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Marketing is about Differentiation

Written by: Hugh Duffy

Article Overview: Without a differentiated service, your service becomes a commodity because you become subject to the market, and vulnerable to someone else with a lower price. To command a higher price for your service and maintain superior profit margins, you must differentiate your service and provide more “perceived” value.

Marketing is about Differentiation

Are you tired of haggling over the price of your service? Have you found it difficult to charge the prices that your services deserve?

Without a differentiated service, your service becomes a commodity because you become subject to the market, and vulnerable to someone else with a lower price. To command a higher price for your service and maintain superior profit margins, you must differentiate your service and provide more “perceived” value. When done properly, your value proposition becomes well known, the sale becomes easy, and your retention rates will remain high.

The late CEO of Coca-Cola used to say:

“In real estate, it’s location, location, location.
In business, it’s differentiate, differentiate, differentiate.”
Robert Goizueta
Former CEO of Coca-Cola

In today’s marketplace, there are thousands of examples where a company has clearly differentiated their product (or service), customers clearly understand the value proposition, and maintaining this premium is easy because they have effectively differentiated their product. Examples of branded products range from Mont Blanc pens to Miki Moto pearls to Starbucks coffee. In the service world, many large companies now outsource their information technology management to IBM based on trust. Another interesting service that is unique is NetJets air transportation (fractionalized jet ownership). In educational services, many parents support brands like Sylvan Learning, Kaplan and Princeton Review to augment basic educational needs for their children.

Firms that succeed with a differentiated strategy often have the following strengths:

• More insight into their customer’s pain points and needs. This can be accomplished with market research and/or superior market penetration in a particular market sector.
• Strong sales team with the ability to successfully communicate how your service is unique and different. The differentiation can be real or perceived but must be effectively communicated across every customer interaction. Years ago, IBM’s sales force used to say that a purchasing manager never got fired for buying IBM. Although this tactic was heavy handed, it was effective for many years.
• Established reputation for quality service. Many companies have slowly gained market share with consistent quality and reliability. Examples range from Japanese auto manufacturers to Marriott.

To be successful with a differentiation business strategy, you must first gain a keen understanding of your market from three different perspectives. Those three angles are from the eyes of the customer (their needs and perceptions), your competition, and an honest assessment of your own firm.

Everyday, we take for granted examples of differentiated products and the premium price that it commands. If Frank Purdue can command a premium for chicken, Charmin can for toilet paper, and Starbucks can for coffee, shouldn’t you give a little more attention to differentiating your services?

Related Articles
  Differentiation is the Key
  The Fear of Differentiation
  The Science of Differentiation
  SELLING...Differentiate Yourself
  Differentiation – Smart Marketing Strategies for the Solo Entrepreneur

Article Tags: air transportation, branded products, differentiated service, educational services, information technology management, location location location, market penetration, market sector, mont blanc, mont blanc pens, netjets, parents support, princeton review, profit margins, retention rates, robert goizueta, service customers, strong sales, sylvan learning, value proposition



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