Differentiation

A key to business success is the ability to develop a niche in the marketplace, according to the Marketing website. To do so, you'll need to determine what makes your business unique and incorporate this feature into your marketing strategy. By making use of differentiation marketing strategies, you can make your business stand out in a crowded competitive marketplace.

a. Products or Services
One way to stand out from the pack is to offer different products or services than your competition. For example, be the first in your town to open a gourmet coffee shop or a Thai restaurant. The key to this type of strategy is to conduct market research to ensure that your unique products or services will be accepted by the local community. You can also expand your product mix to include items that your competitors do not carry. Being unique in the marketplace provides distinct advantages. In fact, if you do not provide something unique, your business will be severely challenged. So, what are the three elements of product differentiation? 1. Convenience People don't want to wait these days. In order to differentiate your product from your competitors', consider how you can deliver your goods and services precisely when they are needed. Often, this means being faster than your competitor but not always. If I order drapes as part of a renovation project, for example, I don't necessarily want them immediately. I may not need them for six weeks. If I get them too soon, they might get damaged waiting to be hung. However, I do want them when the time is right for me. The company that can deliver what I need when I need it will certainly be better positioned to earn my continued business. The success of Dominoes is a standout example in India. They very beautifully pictured their strategy to be leaders of home delivery in the pizza makers. They destroyed pizza hut who had a dine in image. Dominoes today earns more through its delivery than pizza hut through its dine in and delivery. 2. Customization When I order those drapes, I don't want just any old size or pattern. They need to fit perfectly to my windows, and I want them in the style and colour pattern that goes best in my house.

Customization is an element of product differentiation that cannot be over-emphasized. The more you know about your customers' needs and the better you do in serving those needs to your customers' satisfaction the stronger your competitive position will be in the market. Service-based businesses are particularly capable of customization. Even with a product-based business, there are still techniques available for individualizing your firm, such as customizing your billings, or special packaging for your best customers. Product customization is a rapidly growing field for clothing, footwear (ex. sports shoes in school colours), backpacks in the colour you want, cosmetics, automobiles, motorcycles, etc. Examples Dell Dell Computer has changed the competitive landscape by offering customized products directly to customers on demand without premiums in either price or lead time. SOTC They offer customized packages to people according to their needs and wants. Like if a couple take a honeymoon package of 5 nights and six days, and that includes 3 places but they want to visit only 2 out of them then have an option to do so. This leads to customer satisfaction and loyalty. 3. Cost Recovery Cost recovery does not mean paying the cheapest price. It means gaining the highest leverage per dollar spent. Often, in fact, it makes more sense to spend a little more to obtain a product or service that most closely aligns with your needs and brings satisfaction. Too frequently, "I got it cheap" is the consolation prize when you end up with something that really doesn't properly serve your needs. Example Bata Considered as the sturdy shoes/sandal but at a low cost. People associate the phrase paisa wasool with it. Nokia Phones They have a complete range of phones from 1200Rs. to 25000 Rs. A HTC smart phone would cost somewhere around Rs. 20000 where as the Nokia smart phones start from Rs. 10000. Besides being comparatively cheaper they last long. 4. Features, Design and Style Product design has a lot to do with product success. Quite naturally product design becomes a good avenue for product differentiation. A well designed product makes real differences to the customer. It ensures product reliability and durability. In addition, it enhances user comfort.

Kinetic Honda: in the first half of the 1990s, the two wheeler industry witnessed a recession. Countering the effect of recession and scoring over competition was a real challenge for any two wheeler firm during that period. When the industry growth rate was negative, Kinetic Honda came up with excellent performance. Kinetic Hondas market research revealed that most existing brands of two wheelers were not adequately user friendly. Starting was the main problem. Kinetic Honda brought in the new wave scooter, which had electronic ignition and could do away with the kick start routine. The users, especially women found this improvement a blessing. The new model contained a whole range of other features too, such as automatic gear shifting, choke built in indicators and a streamlined aerodynamic body design. Kinetic Honda made these features, especially the kick start as its differentiation plank. Not only did the company succeed in marketing its two-wheeler in the years of recession, it even embarked upon a program of expansion. Titan watches: Titan Watches too used product design as a differentiation plank. The wrist watch had become almost a monotonous, standard product, just a utility. Titan introduced more than 500 models incorporating latest world trends in watch design. Its Classic range combined the elegance of gold and leather, the Royale range was all gold and precious metal and the Aurum range in 18 carat gold ad studded with gems and coloured stones. 5. Employees Companies can gain a strong competitive advantage through having better trained people. Retailers use their frontline employees as a means of differentiating and positioning their brand. Better trained personnel exhibit 6 characteristics Competence They possess the required skill and knowledge Courtesy They are friendly and respectful and considerate Credibility They are trustworthy Reliability They perform service consistently and accurately Responsiveness They respond quickly to customers requests and problems Communication They make an effort to understand the customer and communicate clearly

Examples Infosys is world famous for its employee training. The employees are accredited with a USA Bsc degree after successful completion of their training in Mysore. They set high standards of employee differentiation worldwide in IT sector. On the other hand employees working at Reliance Communications are perceived by other employers that they are ineffective and stubborn and

hence are not viewed in good light by other companies for employment. Employees of companies like General Electric, Cisco, Fritto Lays enjoy and excellent relationship.
1. After Sale

When the physical product cannot be differentiated easily, the key to competitive success may lie in adding valued services and improving their quality. This is the outlook of service differentiation. Installation differentiation refers to the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service. Differentiation by installation is particularly important for companies that offer complex products such as computers. Example HCL offers full installation services to offices that opt for HCL computers as their workstations. Apart from installation they also provide AMC services. Maintenance and repair differentiation describes the service program for helping customers keep purchasing products in good working order, an important consideration for many products. Example Maruti Suzuki Service Stations are famous for the low cost and efficient services. Besides the extensive locations of service stations also adds to the value of Maruti.

