Differentiation strategy - what awaits us in the future?

A differentiation strategy is the most effective tool that a brand can use in a highly saturated market. Especially now, when we visit stores in the physical version less and less often, and more often we choose only from among many similar websites. 

The differentiation strategy is a tactic used by companies from various industries. Each of them uses it differently, but it's important that it does it effectively. Apple branded products are more difficult to repair than others. They are also much more expensive. The low level of customer service is legendary with the apple giant. And yet millions of people are convinced that Apple is high quality, innovation and high-end merchandise. This is precisely because a differentiation strategy has been used and the appropriate one branding. Other phone or computer manufacturers produce hardware that is very similar to each other, with the same operating system and software. Against this background, the iPhone immediately catches the eye. 

Price differentiation strategy - examples 

A price differentiation strategy is an interesting way to stand out in the market. As E. Czarny writes about it in his work Mikroekonomia, it is "the practice of selling the same product at different prices, the level of which is set depending on the situation in which the sale is made". Very often cafes or restaurants use this practice to sell their products at a different price in the morning or during happy hours. Another interesting example of what this strategy is is in the practice of airlines. Tickets cost several hundred zlotys or several thousand zlotys. It all depends on when you buy the ticket and on which day you are willing to travel. 

What is the differentiation strategy? 

Differentiation strategy, also known as differentiation strategyworks great in today's overloaded with stimulus times. It consists in distinguishing a product or brand from the competition thanks to radically different features. Its use takes courage, but it can dramatically increase the company's turnover. Most of your competitors have to laboriously compete with each other, driving down prices more and more? You dramatically increase them! It may seem insane to do this, but it really does work. Especially if you still offer high quality and do not want to cut costs endlessly.  

There is a first, second and third degree price differentiation strategy. First degree it is about fixing the price at the maximum level that the consumer can accept. We often see it at airports, where we grit our teeth and necessarily pay 20, 30 or 40 zlotys for a coffee or a sandwich. Second degree is price modulation depending on the quantity of purchased goods. Third level is a different price for different groups, e.g. student discounts.

Differentiation strategy - price, quality, bonuses? 

The differentiation strategy may also include a radically different product appearance than the competition, or a package of additional services that will make your product a premium class item. Differentiation may have horizontal or vertical character. In vertical, imagine stacked products on top of each other, all of which are designed to meet one need. If your competitor sells plain gray curlers, you can have Gold, Rainbow, Pink and Diamond curlers for customers who need something extra. The horizontal differentiation can be imagined as a row of different products that you have on offer. Your competitors sell gray curlers - you have: a curling iron, straightener, dryer, brushes and crimpers, all available separately or in advantageous combination packages. One company can combine both of these strategies. 

Advantages and disadvantages of differentiation strategies 

The differentiation strategy has obvious disadvantages. There is a risk that the new, higher price will not be accepted by customers. It may turn out that interesting features or new functions are not needed by anyone! Therefore, it is worth carrying out first marketing audit and market analysis. It's especially a good idea to look for niches. Among the thousands of similar companies, there may not be one that offers free delivery, personalization or fast delivery. 

The advantages of the differentiation strategy are more than the disadvantages. First of all, it is only your creativity that determines how you position your company, and thus what price threshold your customers will agree to. By skilful differentiation, you can attract customers on days when they usually don't shop, or persuade them to buy more products.

J.how to stand out online?

Marketers and those responsible for PR campaigns initially thought of selling on the Internet with trepidation. Instead of spectacular shopfronts, smells or sounds, there remains only one and the same for each company: its own website. Fortunately, it has turned out that here too the differentiation strategy is extremely effective. It is precisely because each product can be directly compared with another that the corresponding positioning product and looking for distinguishing features.  

This is interestingly illustrated by the example of the passing 2020. Many industries started to have problems, and selling on the Internet was no longer an option, and became the main source of income. Effect? Within a few months, there were numerous offers of free shipping, bonuses, and personalization that had never been seen before. Precisely to implement the differentiation strategy in practice and differentiate yourself from the competition.

What are the differentiation strategies?

One key type of strategy is differentiation strategy based on product quality. It involves creating a differentiated offer that meets the specific needs of different customer groups. As a first step, companies use segmentation, dividing the market into categories of customers with similar expectations - it is then easier to deliver the right quality tailored to the segment. Another form that it takes differentiation strategyis the positioning of the brand - building its image around values such as luxury, innovation or reliability. The customer will assign a higher value to a product if the brand is seen as unique and trustworthy. The third method is the introduction of product variants - differing in functionality, aesthetics or price - which allows for flexibility in the design of the product. price differentiation depending on the financial possibilities and expectations of the recipients.

Does every brand need a differentiation strategy?

Not every brand should automatically implement differentiation strategy, but in many cases its absence leads to a loss of identity and blending in with competitors. Even small, local companies can benefit from a conscious approach by choosing to diversification strategywhich suits their resources and the specific characteristics of the client. One of the least expensive tools is price differentiationwhich allows it to respond flexibly to changing market conditions and consumer expectations.

How to measure the effectiveness of a differentiation strategy?

The assessment of whether differentiation strategy produces the expected results, it should be based on several measures - both quantitative and qualitative. Firstly, it is worth analysing changes in customer loyalty, which are often the result of accurate price differentiation and product customisation. Another indicator can be the margin - an increase in its level usually suggests that the implemented differentiation strategy begins to bring real benefits. Satisfaction surveys, observation of consumer behaviour and recommendation indicators (e.g. NPS) in turn help to capture the intangible effect of activities. Measurement should not be a one-off - only systematic monitoring allows you to optimise your strategy and respond to market changes.