Article last updated on August 17, 2021
I have noticed that most online businesses don’t use differential strategy in marketing the right way.
The problem here is that most businesses use general marketing strategies which target everyone equally. Yes, we can do omni-channel or even multi-channel marketing, but we are not talking about that here.
With differential strategy common mistake is that businesses spend money on advertising campaigns that may appeal to some people but fail to reach those who would benefit them the most.
A differential marketing strategy uses data analysis to identify customer groups based on their buying habits.
These groups then receive different types of communication depending upon what appeals to each group.
For example, if someone buys lots of shoes, it makes sense to send them emails promoting new styles.
If someone spends less time shopping, perhaps sending them coupons for discounts could help boost their spending power.
What is a Differentiation Marketing Strategy?
A differentiation strategy is an approach that helps you stand out from your competitors by creating unique products or services for customers who want something different than what they are currently buying.
It is a competitive advantage because it allows companies to create and deliver value-added solutions tailored specifically to individual needs.
It also gives consumers more choice when making purchases. Plus, it is a great business model as well!
You can charge higher prices since there will be fewer competition and user experience will improve.
When you take a look at your marketing campaigns, potential customers and customer interaction, you’ll find your differential advantage.
Then you can target segments of audience with specific messages and offers that resonate best with these individuals.
There are two main differentiation marketing strategies: broad and focused differentiation marketing strategy.
These two approaches differ mainly in how much information about individual consumers is available.
Broad differentiation marketing strategy
Broad differentiation refers to offering products or services which have no direct competition within the marketplace.
This type of differentiation requires a company to be innovative and creative when developing new ideas for product development.
It also means having a strong understanding of what consumers want and need.
Broad differentiation strategies require companies to think outside the box and come up with original solutions to problems they face.
So, you will have a broad audience segmentation.
In order to implement this kind of strategy, you as an online business owner must first understand the characteristics of your target audiences.
You should know where your customers fit into various categories such as age, gender, income level, etc.
Once you do so, you can develop targeted messaging and offer customized promotions to meet the needs of each category.
For instance, young adults might prefer free shipping while older ones might appreciate special deals on gift cards.
Focused differentiation marketing strategy
Focused differentiation involves creating products or services for specific markets.
This type of strategy focuses on one particular market segment rather than appealing to all potential buyers.
This is also sometimes called a vertical integration.
Focusing on a single customer group allows you to create more targeted marketing messages and offers.
Target customers based on demographics like age, sex, location, interests, hobbies, occupation, education levels, marital status, family size, household income, etc. This way, you can reach them through personalized communications.
This way you can have an individual marketing plan for every consumer.
You can use data analytics tools to help identify who your ideal clientele is.
Once you’ve identified them, you can then tailor your message accordingly.
The key here is to make sure that you’re not only targeting people but also providing relevant content i.e. focused content.
If you don’t provide enough useful information, you won’t get any conversions.
Types of differentiation marketing strategy
The key to differentiating yourself successfully lies in knowing which strategy works best for your business.
We can break down those two strategies into 13 types of differentiation strategies, so choose the right approach based on your target market and industry.
- Product-based differentiation – this involves offering more choice and variety within one product category. For instance, instead of selling just one type of shoe, you can offer several options.
- Price-based differentiation – this involves lowering prices so that consumers will buy more because they feel like they’re getting value for money. It also allows you to increase sales volume without increasing costs.
- Service-based differentiation – this refers to providing better service at lower cost. You might provide free delivery with every order, give priority support when needed, or even make sure all orders arrive safely.
- Location-based differentiation – this is where you focus on serving local markets rather than targeting national ones. By focusing on these smaller communities, you can create loyal clients who will come back again and again.
- Time-based differentiation – this focuses on how long it takes to deliver goods/services. Some companies take weeks before delivering items while others only need days. Customers appreciate quick deliveries since they save valuable time.
- Experience-based differentiation – this relates to making things easier for customers through technology. For example, online retailers allow users to compare prices easily using price comparison tools. They also have easy return policies in case anything goes wrong during purchase.
- Image-based differentiation – this deals with branding and reputation management. Companies often try to differentiate themselves by giving their brand a distinctive look. In addition, they work hard to ensure that their image remains positive among potential buyers.
- Gender-based differentiation – this applies to men and women separately. Women tend to be more interested in fashion whereas men prefer sports equipment. This means that if you sell both types of merchandise, then gender-based differentiation would apply here.
- Age-based differentiation – this works best for older people. Older shoppers usually spend more compared to younger generations. Therefore, age-based differentiation strategies include special offers targeted towards seniors.
- Culture-based differentiation – this includes catering to specific cultures. For example, some countries celebrate Christmas differently than other regions. So, if you plan to target the US market or UK market, culture-based differentiation could help you stand out.
- Geography-based differentiation – this strategy targets different locations based on geography. If your company sells products internationally, then geography-based differentiation may appeal to you.
- Seasonal differentiation – this strategy revolves around offering seasonal discounts. For example, stores typically reduce prices during winter months. However, this doesn’t mean that you should stop promoting throughout the year. Instead, you should use seasonality to attract new customers.
- Trendy differentiation – this involves creating unique designs that set you apart from competitors. You can either go for trendy styles or offer exclusive services such as customized clothing.
How do I know if my company has a differentiation strategy?
The best way to determine whether your company has a differentiation strategy is to ask yourself these questions:
- What makes our product/service better than those offered by other companies?
- How will we differentiate ourselves in the eyes of prospective clients?
- Why are we doing business with us instead of someone else?
- Is there anything about our brand image that sets it apart from others?
- Do we provide any benefits over similar businesses?
- Are we able to sell our goods at lower costs because we don’t compete against large corporations?
- Does our pricing structure allow us to make money without compromising quality?
