product differentiation strategy

Product Managers often shoot for the easiest way to create product differentiation: they add more features. Goal is to be a quasi-monopolist. It thus appears that a differentiation strategy may not always work. Coca Cola Product Differentiation Strategy 785 Words4 Pages 1.2. Product Differentiation – Creating a product with better features, performance or efficacy. Offer customization options for your products to set them apart from generic competitor offerings. There are several key skills and resources that managers should be cognizant of in order to build and base their positive differentiated strategy. For example, if a customer purchases a product for a gift, they may want it delivered closer to a specific occasion. Tagged on: competitive differentiation examples differentiation strategy examples excellent differentiation strategies types of product differentiation ← 6 Ways Whole Foods Market Makes Social Media the Difference Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products Differentiation is possible along one or more of various dimensions — product features, quality, customer service, guarantee, distribution, delivery, product customization, etc. Product Differentiation Strategy. Consider integrating customization options into your website for maximum benefit. A product can be differentiated based on the form of the product. Although there can be differentiation in services’ too, in this book, we would use the word ‘differentiation’ … According to Porter’s generic strategies, the differentiation approach involves the creation of new and unique products (or services) that create exceptional value for their customers. Your product should have a straightforward user experience and look good. For products that do not lend themselves to production customization, offer self-customization options. Startups who redefine an existing market into either a low-end or a niche market need to shape their positioning and product differentiation strategy for a blend of both an existing and a new market. Learn the iterative customer-led product management methodology used by successful companies. On that basis, what would be your best course of action? Installing and learning new bells and whistles is more hassle than the increase in productivity. Offer multiple shipping options that cater to customers' schedule and preferences. The concept was proposed by Edward Chamberlin in his 1933 The Theory of Monopolistic Competition. Start writing. Top Competition: AT&T, Verizon Wireless. You price the product to gain share and allow deal-making maneuvers. Deciding what should be part of your next product offering is never easy. This is the essence of differentiation. A formula that is costly -or impossible- for your competitors to recreate is central. There are several ways to achieve product differentiation. Look out through their eyes and re-examine every way in which they solve their problem with your product offering. No Perceived Substitute: A product differentiation strategy that focuses on the quality and design of … Your promotion efforts stress the differences between your product and your competition. Copyright 2021 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Differentiation strategy is concerned with product differentiation. Product differentiation strategy in a re-segmented (low-end or niche) market . The product, price and promotion portions of the marketing mix indicate what your best options are for product differentiation. Customers buy from you not only based on product features. For example, if a customer purchases a product for a gift, they may want it delivered closer to a specific occasion. A differentiation strategy is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. Allow customers to tailor your products to their desires. Every brand is built on a product (I include services here as well). Beardbrand positions their products with a specific product ethos. These customers do not want to overpay for features they do not want and do not want to compromise for a product that does not meet their preferences. Sameness is the default for most companies today. There are primarily 6 ways to differentiate, These include: 1. 4. Besides being an imperative for survival in the competitive market, product differentiation has following advantages: 1. Differentiation is possible along one or more of various dimensions — product features, quality, customer service, guarantee, distribution, delivery, product customization, etc. Savvy consumers research their purchases and know what components and features they want prior to making a purchase. Your service, support, financing and installation offerings help customers opt for your solution. The best product differentiation strategies increase your brand image, cater to customer preferences and increase sales. Products that display a different visual style, include different features or handle different tasks stand out from those offered by the competition. Which part of the product life cycle is your industry in? For smaller, local companies that are trying to stand out from national brands, … A better option may be to keep a steady hand on the tiller of the product that you do offer. Your product should have a straightforward user experience and look good. A major aspect of a product differentiation strategy comes from product design. Are there any aspects of your company offering that is in the whole product offering that encourage your customers to buy from you instead of the competition. Startups who redefine an existing market into either a low-end or a niche market need to shape their positioning and product differentiation strategy for a blend of both an existing and a new market. Product differentiation strategy in a re-segmented (low-end or niche) market . Coca-Cola having an 'action orientation', instead of waiting for change to happen it is at the leading edge, driving action forward. It is important to think on product differentiation strategy. 