2. Technology This is one aspect which needs to be monitored continuously to the extent that one product of the competitor which beats your technology can severely hamper the image of the company in the public. Look at how Apple evolves its technology, before even the consumers can identify and state their needs or level of expectation, Apple marvellously captures them in their technology and launches a product that more or less leads the market. The evolution from fuel to hybrid cars was a major step in technological enhancement in the car segment which provided Toyota with a huge market share around the world. The transition from LCD televisions to LED televisions and now 3D televisions are leaving television makers with no choice but to evolve with the changing technology.

a. Pricing

You can differentiate your business through your pricing strategy. By pricing your products or services below that of the competition, you can to cut into their market share by stealing some of their customers. Higher pricing can help you cultivate an image of quality or prestige. If employing a low-price strategy, be sure that you can still remain profitable. If you offer higher prices, you may need to also offer additional services to attract customers, such as free delivery or extended business hours. Example Lifebuoy liquid was priced at 39rs which led to a situation where the segment for which this was launched could not purchase it as it was too high a price for them and the upper segment that had the buying power would rather spend more and buy dettol. Price Bundling strategy adopted by many soap marketers, where soaps individually are costlier than a pack of three, is one of the pricing strategies adopted by companies. Apple uses price decoys in the US market. It launched a 199$ apple I touch where as the high end model of the same I touch was for 399$. On the other hand the Apple I phone was for 229$. The 399$ I touch acted as a price decoy, enticing the consumers to buy the 229$ I phone. Price Skimming is one another important strategy where in the marketer launches the product with a high price thereby taking advantage of the early adaptors and yielding high revenues. This happens in cases of Cameras, mobile phones, DVD player, Club memberships, etc.

b. Expertise
Your personal or business experiences or credentials may allow you to market your expertise. You may be the only florist in your area with an advanced horticultural degree, for example. You also might possess extensive experience gained from working in the corporate or business world that you're now applying to your business venture. If your business is technical in nature, such as working with electronic equipment, your expertise can make your business a more attractive choice. Example What better than LIC, just a simple thought of insurance makes LIC crop up as the only brand worth the trust demanded by an insurance company. They have sustained this over decades in India and have never resorted to aggressive marketing against the new entrants. Want to deliver a parcel urgently? Bluedart is the way to go in India. Capturing the trust of Indians through their effective and efficient delivery systems plus pick up services adds to the trust factor and thereby makes the customers believe in their proclaimed expertise.

c. Channel Differentiation
Company can achieve competitive advantage through the way they design their distribution channels coverage, expertise and performance. HUL is the market leader in FMCG when it comes to dominating channels. Their wide distribution network throughout India is one of the prime differentiating factors. From shakti ammas to retails to camels and melas, they have left no stone unturned.

d.

Packaging, Advertising and Promotion

There have been developments taking place in packaging. Frooti in aseptic tetra pack, Brylcream in a handy tube, LeSancy in a see through pack and Harpic toilet cleansers with an application friendly nozzle are all instances of differentiation though packaging. In advertising the best example of differentiation is Vodafone. They distinguished themselves with the zoozoo advertisements which did not talk about the product but were such a big success because of the concept. Their colourless advertisements gave it a corporate feel yet managing to attract the youth with varied schemes. The famous Coca Cola ad campaigns focussing on the ex factor, thanda matlab coca cola were a huge hit which left Pepsi reeling behind in the race and eventually being the imitators. They also very shrewdly brought in the price factor by promoting the 5 Rs. bottles in the rural areas. Nicorette Chewing Gums based their promotional campaign on anxiety as they started promotional advertisements in the month of December but did not disclose the product. They started with product related advertisements around the last week of December which were based on the concept of Quit Smoking by making a New Year resolution. Though the product failed but this campaign gained a lot of hype and also generated high sales in the initial period of launch.

e. Image Differentiation

Buyers respond differently to company and brand image. The primary way to account for Marlboros extraordinary worldwide market share (30%) is that Marlboros new CowBoy image has struck a responsive chord with most of the cigarette smoking public. Wine and Liquor companies also work hard to create a distinctive image for their brands. Identity and image need to be distinguished. Identity is the way a company aims to position or identify its products or itself. Image is the way the public perceives the company or its products. An effective identity does 3 things 1. It creates the firms character and value proposition 2. It conveys the value in a distinctive way 3. It delivers a emotional power behind a mental image For identity to work it should be conveyed through every possible communication vehicle and brand contact. It should be diffused in Ads, Brochures, financial reports, catalogues, business cards, office stationer, etc. If IBM means service it should be conveyed through every possible medium. Even a sellers physical space can be a positive image generator. Hyatt Regency Hotels created distinctive image through their atrium lobbies. Companies can create a strong image by inviting customers to visit their factories and headquarters. This was done well by Cadburys to better their brand image after the worms controversy.