Which Do You Want to Be?
While you probably don’t want to be the black sheep in your marketplace, you most certainly don’t want to be Waldo either!
Differentiation is making changes to and emphasizing the differences between products, offerings, and companies to achieve competitive advantage. Creating and communicating a reason why they should buy from you and not your competition. The most successful companies, in any industry, are typically those most differentiated.
What is the only thing most people think of when they think differentiation? You guessed it, low price! This is the worst possible differentiation and a tactic of lazy marketers the world over. But, what about Wal-Mart, you say? While Wal-Mart does indeed advertise low prices, their differentiators are their distribution system and low costs. If you have a choice, I would not recommend competing in commodity goods as typically competition is fierce, margins are low, and it is difficult to differentiate.
While branding and pricing can be used to differentiate your business, we are going to focus on product and relationship differentiation. The key to all of marketing is that everything you do is for the benefit of the consumer. Let us begin with product differentiation:
- Offer products that nobody else has (Gap.com & Abercrombie.com)
- Offer a deeper range of products than everyone else (Amazon.com & MusiciansFriend.com)
- Offer product availability when everyone else is out of stock (Beanie Babies, Tickle Me Elmo, Furby, PS3)
- Offer fastest delivery (especially B2B) – determine average lead times, offer fastest that is worth it, and charge even more for faster.
- Use copy to differentiate (JPeterman.com & LandsEnd.com) – tell your story, position yourself as being superior (its better because), and help your visitors visualize the ownership experience.
- Use photography to differentiate (RedEnvelope.com & MyWeddingFavors.com) – higher quality photos increase conversion and price perception (photos tell, words sell). Lighting is the most critical element.
- Use site design to differentiate (ProFlowers.com & 1800Flowers.com) – you have approximately 1.5 seconds to make a first impression! This is the key to conversion. If you can, play a little show and tell with your visitors.
All of these help create higher price points and greater loyalty. Isn’t that what you want?
Let us finish with relationship differentiation. Creating a relationship allows you to command a premium price, while no relationship means price competition. The typical online store is clueless or is simply not leveraging their infrastructure. Your goal is to create destination websites with excellent content (experiential, how to, emotional) created by the company and your users (think Amazon.com and Wikipedia.org).
The key elements to consider adding to your website:
- Forum
- Reviews (section and product level)
- Newsletter
- Web 2.0 Elements
- Teleseminars
- Chat (Live Help)
- Blog
- Podcasts
- Video, Video, Video
Other relationship builders include:
- Conferences
- T-Shirts
- Magazine Advertisements
- Mailed Materials
- Free Samples
- Customer Service
- Return Policies
- Active Relationship Management
If you can, borrow and steal others’ thunder. Carry top brands, partner with them, or hire them. Buy sponsorships in high-visibility areas. No matter how difficult, you must find a way to rise to the top or you will forever be stuck in the downward spiral of competing on price. Unless you have the deepest pockets in your market, you are playing a game you cannot win. Fortune tellers would say they see a big going out of business sign in your near future.
Image Credit: pasotraspaso
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