2. It is important to think on product differentiation strategy. Helps in non-price competition: It allows the companies to compete in areas other than price. Now that you know what your product differentiation strategy is, you will find it easier to defend your position in the market. Then create your product features and marketing around how your product solves those frustrations. Put yourself in your customer’s shoes. Every brand is built on a product (I include services here as well). This product differentiation strategy has created global value, brand loyalty, non-price competitor as well as no perceived T-Mobile. Coming up with a differentiation strategy is essential to the products and services you sell, but it’s also important for your branding and marketing efforts. Another great idea is to focus on other elements of the product which the rest of the company provides. Service Differentiation – This includes not only delivery and customer service, but all other supporting elements of a business such as training, installation, and ease of ordering. But so do your competitors’ products. Product differentiation is a marketing strategy that businesses use to distinguish a product from similar offerings on the market. Goal is to be a quasi-monopolist. Because buyers don’t like to have, any extra attributes m the products that will increase the price. If you include items that make using your product more convenient for your customer, you will distinguish your products from similar product offers. For example, if you are in the growth phase, you should increase the number of different versions you have in a product line to more closely target different markets. Let’s start with the simple idea that product differentiation exists in the mind of the customer. … Is it the market standard? Who are the competing organizations and what do they offer? In your last product (or next one up), what was your product’s delighter(s)? Then create your product features and marketing around how your product solves those frustrations. Product differentiation strategy helps Product Managers answer these key questions “Why should a targeted customer buy my product?” and “How can I make my product stand out from the rest?” The seemingly easy answer is: because my product is different from the others on the market. Product Differentiation Strategy. What types of key customer needs are not being met with existing options? It resonates with a certain group of people who then become devoted custome… This differentiation strategy does not mean to compete with generic or low-priced products, but rather provide customers with the best overall value out of all your product competition. Form. Offer features that higher priced competitors offer on their products, but at a lower price point. Make your products comprehensive by including necessary or complementary products as part of your product package. Now that you have the tools above, get out a piece of paper. Make sure that these parts of the product offering called the ‘augmented product’ are all up to scratch. © 2021 280 Group LLC, All Rights Reserved. Apple has made product design a hallmark of its differentiation strategy since the company's origins. If you are going to create strategic view of product differentiation, you look into and then beyond product improvements. Helps in defending high prices: It helps the companies to give a reason why they charge a high price for their product. T-Mobile is a cellular company that's shedding … 7 tips on product differentiation is … The physical structure, size … A focused differentiation strategy requires the business to offer unique features to a product or service, and it must fulfill the requirements of a niche or narrow market. Know your market. Here are a few strategic tools to help you focus on finding your product differentiation strategy. This type of differentiation is very easy to copy by your competitors and is often very short-lived. Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products That’s cool! Successful companies strive to distinguish their products from competitors through differentiation strategies. According to Porter’s generic strategies, the differentiation approach involves the creation of new and unique products (or services) that create exceptional value for their customers.And, as a consequence, they are willing to pay premium prices for them. When a customer feels she is receiving a quality product at a discount rate, she will be more satisfied with her purchase and will be more likely to make a repeat purchase. However these tools may miss categories of product differentiation that are easier, cheaper and longer-lasting. But so do your competitors’ products. It refers to making a company’s product different from the similar products of the competitors. Product differentiation is a process used in marketingthat identifies and communicates the unique value a product or brand brings to the table when compared to competitors. You have to consider the overall company strategy, the product goals and initiatives, and what your customers truly need. And, as a consequence, they are willing to pay premium prices for them. When used as part of a larger competitive strategy, differentiation can be essential in propelling a company to the next level of growth. Product differentiation refers to the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. Differentiation strategy … Lego It may seem now like a foregone conclusion that The Lego Movie would be a huge hit, but anyone who’s seen a great … Work with your entire team to establish ways you can potentially distinguish your product from others in the market. Product Differentiation Tool: Product Lifecycle, Product Differentiation Tool: Kotler’s and the Mature Market, Product Differentiation Concept: Whole product, Getting Started with Product Differentiation. Consider using promotions to increase value-based differentiation. The main objective of implementing a differentiation strategy is to increase competitive advantage. Use buy-one, get-one free offers, free add-on products, increased size offers and immediate-use coupons. Learn how to differentiate your product in the marketplace. Take note of the market your product serves. When a company efficiently differentiates its products, and few essential products stand out, it usually brings out brand loyalty on the consumer’s part. Differentiation Strategy is the strategy that lays emphasis on offering a superior product, on some dimension (s), compared to what competitors are providing. This is not to be confused with a value propositionwhich communicates your overarching promise. What is Market Research and Competitive Analysis? One key aspect to keep in mind in making sure you offer a differentiated product is to ensure that the product includes at least one ‘delighter.” A delighter is a feature or benefit which caused your customer to say “Wow! Another implication of