Today I’m going to introduce you to a very important concept: Product Differentiation.
Knowing how your product is unique and different from your competitors can be the thing that makes or breaks it for your business. Especially in today’s crowded market.
We’ll be going over why it’s crucial for your business and its 3 different types, as well as some common examples.
Let’s get started!
What is Product Differentiation?
Product differentiation is a marketing strategy to show a product’s distinctiveness. How is the product different or unique from others in the same category?
Hubspot defines it as:
the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. The marketing team communicates these unique qualities through their campaigns and promotions. And the sales team can use them to demonstrate the product’s competitive advantage.
There are many ways for a business to highlight their product’s unique features. For instance:
- It can showcase the brand symbol and quality
- It can boast on specific features and style or
- It can emphasize the unique aspects that make your product superior against specific competitors
For example, Casper, a mattress company, highlights a combination of their product’s features and benefits like comfort and manufacturing right on their homepage:
Why is Product Differentiation Important?
Think about the times you go to the grocery store. Each aisle is filled with products from different brands. There’s 5 selling the same type of yogurt.
If you’re not able to inform the consumer HOW you’re different from the rest, there’s no reason to buy your product over another. And in many cases – especially for more established brands – the differentiation comes from their name alone. This mainly comes from their reputation for consistently creating products that may be high quality (or low quality).
So in a world where we have so many choices, having a product differentiation strategy sets the foundation that defines your business and how other’s perceive your brand compared to your competitors.
But of course, saying you’re high quality doesn’t exactly mean much, since anyone can say the same. Finding the characteristics that are important to your target market is then crucial to showcase your differentiation.
This means spending the time to research the behaviors of your target market to uncover their specific pain points and what they truly desire. With that information, you can formulate the features and benefits that potential customers actually care about and perceive as value. This would provide the basis of your product differentiation strategy and direct all marketing and sales messaging.
What Are The Product Differentiation Types?
There are three types of product differentiation: simple, horizontal, and vertical differentiation.
- Simple Differentiation makes a certain product set apart from the rest. The difference can be easy for customers to determine because it is obvious. Think of a regular rice cooker versus rice cooker with a removable steamer lid.
- Horizontal Differentiation focus on a single feature. The price may be the same as the competing products and doesn’t focus on the superiority of quality. Yet, it offers a different feature or functions. For example, think of a digital camera and a film-based camera. Both can give you a good quality photo but has different features.
- Whereas, Vertical Differentiation shows a product’s single characteristics. Customers are aware of its unique quality. It stands out among the rest even though there is a great difference on the price. A Levi’s 101 jeans stand out from the rest even though the price varies between other jeans in the market.
Examples of Product Differentiation
Let us take a look at some product differentiation examples.
Apple Macbook Pro
Apple is a multinational technology company (you may have heard of them ;)) that produces super popular products like the iPhone and MacBook Pro laptops. Apple has been highly touted for its sleek ergonomic designs and simple Operating System (OS). That is their differentiation factor.
People know that buying an Apple MacBook Pro won’t get you the most ram or processing power for the price you chalk up, like you would from another brand. Nor will it have the most advanced technology built in or varying customization capabilities.
But certain students, video editors, businessman, and creatives choose to purchase the MacBook because of its form factor and an intuitive OS. And those who do require top of the line processing power or customization, they tend to be the ones who build their own computers.
And in recent years, Apple has attempted to increase the power of their laptops to cater to some of the professionals who do require the extra oomph. This makes it more attractive for potential customers who may be eyeing at the Microsoft Surface.
Razer is an award-winning gaming accessories brand that is well known for its keyboards and gaming mice. Their DeathAdder mice recently reached the 10 million milestone and has been one of the hottest gaming mouse for the last decade. Razer continues to release new iterations of the Deathadder and continues to boast the very qualities that made it so famous: its sleek design, comfort, and optimum performance.
These qualities define their differentiation strategy. They are the very characteristics that are heavily sought by their target market: casual and hardcore gamers.
As a cherry on top, Razer uplifts the credibility of the Deathadder by mentioning how League of Legends pro, Faker, uses their mouse and has won championships. This acts as social proof and truly cements the quality of their product and difficult for other gaming mouse brands like Logitech to compete.
Takeaway: Find the pain points of your customers. Then create your product features and marketing around how your product solves those frustrations.
In business, competition is hard. It is important to think on product differentiation strategy. It is a key element to market the product, create a longstanding brand, and capture a segment in the market. Otherwise, you’ll have difficulty in connecting with potential customers who are busy looking for a product that truly speaks to them and gets their attention.
Wilson is a serial entrepreneur that helps transform e-commerce businesses into scalable and sellable brands. He is also an avid fan of personal development, entrepreneurship, and mentorship.