Differentiation Marketing Strategy Examples
Apple is a prime example of differentiation marketing strategy.
For example, the iPod was the first successful example of differentiation in consumer electronics.
Before its release, no one knew if there would even be any interest in MP3 players. Once released, however, iPods became wildly popular.
This success comes down to two things: a unique design and an innovative feature set.
Both are now standard features among competing brands.
Also, Nike is an another great example of differentiation involves Nike shoes.
Most sneakers today come outfitted with some sort of cushioning technology. So how did Nike manage to stand apart from competitors? With superior craftsmanship and smart branding.
Their shoes were made using top-quality materials such as leather or suede. These details helped them earn a reputation for quality.
Differentiation Marketing Strategy Myths
There are several myths surrounding differentiation strategies.
Here are three common ones…
Myth 1: You need to spend lots of money to differentiate yourself.
While spending money does help, it isn’t necessary. If you’re willing to put forth the effort, you’ll find plenty of ways to make your brand stand out.
Just think of what your customers really care about and the un-apologetically differentiate your business in that direction.
Myth 2: Competition will always beat you at differentiation.
Differentiating is all about creating an advantage over others. That means you don’t necessarily have to do anything fancy to succeed.
All you really need to do is focus on what sets you apart from everyone else.
Myth 3: Consumers won’t buy your product unless it looks exactly like someone else’s.
There’s absolutely no reason why you should ever sacrifice style for function.
Just remember that your goal shouldn’t be to compete head-to-head against another brand.
Instead, you want to position yourself somewhere between those two extremes.
Benefits of Creating a Differentiation Marketing Strategy
There are many benefits for using differentiation strategy for your marketing and business growth, but here are a couple of them.
- Differentiation is the key to success in any business. It’s what makes your product or service unique and different from others on the market. If you can create a differentiated offering, it will be easier for customers to choose you over competitors.
- The more distinct your brand identity becomes, the less likely people are to confuse one company with another. This means that when they see your name they know exactly who you are and where they can buy your products or services.
- A well thought out differentiation strategy helps build trust between your company and its target audience. When prospects feel confident that their needs are being met through your offerings, they are much more willing to purchase them.
- Your differentiation strategy may help increase sales volume and profits. Many successful companies have been able to grow simply by focusing on providing superior value to existing customers.
- By using a differentiation strategy, you can avoid becoming obsolete. As competition increases, so does consumer demand for new products and services. In order to stay competitive, many companies try to keep pace with this growth by developing new offers that ideal customers want.
- You can also use a differentiation strategy to attract new customers. For example, some companies focus on attracting people who care about environmental concerns by promoting energy-efficient appliances, solar power systems, etc. Still others promote health issues like organic food, natural remedies, healthy eating habits, etc. Whatever type of differentiation you decide upon, remember that it must fit within your overall branding message.
How to Create a Differentiation Marketing Strategy
As already mentioned, differentiation marketing strategies are those that set your brand apart from others in its category. They allow companies to stand out among their competitors by offering unique benefits and features.
Here’s what you should consider when developing a differentiation marketing strategy.
- What is your product? Is there anything about it that makes it special? How do you make sure that prospective buyers understand why your product is worth buying?
- Who are your ideal customers? Are these individuals looking for specific things? Do they need certain information before making a decision?
- Decide what you want to be known for. This could include any number of different characteristics: eco-friendly, fast delivery, low prices, customer service, etc.
- Once you’ve decided which attributes will best represent your business, think about how you’ll communicate them to potential clients.
- Determine whether your differentiation strategy will involve price cuts, free samples, discounts, etc. If so, determine how often you plan to provide these incentives.
- Also, figure out how long you intend to give away these perks. Remember, giving people more reasons to buy your product or service means that they’re less likely to switch over to another company. So don’t go overboard!
- Think about who else might compete against you. Will you have direct rivals? Or will you face indirect competition through similar businesses? Consider all possible sources of competition. Then, develop ways to distinguish your brand from theirs.
- Make sure that your differentiation strategy fits into your overall branding message i.e. Tell your story.
- Your differentiation strategy may not always be obvious at first glance. But once you know exactly what you want to say, then you can begin crafting an effective communication campaign.
- Be consistent with your messaging. Don’t change up your approach every time someone asks you about your product. Instead, stick to one theme throughout your entire advertising campaign. That way, you won’t confuse anyone.
Why is Differentiation Marketing Strategy Important
Now you know a lot about differentiation strategies. But why should you as a business owner care?
Here’s a quick overview of what differentiation means and why it matters.
It helps you build trust.
When consumers see something new on the market, they tend to assume that it must be better than everything else available.
And because most products look pretty much alike, this assumption usually holds true.
However, when you offer something completely different, prospects feel like they have nothing to lose by trying your product instead of going elsewhere.
In fact, many people actually prefer your product simply because it offers something new.
It builds loyalty.
People love getting deals. They also enjoy being rewarded for their purchases.
By offering promotions and other incentives, you create opportunities for repeat sales.
As a result, you get loyal customers who keep coming back for more.
It increases profits.
Because differentiated products sell themselves, companies can charge higher prices without worrying too much about losing money.
Plus, since they appeal to a niche audience, they generate greater revenue per unit sold.
Conclusion
All in all differentiation strategy can be very effective when used correctly.
However, it takes time and patience to build up a strong customer base. In addition, you must constantly monitor whether consumers still perceive your brand as different enough. Otherwise, you risk alienating current customers while attracting new ones.
Remember that we have broad and focused differentiation marketing strategy and to summarize , here are four key points to keep in mind when developing a differentiated marketing plan:
- Focus on providing value that differentiate you from the rest rather than just selling products.
- Make sure your customers know they’ve found something truly valuable.
- Always strive to improve your offering.
- Be consistent throughout every aspect of your business.