product differentiation is that very often, it brings brand loyalty into the picture. In economics and marketing, product differentiation (or simply differentiation) is the process of distinguishing a product or service from others, to make it more attractive to a particular target market.This involves differentiating it from competitors' products as well as a firm's own products. For example, offer interchangeable covers to help customize a cellphone, or stickers to help customize a child's backpack. Position your products for customer convenience as a differentiation strategy. Use an example marketing plan to build your marketing mix product. Definition: Differentiation strategy, as the name suggests, is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. When buyers are satisfied with a basic product (originally launched product or the currently offered product), differentiation strategy may fail. Curiously, not so much. But product differentiation refers to more than just being different. Innovation / Invention – The best way to implement differentiation strategy is to invent or innovate. Kotler’s strategies in mature markets shows that the market leaders primary marketing stance is to remind customers that they are still the brand that customers trust. Product differentiation is part of the strategic marketing process. Productizing differentiation is a common task and uses tools and processes that Product Managers are familiar with. It is a key element to market the product, create a longstanding brand, and … Creates Value: Product differentiation gives a reason to the customers to choose the brand over others. Product Differentiation Strategy A good product differentiation strategy may gain brand loyalty, which is paramount to any successful business. A formula that is costly -or impossible- for your competitors to recreate is central. A differentiation strategy is key to your competitive advantage. The marketing team communicates these unique qualities through their campaigns and promotions. It mentions its philosophy as well as the difference between Beardbrand and similar competitors. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. What is Product Differentiation Strategy? In Kotler’s model are you a market leader, challenger, follower, or nicher? Differentiating your product or service requires serious thought and research. They productize their way into differentiation. Where your product is in the Product Lifecycle can tell you a lot about what the next strategic moves are. A differentiation strategy is a way to stand out from the noise and give people a reason to choose your business over others. A differentiation strategy is the efforts to make a product, brand, or service unique as compared to all other competitors, hence providing a competitive advantage (Pearce & Robinson, 2011, p. 219). It is because once a consumer is satisfied with a few pr… WEBINAR: Watch our webinar, ‘8 Trends to Track for Product Success in 2021’ WATCH NOW, NEW COURSE AVAILABLE: Digital Product Management GET STARTED, Watch our webinar on-demand to learn how to establish the right culture for your Product Management team to flourish WATCH NOW, Product differentiation strategy helps Product Managers answer these key questions “Why should a targeted customer buy my product?” and “How can I make my product stand out from the rest?”. In an often crowded product market, customers crave product distinctions to help them make purchasing decisions. Differentiate your products by providing the highest customer value. Product Differentiation Price Pricing strategy including the pricesto be charged for your product and services, and compare your pricing policy with those of your major competitors. Where you want to focus your differentiation efforts depends on a lot of factors unique to your product (industry, type of service, etc), but these are some examples and common ways products approach a differentiation strategy: Design. I want it!” The Kano model divides features into three groups: Creating new and different versions of a product is very exciting for companies. It’s about offering something that has an attractive advantage. The marketing team communicates these unique qualities through their campaigns and promotions. From choosing colors to product features, a customized product will differentiate your offering from your competitors and can lead to greater market share. The way you differentiate should not be an arbitrary decision or a reactive response to whatever your competitors are doing. This strategy focuses on … Before examining the differentiation strategies of different companies, it is helpful to understand the concept of differentiation. This is how you build an outstanding product that delivers real value to the people who … 3. This differentiation strategy involves using the characteristics of the product you market to differentiate from your competitors. By offering greater values, customization features and convenience options, you can influence a customer to purchase your products. Where you want to focus your differentiation efforts depends on a lot of factors unique to your product (industry, type of service, etc), but these are some examples and common ways products approach a differentiation strategy: Design. Customers will appreciate your ability to deliver on their preferred schedule, which can increase customer loyalty. Differentiation Strategy is the strategy that lays emphasis on offering a superior product, on some dimension(s), compared to what competitors are providing. Product differentiation refers to the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. 1. From a customer point of view, a new product can actually be more of a headache than a blessing. Product differentiation strategy helps you determines why a customer should buy your product and what makes it stand out from your competitors. 2. Ok, you can make notes on a laptop if you must. Features which provide more – or less performance. Here’s a few steps to get you headed in the right direction. In fact, it’s the opposite—the world has a massive sameness problem. In business, competition is hard. For example, include silver polishing cloths with silver jewelry or a screwdriver with an item that needs assembly. Ready to start focusing on product differentiation but not sure where to start? You’d think companies would be all about that. Product differentiation deals with making changes in the marketing mix of a product so as to differentiate it from whatever the competition is offering OR to offer a product which stands out in the market. In business, competition is hard. Offer multiple shipping options that cater to customers' schedule and preferences. Your differentiation lies in being the trusted supplier in your market category. 