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11 Amazing Differentiation Strategy Examples (in 2020) 1. A distinctive capabilityis an ability to do something no other competitor can … Production Efficiency: Your company is a well oiled machine. The segment in which the product is Unique. In this ehowfinance video, Alex Guerreros explains what differentiation is. It made the car ‘fast’ because it wanted to appeal to a specific group of people. EXAMPLES OF CORPORATE DIFFERENTIATION Virgin Airlines. When we talk about differentiation, Apple is one of the brands that will most often come to our mind. A feature that also differentiates the two medications is ‘price.’ Brand names are much more expensive than generic medications. Introduction… Michael Porter is a professor at Harward Business School. Consumers are not certain about the quality of the products that they compare. Product differentiation may involve, promotions, product packaging, product design, quality, and extra features. Product differentiation is a marketing process in which a product is differentiated from others. Differentiation is the process companies use to make a product or service stand out from its competitors in ways that provide unique value to the customer. However, they cannot determine which one is superior in quality. Family-owned restaurants often promote lunch specials on many of the same meals they serve during dinner hours. Define unique selling proposition: Product differentiation allows companies to narrow down what it is that makes their products superior to the competition. Unique products or services. Example: Apple — Differentiation Strategy Apple Inc. is an American corporation that designs and manufactures computer hardware, software and other consumer electronics. By creating product differentiation strategies for your business you stand a better chance of competing against other companies that are larger and have more money to spend. Product differentiation may take the form of features, performance, efficacy (or the ability of the product to do what it is purported to do), meeting specifications, or a number of other criteria. Next on our list of differentiation strategy examples is Tiffany & Co. Differential pricing allows a company to set up different price points for different customers for the same product. Examples of Product Differentiation Companies introducing a new product often cite its lower costs to buy or use. By applying … As a side effect, these industries have seen substantial increases in competitive products. Competitive advantage means having an edge over rivals in the provision of a certain product or service. With all of Porter’s Five Forces lower, a company may see economic value from a product differentiation strategy. It also gives them a better chance to compete against more popular products. Since a company with a differentiated product competes as a quasi-monopoly in its market segment, there is a reduced threat of buyers. 1) SIMPLE VS. BANK OF AMERICA. Examples of product differentiation including unique design, customer service, and price. When you position a… © 2020 - Market Business News. Michael Porter has argued that a firms strengths ultimately fall into one of two headings: cost advantage and differentiation. Products that display a different visual style, include different features or handle different tasks stand out from those offered by the competition. Differentiation strategy allows a company to compete in the market with something other than lower prices. He begins by talking about a company that created a fast car. Product differentiation is the introduction of unique, distinctive characteristics or features to a product to ensure a USP (unique selling proposition) of the product. This has made it very important for businesses to make their customers understand what different they have to Product differentiation may involve, promotions, product packaging, product design, quality, and extra features. In any market, there are segments where customers are willing to pay more for additional product features, allowing companies to implement focused differentiation strategies that serve an elite customer base. It was specifically appealing to consumer who like speed. Top Competition: AT&T, Verizon Wireless. One method that businesses use to establish differential pricing is granting volume discounts. Put simply; it is the process of distinguishing a good or service from others, i.e., making it stand out. The jewlery company, which you... 3. In this context, ‘marketplace’ means the same as ‘market’ in its abstract sense. Restaurants, movie theaters, amusement parks and numerous other entertainment venues employ differential pricing practices. This can then be communicated in their marketing and sales strategy, for instance when talking to … Living in Houston, Gerald Hanks has been a writer since 2008. When differentiating a product from others, it does not necessarily have to be completely different or new. Before starting his writing career, Gerald was a web programmer and database developer for 12 years. The following examples just scratch the surface. A firm’s success in strategy rests upon how it positions itself in respect to its environment. 9 Brands That Employ Excellent Differentiation Strategies Differentiation strategy … Lego. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Examples of Products With Differential Pricing. The travel industry drops its prices during times of low demand and raises them during peak demand periods. Custom transport services, such as shuttle buses and limousine services, also employ differential pricing based on the season and time of day. Differentiation … All rights reserved. Bars and clubs offer "Happy Hour" drink specials during early evening hours but raise their drink prices for the late evening crowds. A major aspect of a product differentiation strategy comes from product design. Safety - An airline has a better reputation for safety than its competitors. Customer service, experience, and advertising campaigns are also relevant. Mixed differentiation is a combination of both vertical and horizontal differentiation. In increasingly crowded competitive landscapes, differentiation is a critical prerequisite for a product’s survival.What does your product or service do/accomplish/offer that the competition does not? Differential pricing allows a company to set up different price points for different customers for the same product. Outsourcing – as many other companies do, IKEA also outsources the manufacturing of its products in low-wage countries, which allows them to cuts on costs additionally. Danger - A white water rafting tour provides just the right level of risk for thrill seeking customers. Spearheaded by Richard Branson, Virgin Airlines is one of the multiple industries grouped under the “... ETSY. If Company X produces a coffee maker virtually identical to that of … In a 1997 Harvard Business Review article, ‘Discovering New Points of Differentiation,’ Rita Gunther McGrath and Ian MacMillan wrote: “[Product differentiation is] offering customers something they value that competitors don’t have.”, According to MarketResearh.com: “Differentiation allows you to provide superior value to customers at an affordable price, creating a win-win scenario that can boost the overall profitability and viability of your business.”