The differentiation strategy can sound complicated. In practice, it is simpler than you might think. As long as the company takes the time to research and understand not only its competitors, but its own separate brand as well. Then, in no time, it should be on the way to differentiation.
A differentiation strategy is one of the building blocks of a successful brand. Once a company has determined how it is positioning its brand, it can begin to refine its diversification strategy. In other words, it must know in advance where it is positioned on the market and what makes it unique. Then it's time to show the world how much different it is from the competition and for what specific reasons.
What is the differentiation strategy?
A simple answer to the question of what a differentiation strategy actually is would be this: brand differentiation reflects what sets it apart from similar competitors in the market. When developing a positioning strategy, the brand gets to know other companies from its sector, offering similar solutions and products. It may turn out that potential customers have a lot to choose from. So how to convince them to choose this and not another brand? The only way is to reassure them that there is something "different" about it. Something given target group finds it more attractive. Something that will appeal to your audience and their wallets.
Unfortunately, just staying away from blue in your logo, when used by every other company in the industry, is not the end of your branding strategy. The differentiation strategy is something more complex. The company needs to make sure that everything it represents has value for customers. Starting with the function of the product, through employer branding, customer experience, and ending with the visual effects used in branding.
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Strategy differentiation - where to start?
A differentiation strategy can begin with a comprehensive examination of the company and brand elements that differ from what the competition offers. It's usually a good idea to start by listing the different differentiating items and then testing each one to see if it is actually a good differentiator. An effective differentiation strategy requires answers to three key questions.
1. Is what the company communicates authentic?
1. Is what the company communicates authentic?
The distinguishing feature of a brand is what defines the company. It's an element that highlights something important - from the way you do business to the types of products you manufacture. It is so characteristic of a given company that no other company will be able to copy it. It is not worth inventing a distinguishing feature if one does not actually exist. Today's customers are smarter than you think. They can easily see through exaggerated claims. Thus, the differentiation strategy should be based on a discriminant that the company will be able to prove every day.
2. Does what distinguishes the company matter?
Finding a few differences between your business and competitors can be quite easy. However, this does not mean that all of these differences are valuable. If the way a company distinguishes itself from other brands doesn't matter to its audience, it doesn't really add anything. It will not increase the business opportunity. The differentiation strategy requires reflection. When choosing brand differentiation strategies, a company needs to know exactly what it wants its customers to associate with it.
3. Is it feasible?
If a company is going to prove to its customers that what it says about its brand is true, it needs to make sure that it has chosen a differentiator that will work. Corporate identity is easy - a logo, brand name, etc. stand out. This is something that the company's customers can see every day. On the other hand, just telling people that the products offered by the company are better than other options on the market is much more difficult to prove.
Advantages of effective differentiation
A differentiation strategy has several essential advantages that can help create a unique niche in the industry. One of them is less price competition. The differentiation strategy allows the company to compete in the market with something other than lower prices. For example, a cosmetics company can make its products stand out by improving their performance or by using only natural ingredients. Although its competitors sell their cosmetics cheaper, they cannot provide consumers with the same good quality preparations and with such good ingredients.
The differentiation strategy is based on the uniqueness of the product and its exceptional features. If you are wondering what makes your products stand out, create a list of features that your products have that are lacking in competition. Some of them really make your product unique. Now you need to convey that to consumers - through effective marketing and advertising. Get involved in this online marketingand if you operate in the business to business sector - also b2b marketing.
The differentiation strategy is also higher profits. When products are diversified and transformed into higher quality products, the effect can be one - higher profit margins. Customers who are not price sensitive expect premium products. So if your target market is willing to pay a higher price for the highest quality or better value, your business can generate more revenue with less sales. Following this line of reasoning, if a company maintains the perceived quality of its products, it can create brand loyal customers.
This is another benefit of the differentiation strategy. The next step is to make customers believe that there is no other product on the market that would meet their needs and expectations as well. What's more - the company can gain an advantage in the market even when similar products are available. How it's possible? Because customers will not want to replace its product with another. A brand differentiation strategy is about how it presents itself to the world around it. Let us analyze it with examples.
Differentiation strategy - examples
The brand that knows what a differentiation strategy should look like is Lush. Although Lush Cosmetics has not yet entered Poland, offering natural, hand-made cosmetics, it has won the hearts of many women around the world. The brand positions itself as a unique solution for health and beauty. It does not resemble any other brand of its kind on the market and reaches its customers with a warm, friendly verbal identity that is visible in everything from packaging to message.
Perhaps the most fundamental distinguishing feature of the Lush brand is its commitment to fair trade and the purity of handcrafted solutions. It is a company that demonstrates the value of social and corporate responsibility in everything it does. Its brand is easy to perceive and authentic. What is the differentiation strategy Lush? The company distinguishes its brand by using a name that evokes the ideas of nature and luxury. He understands his clients - men and women who are fed up with standard cosmetics.
Lush doesn't sell products. Instead, it sells a point of view on defining beauty, seeking to focus on natural ingredients, unique solutions and sustainable business methods. The brand also offers a one-of-a-kind retail experience. Customers entering their stationary store can count on professional advice and even try the product before buying. To me as a consumer, this differentiation strategy is very appealing.
One of the easiest ways to make your business stand out from the crowd is to use the right techniques branding. A brand is associations, connotations or ideas related to a company, product or service. Some of these associations can be actively promoted by marketing solutions and the definition of your own corporate identity. On the other hand, part of the brand identity is impossible to control because it is influenced by customer experiences and opinions.
One example of a widely recognized brand is Coca-Cola. Her differentiation strategy is a masterpiece. Note that it is distinguished not only by the name or the product, but also by the choice of colors, the curvature of the bottles and glasses, the way it is sold, and even the history of the brand. Its marketing scheme is perceived by masses of customers as original and unique. We associate all dark, carbonated drinks other than Coca-Cola with a copy of an authentic brand. Thanks to careful branding, Coca-Cola has become a company worth approximately $ 84 billion in 2020.
Why is it worth implementing a differentiation strategy?
Having a brand differentiation strategy has probably never been more important than it is today. Online business has made most industries that also operate on the Internet (basically all industries!) Incredibly competitive.
Every Michał, Sandra or Jacek can create a cheap website with a free logo and write something about "being unique" on it. Therefore, it is not enough. Today's demanding consumers will not buy it - literally and figuratively. When we search for a service or product online, we expect it to be rated highly in Google. When we enter the site, we expect it to be user-friendly and full of beautiful and relevant images that appeal to us as customers. We want there to be some very special selling point that goes beyond the written promise. We want the brand to appeal to us and stand out from the competition we looked at 30 seconds ago. How can this be achieved? Only by creating a strong brand differentiation strategy can a company successfully differentiate itself from potential competitors.