2. And the sales team can use them to demonstrate the product's competitive advantage. Product Differentiation This refers to differentiation that aspires to make a product more attractive by contrasting its unique qualities with other competing products (Investopedia, 2015:1), as in the case of Coca-Cola, other soft drink brands. It is a key element to market the product, create a longstanding brand, and … Position your products for customer convenience as a differentiation strategy. Is it very stable? Location and Service. 3. What Is Product-Based Differentiation This differentiation strategy involves using the characteristics of the product you market to differentiate from your competitors. Product life cycle is your industry in company 's origins strategies increase your brand,! Areas other than price marketing mix indicate what your customers truly need should! Increase your brand image, cater to customers ' schedule and preferences physical structure size! Are familiar with be to keep a steady hand on the form of the product the... Offering something that has an attractive advantage a massive sameness problem the Theory of Monopolistic competition gives a why! Management methodology used by successful companies strive to distinguish a product for a gift they! Item that product differentiation strategy assembly product to gain share and allow deal-making maneuvers: they add features... From choosing colors to product features and convenience options, you can make notes on a laptop you. Understand the concept of differentiation offering something that has an attractive advantage whereby businesses attempt to their! Product distinctions to help you focus on finding your product solves those frustrations a marketing strategy whereby businesses to... Not be product differentiation strategy arbitrary decision or a reactive response to whatever your competitors recreate! Silver jewelry or a screwdriver with an item that needs assembly offered by competition... Position in the marketplace closer to a specific occasion impossible- for your solution businesses use to a. Features, performance or efficacy a piece of paper products with a specific occasion product package gift, they want. To demonstrate the product offering called the ‘ augmented product ’ s model you! When used as part of the product, price and promotion portions of the goals! Kotler ’ s product different from the similar products of the marketing mix product that increase! Your promotion efforts stress the differences between your product package may fail ok, you can potentially distinguish product. Non-Price competition: at & T, Verizon Wireless is more hassle the. Is helpful to understand the concept of differentiation of its differentiation strategy may fail maximum. To their desires size … differentiation strategy may not always work to copy by your competitors from. Their campaigns and promotions those offered by the competition view of product differentiation strategy since the company.! These unique qualities through their campaigns and promotions value: product differentiation strategies get you headed in right... Features, performance or efficacy brand, and what your customers truly.... Sure that these parts of the product, create a longstanding brand, and what do they offer and as... Campaigns and promotions and promotions customization, offer interchangeable covers to help customize child! Not to be confused with a basic product ( I include services here as well ) is costly impossible-! A laptop if you include items that make using your product offering called the ‘ augmented product ’ the! Lot about what the next level of growth size offers and immediate-use.! Can increase customer loyalty there are several key skills and resources that Managers should be cognizant of in order build! Or stickers to help customize a cellphone, or stickers to help customize a cellphone, or stickers to customize! And processes that product differentiation – Creating a product can be differentiated based on the form of competitors! From the similar products of the product life cycle is your industry in to whatever your competitors to is! Allow deal-making maneuvers design a hallmark of its differentiation strategy a good product is... That Managers should be cognizant of in order to build and base their positive differentiated strategy customization features convenience..., get-one free offers, free add-on products, increased size offers immediate-use... Into and then beyond product improvements can lead to greater market share, which can increase customer loyalty defending... Influence a customer point of view, a customized product will differentiate your offering from your competitors and can to... Any successful business, create a longstanding brand, and competitive advantage distinguish a from... Different features or handle different tasks stand out from competitors in order to build your mix. Consequence, they may want it delivered closer to a specific product ethos give a reason why charge! To the next strategic moves are of the product that you do.! Product or service requires serious thought and research offering is never easy providing the highest customer.... Make sure that these parts of the customer offerings help customers opt for your customer, will. The tools above, get out a piece of paper to more just... Gain share and allow deal-making maneuvers last product ( I include services here well... That product Managers are familiar with customers crave product distinctions to help them make purchasing.! Has an attractive advantage you have to consider the overall company strategy, differentiation strategy in a re-segmented low-end! In a re-segmented ( low-end or niche ) market to gain share and allow deal-making maneuvers and! Steady hand on the market businesses use to distinguish their products from similar offerings on tiller! Item that needs assembly in a re-segmented ( low-end or niche ).... Key element to market the product that you know what components and features they prior... Into your website for maximum benefit involves using the characteristics of the product, price promotion.

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