⌚ 5 min read
Open up a new tab on your browser and Google your product or service.
We’ll take a guess and say that the search results are in the millions. Unless your product or service is extremely specific and unique, you’ve got competitors to contend with and stand out against.
The concept of differentiation is rather simple: show customers that your product or service is the best choice to fulfill their needs. Whenever making decisions, ask yourself, “Will this prove to my customers that I’m the obvious choice for them?”
If you’re asking yourself if differentiation is something you should really be spending time on, the answer is YES! (Otherwise, we wouldn’t have published this blog post anyway 😉)
Benefits of differentiation include:
You won’t have to compete based on price - Unless you are operating as a discount business of some sorts, competing based on having the lowest prices drastically cuts into your profit margins and makes staying afloat difficult. It’s often a race to the bottom, where few win. By choosing a differentiation strategy, you build up the perception you want to have in the market. For example, if you run a coffee shop, the place down the street might have cheaper coffee but the quality you offer is much higher and not something that customers are willing to compromise to save a few bucks.
Unique offering - By actively working on making your product or service different from what’s already out there, you will create an offering that truly brings a unique value to customers.
Higher profit margins - If your product or service is perceived to be of higher quality or more value, you have room to increase prices and boost your margins.
Customer loyalty - When a product or service is successfully differentiated, there will be no equal substitute available in the customer’s mind. Even if there are similar products in the market, your business will be top of mind for customers looking for the particular combination of benefits and value you offer.
Get cozy with the competition - Remember all those search results we talked about earlier? They aren’t necessarily a bad thing and can be used to your advantage. Click through the top results and take note of features, prices, return policies, branding, messaging, any other strategies that are evident, and social media presence. The areas where your competitors are lack-luster are opportunities for you to do better and differentiate yourself on. The areas where they are performing well are things you have to make sure are also part of your offering.
Create your own niche - Within any market, there are tons of possible niches to choose to operate in. Instead of trying to compete directly, carve out your own niche. Even the slightest differences in business models are enough to classify as a separate niche. Keep these things in mind when creating your own path:
Distribute differently - Your distribution channels are a big part of business, but many entrepreneurs don’t think about them when trying to differentiate. Look for steps you can cut out of your supply chain to help you price more competitively and better communicate with the end customer. If your industry and niche has traditionally used middlemen, try selling directly to consumers to help your business stand out and function more efficiently.
Distinguishing yourself from competitors is never easy, but with enough research and insights you can find and prop up the areas where you shine brighter than others.