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This perhaps somewhat astonishing idea came to me as I was leafing through some personal archives as I search for just the right items to place on my new portfolio site. Some of my company’s old brochures are in the box, and I remember the struggle we went through at times to find the right words, present the right image, frame the right message.
Why marketing is so hard? By John Koetsier I’ve come to believe that marketing is easy.
This perhaps somewhat astonishing idea came to me as I was leafing through some personal archives as I search for just the right items to place on my new portfolio site. Some of my company’s old brochures are in the box, and I remember the struggle we went through at times to find the right words, present the right image, frame the right message.
All of that could have been so such simpler … if we had just built our product with more compelling points of differentiation.
Products with compelling points of differentiation sell themselves. Not that you don’t have to do the marketing, create awareness, sell the idea, and all that. But they write their own story.
A good example is the iPhone. If you’ve seen any of the ads, you know the deal. An iPhone ad never says buy me, or iPhone is better than X phone, or heaven forbid, the either of the words “solution” or “device.” All an iPhone ad does is show you capabilities and possibilities. The rest of the pitch happens inside your own head.
The marketing, in other words, ought to be embedded in the product.
“The marketing, in other words, ought to be embedded in the product.”
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Differentiation: a key marketing strategy
March 30, 2008
By John Koetsier
Seth Godin posted an article on really bad branding a couple of days ago, pointing out some company names that don’t differentiate companies very well:
Jewelry Central is a really bad brand name. So are Party Land, Computer World, Modem Village, House of Socks and Toupee Town.
It’s a bad brand name because Central or Land or World are meaningless. They add absolutely no value to your story, they mean nothing and they are interchangeable.
Why is differentiation such a key marketing strategy?
It’s simple – you only truly succeed as a brand, and as a business, by being top-of-mind in your targeted clients’ minds. And you can only be top-of-mind in your clients’ minds by having a clear, identifiable, distinguishable identity … ideally an unique identity with a story.
The name is a piece of it – an important piece. The image is an important piece. The story is an important piece. The products you choose to create and market are important pieces. The successes you build are important pieces. The customers that you enable are important pieces.
Put them all together, you’ve got a brand.
But if it’s not differentiated … if a client can’t distinguish your name, image, story, products, and successes from competitors … all of it is meaningless.
Because that client will open up the yellow pages (in other words, Google), search, find you and your competitor, and go eeny meany miny mo. Which means that all your hard work and all your investments in marketing mean nothing. Differentiation, which needs to start before your marketing, and even before your product development, is an effort to ensure this doesn’t happen.
This is all obvious. So why are so many companies not differentiated?
Here’s why: differentiation requires discrimination. If you want to be differentiated, you must say no. There must be certain products you won’t build. Certain markets you won’t pursue. Certain clients you don’t want. These are all clear and undeniable corollaries of choosing certain products that you will invest in, certain markets that you will pursue, and certain clients that you definitely do want.
However, many companies can’t say no.
They fail to see that in saying no, they gain increased capability to say a very focused, powerful yes.
Philip Kotler discussed five issues of marketing strategy in his 9th edition of Marketing Management
Differentiating and Positioning the Market Offering
Developing New Products
Managing Life cycle Strategies
Designing marketing Strategies for Market Leaders, Challengers, Followers, and Niches
Designing and Managing Global Marketing Strategies
These issues are covered in different knols by me. This knol describes differentiating and positioning.
Differentiating and Positioning the Market Offering
The issues discussed in the area of differentiating and Positioning the market offering are:
Differentiation - Definition: is the act of designing a set of meaningful differences to distinguish the company's offering from competitor's offerings.
Boston Consulting Group's differentiation opportunities matrix: Actually it is a competitive advantage matrix applicable to differentiation opportunities.
Four types of industries identified by BCG matrix are:
Volume industry: only a few but very large competitive advantages are possible. The benefit of the advantage is proportional with company size and market share. Example given - construction industry
Stalemated industry: in this type there are only few opportunities and the benefit from each is small. The benefit is also not proportional to the size or market share.
Example: Steel industry - It is hard to differentiate the product or decrease its manufacturing cost.
Fragmented industry: in this type, there are many opportunities, but the benefit of each of them is small. Benefit does not depend on size or market share.
Specialized industry: in this type, the opportunities are more and benefit of each opportunity is high. The benefit is not related to size or market share.
Kotler mentions, Milind Lele's observation that companies differ in their potential maneuverability along five dimensions: their target market, product, place (channels), promotion, and price. The freedom of maneuver is affected by the industry structure and the firm's position in the industry. For each potential competitive opportunity or option limited by the maneuverability, the company needs to estimate the return. Those opportunities that promise the highest return define the company's strategic leverage. The concept of maneuverability brings out the fact that a strategic option that worked very well in one industry may not work equally well in the other industry because of low maneuverability of that option in the different industry and by the firm in consideration.
Regarding the tools of differentiation, five dimensions can be utilized to provide differentiation.
Product
Services that accompany marketing, sales and after sales services.
