Differentiation

Differentiation – Now defined

Differentiation is the process of distinguishing a product or entire offering from others, making it more attractive to a particular target market. This involves differentiating it from competitors’ products and standing out on the competitive landscape through unique positioning.

Differentiation is a source of competitive advantage. Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of your product and create a sense of value. Without question, differentiation must be valued by buyers. The term unique selling proposition refers to advertising to communicate a product's differentiation.
Under The Next Idea terminology there are two forms of Differentiation: ‘Duplicate’ and ‘Exclusive’.

Duplicate Differentiation refers to differentiating product or offer features that can be found elsewhere.
Exclusive Differentiation refers to differentiating product or offer features that are unique in the market and are unavailable elsewhere.

The term Duplicate Differentiation applies to areas of a brand that may be executed to a high standard but can be found close-by with relative ease. For example, a restaurant that promises to differentiate by offering first class service is differentiating itself. However the differentiating significance is small as it only applies to those competitors who have less than good service, and whose product and environment does not compensate for their lower standard of service.

Duplicate Differentiation can work extremely successfully, when a wide number of duplicate yet well executed points of difference are merged together. Some examples: Pret a Manger in the UK and Chipotle in the US, both employ Duplicate Differentiating features; they equally provide a fresh product that is attainable very fast, at a competitive price, served in a highly friendly manner. Both offer relatively comfortable surroundings to eat on premise, should the customer wish, and provide extremely clean and sanitary surroundings for customers whether they eat in or take out. Their differentiating features are clearly defined as follows: 1) Fresh (& Humane) good quality consistent products 2) Fast and efficient service 3) Competitive Pricing 4) Friendly Service 5) Engaging environment 6) Clean and sanitary surroundings. Independently, each of these points are positive differentiators, however they can all be found elsewhere at greater or lesser levels. However what makes these brands unique and highly differentiated is their relentless commitment to each and every point of difference, resulting in their brands beating their competitors at every corner – indeed their well executed combination of Duplicate Differentiators provides singular Exclusive Differentiation.

Exclusive Differentiation is different as it represents the highly sought after competitive advantage that organizations aspire to in order that their product or offer stands out against the competition. This often takes the form of patented equipment or products, merchandise design, and the use of certain technologies. Providing demand is prevalent, a firm with well executed Exclusive Differentiation will be unusually successful. Think Dyson – unique Vacuums with patented technology, that work exceptionally well. They built their reputation on Exclusive Differentiation yet they still combined this with some Duplicate Differentiation – personified by its design. Its competitors also had good looking vacuums, yet Dyson ensured its design was equal or better to its competitors, thus maintaining its advantage in the specific consumer requirement of image. Had Dyson not paid attention to its design, and simply rested on its patented technology, they may have experienced some success, but it is doubtful if that success would have manifested to the extent that we have seen. Therefore while Exclusive Differentiation is the Holy Grail of differentiation, as Dyson shows us, loosing site of Duplicate Differentiation, when Exclusivity has been achieved, may ultimately compromise what has been so hard to attain in the first instance.

In the restaurant world Exclusive Differentiation would apply to unique recipes, style of food presentation, environmental design and product range. Service features heavily, however recently, service has become an even greater global differentiating characteristic. Historically restaurant service was defined either at the counter or at the table. Nowadays Service has many touch points; from traditional counter or table service, through to online ordering, order by phone, deliveries and pick up. Therefore restaurants do have greater opportunity to define themselves through service, given the broad spectrum of technology available, combined with modern dining trends.

However with this new technology comes enhanced risk. For example, a customer having difficulty in navigating a restaurant’s website, will lower their entire opinion of the restaurant’s offer and service, yet [the customer] has not even begun to interact with an employee.

Customers possess what’s known as ZOPA (Zone Of Possible Approval). This is the emotional approval rating that individuals exercise when making choices on what to buy, where to eat, even what car to purchase. What may be perceived as small details by an operator, may actually be deal breakers for customers as their ZOPA rating drops to the floor when a dish is served luke warm and not hot, or their coffee has too much froth. However, give a customer flowers on their unannounced birthday, tell them that they enjoyed the last steak they had and it was served medium, will expand the Customer’s ZOPA exponentially – as the operator has just differentiated itself through the perfect combination of Duplicity and Exclusivity. (Flowers on Birthday = Duplicate Differentiation / Knowing its their Birthday without being informed by the guest is Exclusive Differentiation).

As we enter into a new globalized world of business, well executed Differentiation, both Duplicate and Exclusive, will be a key dynamic in deciding who stays and who leaves our industrious landscape. Only time will tell who will successfully navigate the world, and who will hit the perfect storm. What we do know – give a guest flowers on their birthday, and keep them guessing how you ever knew, will be one sure way to stay in your customer’s heart forever.

At the Next Idea, Differentiation forms part of every project we undertake, we understand that a brand’s ability to positively differentiate itself will provide substantial competitive advantage in the increasingly competitive globalized marketplace. Indeed, its our ability to both identify trends and instigate trends, that provides our clients with an edge over their toughest competitor.