Differentiation: Beating Your Direct And Indirect Competitors

Posted by Michael Lindberg on Mar 29, 2017 9:20:32 AM

product differentiation

Standing out from the crowd

I guess that most marketeers agree that it is getting increasingly difficult to stand out from the crowd, at least based on the products you supply. There are three obvious reasons for this:

 

1. A torrent of new products has washed over customers, each with conflicting claims and the tiniest points of difference – and many of those differences are overlooked or perhaps not even recognized.

 

2. Technology enables competitors to bring “me-too” products to the market by taking products apart and replicating them before companies have had the chance to establish their differences.

 

3. The speed of technology has enabled companies to reinvent themselves as quickly and as often as they desire, making it difficult to differentiate on product differences alone.

4 steps of differentiation

So thank heaven you don’t need to always have the best product because that’s a battle you can’t win. Rather, the battle you must fight each and every day is about perception. It’s imperative that you understand that success or failure is all about perceptual problems and opportunities in the minds of the customers; this is where you win and lose. You have to stay focused on adapting to the mind of the customer, not trying to change it. The more you understand the minds of your customers, the less likely you are to get into trouble. These are some of the lessons taught by Jack Trout who, together with Al Ries, is one of the founders and pioneers of positioning theory: i.e. how you create an impression in the customers’ minds that is different from your competitors’ position. Here’s Trout’s four-step process for making it happen:

 

STEP 1: Make sense in context

Your message has to make sense in the context of your category. It has to start with what the marketplace has heard and registered from your competition. Get a quick snapshot of the perceptions that exist in the minds of your customers and determine your perceptual strengths and weaknesses, as well as those of your competitors.


STEP 2: Find the differentiating idea

Look carefully for something that really has the potential to set you apart from your competitors. The secret to this is understanding that your differences do not have to be product-related; actually, in most cases it’s so much better if they are not. A business can be differentiated in several ways that go beyond just focusing on the product, for instance business model innovation.


STEP 3: Have the credentials

When you have identified what sets your company or product apart you need to prove it in a trustworthy way. You must have credentials to support your differentiating idea; to make it real and believable. Demonstrate your difference, because the proof of the pudding is in the eating.


STEP 4: Communicate your difference

Even if you succeed in building a differentiated product, the world will not automatically beat a path to your door. Better products don’t win on their own; you must build a strong image in the marketplace. Every aspect of your communication should reflect your difference – and you cannot over-communicate this difference.

Management's role in beating your direct and indirect competitors

Differentiation calls for marketing. However, in many companies, not least business-to-business companies, product is still king while marketing (read: advertising) is viewed as a necessary consequence of the product – not vice versa. And as we have seen, this view is terribly wrong. That approach worked in the day and age where demand was bigger than supply, but those days are now more than half a century behind us. So why hasn’t this view changed? Well, it all starts at the top. Top management has to be in charge of making sure that the differentiation strategy is generated, communicated and maintained. 

 

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Topics: Insider, Marketing