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How to come up with your differentiation strategy?

With more than a million new businesses set up in France in 2022, differentiation is no longer an option. It's an obligation.

Researching the competition is an essential step in building your marketing strategy. But most companies get it wrong: they build their strategy on doing things either better or cheaper. When they should be focusing on doing things differently.

What’s a differentiation strategy?

Simply put, a differentiation strategy sets you apart from the competition in the eyes of your future customers with an approach that is unique, different and distinct from what already exists on the market. In addition to being unique, your products or services must be valued by customers. You’re looking to offer your customer something that they value, and that your competitors don’t.
The most successful differentiation strategies have literally changed markets, creating a point of no return. This is what Free did in the early 2000s, with the launch of its first “triple play” offer: broadband Internet, telephone and television. At the time, the operator, although described as low-cost, chose an unique positioning: to offer a more elaborate package at a lower price.

The more radical the breakthrough, the more likely it’s going to require radical change.

Eddie Yoon, Nicolas Cole, Christopher Lochhead

A successful differentiation strategy will often create a breaking point in the market and change our society, for better or for worse. In order to sell his cars and become an essential mode of transport, Henri Ford had to convince the American government to create their famous highway system.
In the same vein, whether you’re for or against it, Uber and Lyft have revolutionized the transportation market, impacting our society to the point where we’re talking about the “uberization” of the planet.

So you need to go further than simply drawing your customers’ attention to your product. You have to go further than making them understand the value, and benefits, of your product. You need to transform the world so that it’s aligned with your vision. This may require a new way of thinking, but also new legislation or new infrastructure.
Take a stroll around town today and you’ll see that over the last 5 years, our cities have been transformed to accommodate charging stations for electric cars. Tesla has a lot to do with it.

The benefits of a differentiation strategy

You can be a small fish swimming in the middle of thousands of other fish, in a saturated ocean where you have to fight for every last morsel of seaweed you can nibble. Or you can change location and become a big fish in a small lake. In other words, head for untapped market spaces where there’s no room for competition. There, you can invent and capture new demand. By offering customers more value. That’s the idea behind a differentiation strategy.
For the sake of your business, stop playing the comparison market. It’s a costly game, with unstable results. Pepsi has often paid the price: the soda brand has long based its advertising campaigns on being “the other” soda. The drink has rarely succeeded in surpassing its long-standing enemy. On the other hand, it has gone where Coca-Cola has not: into the food market, with Lay’s potato chips and Doritos. Today, it is the world’s second-largest food company.

Create your own rules. With a differentiation strategy, you can :

  • build solid branding ;
  • naturally attract new customers to you;
  • make your customers your best ambassadors;
  • increase your retention rate.

8 ways to differentiate yourself in your market

1 – Through a unique benefit or problem

Think about the benefits to your customers, not the features of your products. We don’t care if Apple Pay uses NFC technology. What we care about is being able to pay from our phone, without having to pick up our wallet. You can create a unique innovation on the market: if you can’t convince your audience of the benefits of using your product, you won’t sell it.
In the same vein, if the transformation incentive promised by your product isn’t working, it may be that you’re not addressing the right audience. Or their needs have changed. Lidl has been a hard-discount specialist since the 1970s, yet the food retail chain turned a new leaf 10 years ago. Why did this happen? The hard-discount sector was slowing down (it has now recovered with inflation). Consumers no longer just want cheap products. They want quality products, at the best price: “The real price of good things”. The layout of supermarkets has also been modified, for a more pleasant customer experience.

2 – Thanks to unique branding

Branding is everything a customer or consumer thinks of when they think of your company. Branding is your opportunity to master what your brand is associated with. If I say Michel et Augustin, you’ll probably think of artisanal cookies, gourmet recipes, colorful packaging and a good-natured atmosphere.

There are two ways to create a different kind of branding:

  • through your values ;
  • through your brand itself.

Michel et Augustin made its mark with its values and good-natured branding. You can differentiate yourself through your brand when it is radically different from what is expected in the market.

