Differentiation, Part Two

Let's think about this for a minute. High quality essentially means that you give the customer a product that meets their needs - that does what you say it does, doesn't break, looks nice, fits specifications, etc. Service means that you do what it takes to develop and maintain the relationship both before and after the sale.

Here's my real question -

Isn't the process of providing great quality and service just giving the customer what they want?

So what we as American businesses are really saying is that we think we can actually compete by giving people what they want?

Wait a minute! How demeaning! Have we really shrunk so far that it's actually possible to have a competitive advantage based on simply filling people's needs? I hope not!

And think about it, differentiation based on quality and service is almost non-defensible. It's incredibly difficult to hold an advantage in those areas for any significant period of time.

Just ask the airline industry!

So, let's probe deeper into the subject of differentiation:

It's key to understand that differentiation focuses on getting people to buy your stuff/services over your competition. But it's also the process of promising the consumer something for which they would be willing to pay extra to possess.

So one key is to make sure that your target marketplace really wants what you are promising to provide them.

For example: if Cadillac were to create a car targeted at little old ladies who only drive it to church on Sunday, they may decide to offer an engine that can do zero to 60 in 4.3 seconds with a top speed of 190, but the target little old ladies audience (with a few exceptions, like one of the ladies in my church) won’t see enough value in that feature to be willing to pay extra to get it. And that engine probably won’t cause grandma to pick up a Caddy instead of a competitive big fancy car.

So it’s important to know the purchase influencers for your selected target market. This comes through a combination of both qualitative exploratory research and quantitative verification research. In other words, the best way to find out this answer is to ask your target market what they want. And it’s important to realize that there are multiple factors that influence buying behavior:

Cultural: While working on Glade about 10 years ago, I discovered that there was a huge fad at that time among the Hispanic community of putting a golden crown that was also an air freshener in the back window of their car. I thought this was a small idea, until I saw the sales numbers - huge! But non-Hispanics never bought them. What cultural needs can you fulfill?

Demographic: People of different age groups have different needs, often for the same product, like size of vehicle

Lifestyle/Psychographic: Think of the difference in type of home people buy who are focused on social standing as opposed to those who are cocooners

Buying-Decision Process: How many times have you seen purchases made by corporations that didn’t make sense until you realized that politics made a big difference in the decision? I’ve had to hire the same top-of-the-line packaging firm 3 times now in my career, over my profound objections, because their work isn’t that creative, and it's certainly not worth the 300% premium you pay over other more talented firms. But I had to do it because someone in management wanted to protect themselves from blame. Similarly, it's been said that you can never go wrong hiring IBM. Can you become the "safe" solution to a problem for your industry? You may cost more, but they trust that you'll give them a good product.

Global vs Local: People in Europe have a totally different mindset than US consumers and African ones. Products designed to sell on a global basis must take this into account (that’s why most marketers don’t recommend a single-product strategy.)

Differentiation - finally

Now that we’ve defined our segment, and determined its unique needs, it’s then time to differentiate your product. Differentiation is the process of creating and marketing a set of meaningful differences to distinguish your company’s offerings from those of the competitors.

One great way to do this is through a perceptual map. This is one of the coolest tools to come out of market research. It shows the different attributes that consumers overlay on a given product group and shows where the various brands are in relation to those attributes. Key in looking at a perceptual map is to find major areas where no competitive brand is located. That area is an unmet need. (For more information on perceptual maps, try doing a search on Google, there's lots of good info there!)

Perceptual maps are wonderful, but they’re expensive and time-consuming to produce. So the poor man’s method involves qualitative research to determine key product attributes, followed by quantitative research that measures how well each of the competitive brands measures up against those attributes. This will also show where the gaps are.

Another approach is to look at your current product offering. What are your competitive advantages? These could be product features, warranty, local manufacturing, customer service, speed of delivery (I have one client who has built her entire successful business on the fact that he can deliver a complex metal part in 4 weeks while everyone else does it in 8 - and she gets a premium for doing it), personnel, channels of distribution, brand/product image, etc. I recommend that you create an exhaustive list and keep it on file as you may be able to use different attributes at different times with different customer segments.

Once you have the obvious points done, it’s often valuable to look at the less obvious, possibly even the areas where you are technically no different than your competition, but nobody owns that space yet. For example, consider "Columbian Grown Coffee". Lots of coffee is grown in Columbia, but only one company owns that positioning. This is a great way to differentiate a commodity product. Your tea leaves could be "lovingly hand picked", your wheat could be "grown in America’s heartland", toilet paper can be "squeezably soft" your gas could be treated with "engine cleaning additives" even though all gasoline is. What’s important is that everyone may produce it the same way, but if one player in the market positions against that attribute and actively promotes that they offer that feature, they can own it and be perceived as superior to the rest of the category in the consumer’s mind.

Then it’s important to develop the reason why you are different. I call this the elevator speech. If you’ve only got 20 seconds in the elevator to pitch your product to your biggest potential customer, what one thing do you say? That then becomes the core of your differentiation strategy, and the one upon which you base your positioning efforts.

Tags: Marketing