Author: Shankar Meembat, The Alternative Board (Milton Keynes)
Recently, I have been working with a business that was in a highly regulated industry; products are specified to the ninth degree and have very little competition. As a result, I’ve been thinking: is a differentiation business strategy always possible and is it even necessary?
I now believe differentiation in business is essential. Without differentiation, you’ll end up competing purely on price. And if you think competition is not an issue, you might be interested in my previous article on competitor research and how to find your competition.
How do you differentiate your business?
You can differentiate yourself on functionalities. That’s the most common as an easily understood means of differentiation. A 16 megapixel camera is clearly different from a 2 megapixel one. If price is not an issue, most users would prefer the 16 megapixel camera over the 2 megapixel camera.
In addition to specifications, quality and design are also effective for business differentiation. This is often where branding comes into effect.
You can also differentiate by segmenting your customer. A mobile phone in many different colours is effectively differentiating itself based on the preference of its customers whilst having the same functionality and price.
Other differentiation strategy examples include how a product or service is delivered. Ask yourself the following questions: Do you customise your product for each customer? Do you offer after sales support? Is your warranty different? For example, Singapore Airlines has the same planes, use the same airports and promotes itself to the same consumers as other airlines. However, in their case, the company differentiation is their excellent service.
Lastly, because differentiation is all about how the customers perceive you, you can bring about differentiation in almost every aspect of your business. This includes sales, marketing, and operations. Here is more information on how to achieve differentiation in business.
So remember – differentiation is important because without differentiation you will just be competing on price.
You can differentiate your business in many ways. First, by the product features and functionalities. Secondly, by customer segments. Thirdly, evaluating the way in which your service is being delivered. And finally, by leveraging the perception of your brand.
As a business owner, how do you differentiate your business? We’d love to hear about it.