Question

How are companies looking differently at innovation and market differentiation?

Answer 1

Answer:-- Differentiation allows you to provide superior value to customers at an affordable price, creating a win-win scenario that can boost the overall profitability and viability of your business. Our research indicates there are six primary ways to differentiate, including product, service, channels of distribution, relationships, reputation/image, and price.

However, not all differentiation strategies are equally effective, and some methods may be more important to invest in than others in order to stand out from the competition. Read on to learn more about these different strategies and the key advantages and disadvantages associated with each one

Product Differentiation

Product differentiation is probably the most visible. It includes actual physical and perceived differences, of which the latter can be acquired through advertising. Product differentiation may take the form of features, performance, efficacy (or the ability of the product to do what it is purported to do), meeting specifications, or a number of other criteria. This is the general area that most B2B marketers — and probably most consumer marketers as well — spend the majority of their time and dollars.

Distribution Differentiation

Channels of distribution can also be an effective means of differentiation. Distribution can provide coverage or availability, immediate access to expertise, and greater ease of ordering, and higher levels of customer or technical service.

Relationship Differentiation

An often overlooked means of differentiation is through company personnel. Employees, associates, or team members with customer interface can provide and demonstrate competence, courtesy, credibility, reliability, and responsiveness. Responsible for executing day-to-day client-facing communication, they are the linkage between the product and customer. If that linkage breaks down, the business is destroyed.

In many businesses, the sales representative, CSR, or the technical service representative becomes a trusted member of the customer’s team, ensuring that the product is delivered on time and works as it is supposed to, while resolving any issues quickly and accurately

Image/Reputation Differentiation

Some businesses set themselves apart by their image either as part of another differentiation avenue or as a separate strategic path. Normally, image is created by other forms of differentiation such as high levels of service, superior product quality, or performance.

Image is controlled and managed by symbols used in communications, advertising, and all types of media — written, digital, and audio, as well as the atmosphere of the physical place where customers encounter the business. This is not limited to retail businesses only.

An image or reputation can be a daunting hurdle for potential new entrants. DuPont, for example, generally has a strong image as a technical powerhouse in almost all markets in which they participate. The company employs a large number of engineers, scientists, and product development experts

Price Differentiation

Successfully competing on price requires recognition that every customer has a different price they would be willing to pay for your product. Segmentation and differentiation allows a business to come close to maximizing the potential revenue by offering each segment a differentiated product at a different price.

Factors to Consider for Differentiation

A difference is worth establishing when it meets at least one of the following criteria:

Valuable: the perceived benefit exceeds the costImportant: delivers a benefit critical to successDistinctive: unique or offered in a distinctive waySuperior: better technology, fasterEmotional: ties to a core emotion — love, hate, desireCommunicates: understood and visiblePreemptive: cannot be easily copiedAffordable: customers can pay the higher priceProfitable: contribution (margin times volume) exceeds cost of difference.