The differentiation strategy, in marketing, is currently one of the most reputable sales tactics .
Product differentiation is economically advantageous for a company. It lets consumers know why it’s worth investing in their product. It thus precludes all other substitutes available on the market.
What is the differentiation strategy?
The differentiation strategy is an approach that aims to distinguish a product or service from other similar products offered by competitors in the market. It involves the development of a unique product or service for customers. It concerns both 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 companies 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 is to create a brand or business that somehow differentiates itself from its competitors. It is applied to industry and is aimed at a wide range of consumers.
A targeted differentiation strategy requires the company to offer unique features to a product or service, and to meet the requirements of a niche or narrow market.
The benefits of applying a differentiation strategy
The differentiation strategy has several advantages that can help you develop a unique niche within your industry. Here’s what you’ll gain from having a good differentiation strategy in place.
The differentiation strategy allows a company to compete in the market with something other than lower prices. It lets consumers know why it is worth investing in their product, as opposed to all the other substitutes available on the market. A successful differentiation campaign significantly increases a company’s sales and gives it a competitive edge in the market. Concretely, it allows him to understand why he deserves more than others the investment of a consumer.
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 differentiate your product, and you can communicate it through effective marketing and advertising. The distinct features introduced into the product sometimes make it better than its substitutes.
Better profit margins
When products are differentiated and processed into higher quality products, it offers 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, it will likely increase loyalty to that one because it boosts the value of your brand.
The steps of creating a differentiation strategy
There are several ways for a company to create a competitive advantagebased on differentiation for a single product or for the company as a whole. Here are some steps to create a differentiation strategy.
Decide what you want to be known for
You need to have an idea of your expertise in your business. You’ll need to assess what’s important to you and your business and the areas in which 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 wishes and needs of current and potential customers. It will also help you select the differentiators that will make your expertise more attractive. For example, you may decide to send a survey to those who buy your products or use your services and collect data to get a clear idea of what they are looking for.
This step is important so that you can find elements that make your brand or products different. Each differentiator can be broad initially, so you can try to write them down and then create smaller subsections that narrow them. Here are some common differentiations:
- Image or reputation
Tell your story
When you tell your company’s unique story, it can automatically help you in your differentiation strategy, as your competitors probably won’t have a story like yours. Evaluate your mission, vision, and values, and you’ll be able to craft an overall 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 biographical section on your company’s 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 design a new branding, if necessary. This will attract new customers and consumers to your target audience.
Many companies choose to restructure over time and use different strategies to grow and differentiate themselves in the market. If you want to increase your profits without taking high risks or lowering your prices, consider creating a differentiation strategy.