Personnel that interact with the customer
Channel
Image
Differentiating a Product
Features
Quality: performance and conformance
Performance - the performance of the prototype or the exhibited sample,
Conformance - The performance of every item made by the company under the same specification
Durability
Reliability
Reparability
Style
Design
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Miscellaneous services
Personnel Differentiation
Competence
Courtesy
Credibility
Reliability
Responsiveness
Communication
Channel differentiation
Coverage
Expertise of the channel managers
Performance of the channel in ease of ordering, and service, and personnel
Image differentiation
First distinction between Identity and Image - Identity is designed by the company and through its various actions company tries to make it known to the market.
Image is the understanding and view of the market about the company.
An effective image does three things for a product or company.
1. It establishes the product's planned character and value proposition.
2. It distinguishes the product from competing products.
3. It delivers emotional power and stirs the hearts as well as the minds of buyers.
The identity of the company or product is communicated to the market by
Symbols
Written and audiovisual media
Atmosphere of the physical place with which customer comes into contact
Events organized or sponsored by the company.
Developing a Positioning Strategy
Levitt and others have pointed out dozens of ways to differentiate an offering(Theodore Levitt: "Marketing success through differentiation-of anything", Harvard Business Review, Jan-Feb, 1980)
While a company can create many differences, each difference created has a cost as well as consumer benefit. A difference is worth establishing when the benefit exceeds the cost. More generally, a difference is worth establishing to the extent that it satisfies the following criteria.
Important: The difference delivers a highly valued benefit to a sufficient number of buyers.
Distinctive: The difference either isn't offered by others or is offered in a more distinctive way by the company.
Superior: The difference is superior to the ways of obtaining the same benefit.
Communicable: The difference is communicable and visible to the buyers.
Preemptive: The difference cannot be easily copied by competitors.
Affordable: The buyer can afford to pay the higher price
Profitable: The Company will make profit by introducing the difference.
Positioning
Positioning is the result of differentiation decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds.
The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should buy the product.
Example:
Volvo (station wagon)
Target customer-Safety conscious upscale families,
Benefit - Durability and Safety,
Price - 20% premium,
Value proposition - The safest, most durable wagon in which your family can ride.
How many differences to promote?
Many marketers advocate promoting only one benefit in the market (Your market offering may have many differentiators, actually should have many differentiators in product, service, personnel, channel, and image).
Kotler mentions that double benefit promotion may be necessary, if some more firms claim to be best on the same attribute. Kotler gives the example of Volvo, which says and "safest" and "durable".
Four major positioning errors
1. Underpositioning: Market only has a vague idea of the product.
2. Overpositioning: Only a narrow group of customers identify with the product.
3. Confused positioning: Buyers have a confused image of the product as it claims too many benefits or it changes the claim too often.
4. Doubtful positioning: Buyers find it difficult to believe the brand’s claims in view of the product’s features, price, or manufacturer.
Different positioning strategies or themes
1. Attribute positioning: The message highlights one or two of the attributes of the product.
2. Benefit positioning: The message highlights one or two of the benefits to the customer.
3. Use/application positioning: Claim the product as best for some application.
4. User positioning: Claim the product as best for a group of users. - Children, women, working women etc.
5. Competitor positioning: Claim that the product is better than a competitor.
6. Product category positioning: Claim as the best in a product category Ex: Mutual fund ranks – Lipper.
7. Quality/Price positioning: Claim best value for price
This issue is related to the discussion of worthwhile differences to incorporate into the market offering done earlier. But now competitors positioning also needs to be considered to highlight one or two exclusive benefits offered by the product under consideration.
Communicating the Company’s Positioning
Once the company
has developed a clear positioning strategy, the company must choose
various signs and cues that buyers use to confirm that the product delivers
the promise made by the company.
Are you ever frustrated
or hesitant when you talk to prospective customers because you can't
readily explain why they should come to you rather than go to your competitors?
Sure, you might have your 30-second elevator speech, but then they ask
you that dreaded question, So what makes you different? Then, all those
self-doubts creep in, and you just aren't sure what to say. Differentiation
can boost confidence--yours in yourself and that prospective customer's
confidence in you!
Dif-fer-en-ti-ate v. tr. To perceive or show the difference in or between; discriminate.
In business terms, to differentiate means to create a benefit that customers perceive as being of greater value to them than what they can get elsewhere. It's not enough for you to be different--a potential customer has to take note of the difference and must feel that the difference somehow fits their need better. (Other words that mean virtually the same thing: Competitive Advantage; Unique Selling Proposition; or Value Proposition.)
As you are building your business, you can use differentiation to attract more customers. Once you have momentum, differentiation allows you to charge a higher price because you are delivering more value to your customers. Make a point to evaluate and adjust your differentiation methods at least annually.
The various methods of differentiating your businesses fall into four general categories:
Price Differentiation
Differentiating on price is probably the most common and easily understood method. HOWEVER, for Solo Entrepreneurs, caution is in order. On the one hand, potential customers might expect a lower price from you than from your larger competition because they perceive you as having less overhead, etc. On the other hand, cheaper prices can evoke perceptions of lower quality, a less-stable business, etc. And if you compete on price against competitors with deeper pockets, you can price yourself right into bankruptcy. Be creative with this differentiator by competing on something other than straight price. For example, you might offer: