Business Differentiation

Now all of marketing is differentiation. Everything you do in the design of your products and services, in the way you advertise and promote them, and in the way you sell and deliver them, revolves around differentiating yourself from your competition to be successful in business, to move more rapidly along the road to wealth. Your products must be different, better, and superior in one or more clear, specific ways that represent real value to your customer.

You absolutely have to possess an area of excellence that people know, understand, recognize and respond to. You must have a unique selling proposition, as we talked about in the past.

  • Something that you do or offer to your customer that is of benefit to him or her, then no other competitor can offer except you.
  • What are your unique selling proposition for yourself and your product and your company?

In deciding how your position yourself and your market begin with your ideal customers.

  • Who are they?
  • Why did they buy?
  • What do they consider value?
  • What specific benefits are they seeking from purchasing your product or service?
  • What do your ideal customers have to be convinced of before they will buy from you?
  • Who are your competitors?
  • Why do your ideal customers buy from your competitor rather than from you?
  • We can\’t ask this question often enough.
  • What value do your customers perceive in the offerings of your competitors that they do not perceive in your offerings?
  • What are the most attractive features and benefits that your competitors offer that your prospective customers do not feel that you offer?
  • What are their strengths?
  • How have your competitors succeeded? Up until now, what are they doing to keep people from buying your products and services?

Once you are clear about your ideal customers and what they want and you are clear about your competitors and why your customers are buying from your competitors, you can then analyze and dissect your product or service in more detail. Again, the great question is, what do you sell? What exactly do you sell? Remember, customers, do not care what your product is as much as they care about what your product does. Customers are demanding, discerning, discriminating, and disloyal. They will buy from whichever company they feel will satisfy their specific needs of the moment better than anyone else.

And as you know, the customer is always right. The customer\’s decision is always rational in that it is based on his or her assessment of the advantages and disadvantages of each product or service that is available to satisfy his or her needs to win customers. You have to get inside their heads and view your product or service from their perspective. It is only when you can get customers to see your product or service as the best choice for them that you can make more sales in every business or industry.

The top 20 percent of companies earn 80 percent of the profits. For this reason, thousands of companies have been studied for many years in an attempt to determine the specific factors that lead to greater growth and prosperity, as opposed to average growth or even decline or bankruptcy. One of the most important discoveries of the Profit Impact of Marketing Strategy, the PIMS study at Harvard covered 620 companies over a 20-year period was that the perceived level of quality of a company\’s products and services was the critical factor in determining its sales growth and profitability. In other words, if a survey asked customers in a community to rate all the companies in an industry in that community on a scale of one to 10, the company that customers rated the highest in quality would also turn out upon examination of their financial statements to be the most profitable in that industry. Each market and each product or service in a market can be divided into segments. These segments refer to the products or services themselves into the types of customers who purchase those products or services. Because of this segmentation, it\’s possible for a company that sells a low-priced product to achieve the highest quality ranking in a particular market segment.

For example, Tiffany sells high-priced jewelry and other products primarily to wealthy people for whom price is not a concern among quality jewelers. Tiffany has an extremely high-quality ranking and is, by extension, a very profitable enterprise. Zales Jewelers is a national chain that sells to middle-income earners. Its stores have a wide selection of engagement rings, wedding rings, and other forms of jewelry that family members and friends buy for each other. In its market segment, it has a high-quality ranking in serving its particular type of customers and has therefore been highly profitable year after year.

McDonald\’s can certainly not be compared to a first-class restaurant, but in its market segment, McDonald\’s is famous for excellent quality fast food. This explains why the company is so successful and profitable in the fast-food market.

If someone conducted a survey to determine the quality ranking of your company in your market, where would you score? It would be nice if your answer was number one. But this may not be true, at least for the moment. What is most important that you determine your relative quality ranking at the current time? Let us say that out of 10 companies in your business that are attempting to sell to very much the same customers, your quality ranking is 6. If you could examine the financial statements of your competitors, you would probably find that your level of profitability ranks you about the same. Your job now is not necessarily to be number one in your market. That\’s often too much of a leap. That should be your ultimate goal to be in the top 10 percent in your industry and ideally to be the best. But your goal at this point is simply to improve your quality ranking by one level to move from number 6 to number 5. You can do this in the foreseeable future.