3 – Through a unique customer experience

And when I say “unique customer experience”, I mean quality and simplicity, with empathy for the customer. For example, one of the dark patterns of customer experience is to make it so difficult to cancel or return a product that you remain a subscriber, simply because you don’t know how else to do it. From the outset, one of Amazon‘s strengths has been to make product returns easy.
This was also the case with many SaaS products, with the famous free trial, for which you were obliged to enter your bank card. Of course, you always forgot to cancel or couldn’t find the button. And off you went for a year’s subscription. Today, users are more inclined to subscribe if they are not asked for their bank details. Or if you promise to get back to them before their subscription starts.

Schedule customer interviews and ask them: how can you make their experience radically simple?

4 – Thanks to a different price

Often, we tend to use a cost+ method: we calculate the cost of production, then add a margin. This method works for physical products (although it can be vastly improved), but not for digital products. With SaaS, the mistake is to base your price differentiation solely on those of your competitors. You focus on whether you’re more expensive or cheaper, leaving out an essential factor: what value do you bring?

On this topic: SaaS pricing.

5 – Thanks to a different production method

Your production method is a differentiation strategy. We’ve seen this a lot in the last decade with the rise of ethical fashion (which is now unfortunately suffering from inflation). One example is Balzac Paris, which really began its adventure in 2014, with the promise of eco-responsible fashion.
And yet, 10 years ago, ethics and ecology were becoming major issues. Balzac was able to create a differentiating branding on its production methods at a time when fast-fashion was increasingly criticized and consumers had tired of greenwashing.

6 – Through different distribution channels

The question here is how can you sell your product in a totally different way? Spotify has revolutionized the way we listen to music: there’s no longer any need to go to the store to buy a CD, to endure the choices of different radio stations or to illegally download an album on eMule. We have everything, in one place, at our fingertips.

Another example: Tupperware. At the end of the 40s, Tupperware products, although revolutionary, were not sold in stores. Brownie Wise launched the concept of Tupperware sales, inspired by Stanhome, the first company to use network marketing to sell from home. The rest is history.

7 – Thanks to different marketing

Creating a different kind of marketing when it feels like everything has already been done is a real challenge. Don’t market your product. Market your vision, your story. Keeping in mind the primary objective: it’s not about telling your story, but about how your product or service will transform your customer’s life. At the end of the day, your customer is the main character.

Tell a story that places your product in a unique category, where it’s the only solution. Need a solution for filming your surfing sessions, your skiing adventures or your next canyoning trip? You’re bound to think of GoPro. The brand is so established in its market as the only solution that you don’t think “portable camera”. You think “GoPro”.

8 – Through a different business model

In other words: how can you make money differently from what your industry is used to? In the 90s, when you wanted to see a particular film, you’d go and rent a cassette from your local video store. You’d rent your VHS, pay and go home. Sometimes, you’d forget to return the tape and pay late penalties. In 1997, Netflix entered the market with a new concept: for a monthly subscription fee, Netflix would send your favorite movies directly to your home. When you’d finished, you’d send it back and the company would send you a new tape.

In conclusion

Creating your differentiation strategy will require you to think differently. Rather than taking inspiration from what already exists, and wondering how you can do it better, imagine how you can transform your market. As a reminder, you can differentiate yourself through :

  • the benefit or problem solved ;
  • your branding ;
  • your customer experience ;
  • your price ;
  • your production method ;
  • your distribution method ;
  • your marketing ;
  • your business model.

And to get the information you need directly from your customers, discover my guide to preparing, conducting and analyzing customer discovery interviews (in French).

Let’s chat?

Midjourney creations
prompt/an advertisement in the 50’s, selling can food, directed by wes anderson –s 100 –ar 3:2
– prompt/a woman in the 50’s, selling tupperware in her living room with a lot of women friends, all smiling, directed by wes anderson –s 100 –ar 3:2
Graphics : Canva creation

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