questions will provide a clear insight into whether a particular brand is providing differentiated value to the customers or not. This will further assist the brand in identifying a few areas that you need to invest in for differentiating your brand. Numerous ways are there through which you can differentiate your brand. For instance, you can differentiate your product, distribution channel, price or service (Sivashanker, 2021). However, as I said previously, not every differentiation strategy might work for your brand.
Price Differentiation might not work in a market comprising low-price rivals
If you are running your business in a market in which competitors are offering services or products at lowest possible prices for differentiating themselves.
Figure 1: Possible ways of differentiation you can consider
Moreover, it might not always help you to gain maximum competitive advantage if you adopt a competitive-pricing strategy and keep on lowering your product prices than competitors. In these cases, you need to determine ways your products are more unique than others are and if you can motivate your customers to pay a higher price for buying your products. That will be a “point of differentiation” for your brand if you can find unique features of your products that will convince your customers to pay a higher price. For example, one of the leading makeup brands that operates in a market having low-price competitors . The former did not get involved in a price war with the latter; instead, it focused on highlighting a unique feature of its brand which is its product sustainability being handmade. Further “Handmade” tag on its product differentiated it. Thus, this reflects adoption of customer-oriented approach of this brand.
Product or price differentiation might not work for brands in some cases as customers are getting more value-driven than being product-driven. Thus, businesses can differentiate their services as well by adopting a unique complaint management strategy. For example, they can upskill their sales team for developing emotional intelligence so that they can connect with customers emotionally when receiving an objection. Customers can have negative purchase experience earlier and emotionally intelligent sales people can alleviate this concern by ensuring the ways the new service or product will provide maximum value to the customer.
Try to capitalise on advertising strategy and brand image
Reputation differentiation can also help you to differentiate your brand. According to BBC, a strong brand-image can help you to convince your customers to pay high prices for your products. To illustrate, strong visual brand-image of Apple has helped it to differentiate itself from others. It has been possible because Apple has capitalised on its ability of advertising its products in a unique way and it creates hype prior to launching its products in market. It motivates its customers to pay high prices implying that its products are of better quality. Strong brand-image of Pepsi has been created through clever advertising of low-priced products in which its rivals offer high-priced products.
Conclusively, the entire focus of a brand should be on determining the ways its services or products are influencing its customers’ brand attitudes differently than others and for this, a brand should adopt a customer-centric approach while designing its strategy to differentiate its products. It might not always be possible for you to gain maximum benefit after investing in a differentiation strategy; however, in the long-run it will help you to build a positive brand image which can drive your competitive-differentiation.