Different is good. Different is the way to more customers and higher profits. Without clear market differentiation your business will look much like a commodity, and commodities generally compete on price. Competing on price is not much fun.
Market Differentiation Strategy Tips for Success
Discussions about differentiation can often be based around competitors, but a preferred method would have you customer-centric in your thinking. Focus on your customers’ needs (and be aware they may not know what those needs are—it is your job to help figure that out). Here are some thoughts that you may accomplish that:
Innovate to Accelerate
Many business leaders simply ask their customers what they need. This is a great first step, but those customers might not know. It is incumbent upon you as CEO to take information about their challenges, innovate, and ultimately provide a solution for them.
For instance, we all know Apple. Nobody was begging for the iPhone back in 2007. Ten years later it seems as though we can barely function without one. Though that is an example of a large company with a lot of resources, they still innovated. They did not solely rely on their customers to tell them what they needed. Instead they created an entire platform around what they thought people would be interested in. It may at times seem somewhat of a gamble, but innovation is an extremely effective (and perhaps required) business strategy.
Professional Service vs. Product-Oriented Companies: Neither Can Effectively nor Sustainably Compete on Price Alone
Even though all companies deliver a different product or service, when you boil it down it’s all the same. You have to avoid being a commodity. As soon as you get into battle with your competitors pricing alone, you have a significant issue. Fighting against this is a crucial aspect for both product and a service-based businesses.
Standing out in the market matters whether you are selling iPhones, pencils, or legal and accounting advice. How can you differentiate your company’s goods or services in a way that creates more value for your customer?
If you work on being different from the inside of your company (your team and culture), you will likely end up being different to the outside. Remember that different is good. It allows you to get a higher price in the marketplace, a higher margin, and provide a better level of service to your customers.
Trying to whittle down that margin to the lowest point ultimately does not serve the consumer well. Instead endeavour to operate a high margin business—it is good for the business and good for the customers (and employees) too. You need profit and the resources profit brings in order for the company to:
- Provide quality service
- Have the proper tools
- Hire and maintain talent
Be different, be profitable, provide outstanding value, and be sustainable.