Competitive differentiation

Competitive differentiation has a number of important meanings for a company.

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1. Creating a competitive advantage. Providing original products or services helps a company to gain a stable place in the market, gaining a head start and leaving competitors far behind.
2. This leads to higher profits, increased market share.
3. Strengthening the brand. Differentiation aims at creating recognition for consumers, strengthening the brand and increasing brand loyalty.
4. Exclusive characteristics of products and services become the basis for a positive brand image or a potential opportunity to have a positive experience when using certain services.
5. Protection from competition. Competitive differentiation helps a company to take a clear and stable position in the market, constantly strengthening it. It is difficult for competitors to replicate a similar strategy if the company presents a one-of-a-kind, valuable product.

Types of competitive differentiators

There are several types of competitive differentiators that can be used by companies in order to create uniqueness, attracting the attention of consumers. Depending on the industry, the needs of the target audience, the specific business, the competitive advantages of the differentiation strategy can vary. So, differentiation can be done in the following ways.

1. Quality-based - is based on providing extra-class services or products. The company can introduce innovative approaches to create products, actively use advanced technologies, surpassing competitors in terms of quality.
2. For example, the automobile brand Rolls-Royce is known for high-quality, reliable and luxurious cars that combine excellent performance and maximum comfort.
3. Based on price. Based on offering similar or like-for-like products at a more competitive, lower and affordable price.
4. This attracts a wide audience, also forming a competitive advantage.
5. Based on innovation. Emphasis is placed on an innovative approach to developing a list of products and services. The consumer is provided with a unique user experience, perhaps - innovative technologies are actively introduced or alternative approaches to problem solving are used. A vivid example is Apple, which constantly invests huge amounts of money in research, innovation, development of the latest technology.
6. This makes it possible to create products with excellent technical characteristics combined with innovative design.
7. Based on design. A significant role is played by original and attractive design, which can also act as a differentiator. Companies often use non-trivial shapes, exclusive elements, aesthetic thoughtful solutions to attract the attention of the buyer.
8. It is worth recalling the Coca-Cola Company, which offers a mega-popular beverage in bottles with aesthetically pleasing, recognizable design.
9. Relying on a high level of service. A company can offer the highest level of customer service and tech support. This automatically makes its services and products more attractive. For example, Zappos, a company that sells shoes online, is known for its great service.
10. The buyer is offered fast delivery, 24/7 support service, free return policy for unsuitable goods.
11. Taking into account the individual needs, moods of the client. It is possible to present personalized goods, products, services, taking into account the preferences, tastes, individual needs of the client. For example, the famous sports brand Nike gives customers the opportunity to create their own sneakers, choosing materials, colors and other parameters.
12. This is an excellent example of the emphasis on creativity and the desire to express oneself, inherent in most people.
13. Focus on environmental responsibility. A company can have environmental values by offering products that are clean and do not harm the surrounding world, nature. For example, Tesla Motors, a manufacturer of electric cars, makes a big contribution to eliminating harmful emissions from autos by creating zero-emission models.

Competitive differentiation strategy

One of the important parts of competitive differentiation strategy is brand differentiation. A company should consider a list of aspects for effective differentiation.

1. Defining the target audience: it is necessary to identify the representatives of the CA - that segment, analyzing which, it is easy to create services or products that meet the preferences or needs of the buyer.
2. Analyzing competitors' activities: it is necessary to study competitors, their principles of work, products to identify characteristics that may be interesting and subsequently offered to consumers.
3. Forming a list of exclusive characteristics: it is necessary to understand what advantages can be provided, thanks to which they can be offered.
4. This can be related to design, quality, innovation, price or other factors.
5. Communicating uniqueness: the company must present to potential clients and customers the unique characteristics of its product, its advantages. Advertising campaigns, social networks, other communication channels are used for this purpose.

Porter's strategy

Michael Porter, a famous American economist and strategic consultant, presented a framework for understanding competitive strategies in his book of the same name. He identified three basic differentiation strategies, thanks to which we can talk about competitive differentiation strategy according to Porter.

1. Broad differentiation: when choosing this strategy, the goal is to focus on the uniqueness, the differences of the product from the competition. The method requires investment in innovation and broad market segmentation.
2. A good example is BMW, which offers the widest range of cars with variable characteristics and attractiveness equations for different consumer segments.
3. Focused differentiation: involves concentration on a specific market niche, offering customized products or services demanded by a certain target audience.
4. For example, Rolex produces high-end watches - a recognized symbol of luxury, high status.
5. Value-based strategy: combines differentiation and cost reduction of a product or service. The company offers unique benefits at a more competitive price. For example, the IKEA brand presents a luxury range of modern functional furniture at an affordable cost.

Conclusion

Competitive differentiation strategy is an important tool for the company, helping to stand out in the market, to form a target audience. It allows to ensure the stable development and success of the organization, create a competitive advantage, strengthen the brand.

Understanding and active use of the strategy is the first step to confident competition and achievement of business goals. It is important to make the product different from competitors, forming value for consumers. Bright examples of such advantages are related to design, quality, level of service, innovation, personalization.

The competitive advantages of differentiation strategy can be realized through deep analysis, research of market needs and development of unique products and services.