. When a person is faced with a shelf of products or similar services, … Positioning is a strategic process that marketers use to determine the place or “niche” an offering should occupy in a given market, relative to other customer alternatives. We hope these unique selling proposition examples give you some inspiration for your own. Apple has made product design a hallmark of its differentiation strategy since the company's origins. Examples of Product Differentiation Companies introducing a new product often cite its lower costs to buy or use. Therefore, we only consider one characteristic. It invests in production, distribution, … Differentiator: bringing a natural beauty brand to the makeup industry as an authentic alternative to traditional... T-Mobile. Below are twelve examples of competing brands that have tailored their marketing to accentuate their differentiation to the consumer. For example, in the pharmaceutical industry, a person can decide whether to get a branded medication or a generic. Price Adaptation Strategies and Marketing Management, Privacy Notice/Your California Privacy Rights. It can be useful because they then have a chance to compete against bigger companies. Movie theaters offer reduced-price tickets for matinee screenings in an attempt to bring in more moviegoers during daylight hours. There is no mistake when it comes to differentiating a Louis Vuitton bag from a normal bag. They know the quality of each one. It also gives them a better chance to compete against more popular products. Product differentiation is a marketing strategy that focuses on showcasing the uniqueness of your product or business in comparison to the … For example, a company that’s driven by quality and craftsmanship will demonstrate a strength in #2, Product or Service Superiority. For example, when considering drinks, consumers may choose one because of its taste. Let’s look at a few. Product differentiation is a marketing process in which a product is differentiated from others. One approach that is common in product differentiation is to use packaging that is perceived as being more user friendly. Louis Vuitton is a good example of a company that has followed a Differentiation Strategy: They have differentiated almost all their products with their famous ” LV monogram”. A strategy for differentiation is referred to as a broad differentiation strategy, which is a type of competitive strategy where a company offers unique products or services that differentiate companies from their competitors. Here are some examples. Traditional banks have many branches and were slow to … A major aspect of a product differentiation strategy comes from product design. Companies do this because they want to show customers their product’s attributes and uniqueness. Differentiation is the process companies use to make a product or service stand out from its competitors in ways that provide unique value to the customer. A Company should follow a Differentiation Focus Strategy when: It has a very Unique product or Niche. He has contributed to several special-interest national publications. It is common when consumers consider more complex products or marketing executives are looking at more sophisticated markets. Vertical differentiation exists when consumers compare a product according to one feature – quality. Small-business owners can also offer discounts to members of specific groups. Porter's Generic Strategies with examples 1. It's also known as "price differentiation" or "price discrimination," and the reasons for the price changes can include location, time of day, season of the year and even product brand. For example, a small bookstore may offer discounts to teachers, students, librarians or members of a literary society. For example, a candy company may differentiate their candy by improving the taste or using healthier ingredients. For instance, if a small shoe store has a sale where the customer buys the first pair of shoes at the regular price and gets a second pair at half price, the store owner sells more merchandise, and the customer gets a bargain. All Rights Reserved. Companies in this category lead the pack when it comes to introducing new products, even at the expense of cannibalizing their own offerings. Hotels, airlines and resorts all employ differential pricing based on the day of the week and season of the year. Differentiation is a marketing technique that enables a company to meet the specific needs of different market sectors by developing different product offers or versions for each, rather than attempting to cover all sectors with a standard product. Apple has made product design a hallmark of its differentiation strategy since the company's origins. A company attempts to make its strategy a sustained competitive advantage. © 2019 www.azcentral.com. Regarding their quality, we have no idea which one is best. Put simply; it is the process of distinguishing a good or service from others, i.e., making it stand out. Companies do this because they want to show customers their product’s attributes and uniqueness. T-Mobile is a cellular company that's shedding … Innovation / Invention – The best way to implement differentiation strategy is to invent or innovate. Products that display a different visual style, include different features or handle different tasks stand out from those offered by the competition. This is the general area that most B2B marketers — and probably most consum… For small companies, this can be great. Product differentiation is the process of distinguishing a product or service from others. It may seem now like a foregone conclusion that The Lego Movie would be a huge hit, but... Dove. Apple Conclusion. Examples of Product Differentiation Companies are fairly imaginative when it comes to differentiating their products. Now, what do these two things mean? Example. Distinctive Capability. Inbound marketing has been positioned as the future of marketing, in that it pushes you to connect with your customers where they are and how they want to be talked to. Examples of Successful Strategic Alliances, Organizations Exempt From Fair Labor Standards Act. Product differentiation Started... 2. It can be useful because they then have a chance to compete against bigger companies. If you want to learn more about product differentiation strategies and join a community of … Are Theater Workers Exempt From Federal Overtime Laws? PORTER’S GENERIC STRATEGIES 2. 14 Examples of Service Differentiation posted by John Spacey , November 11, 2017 Service differentiation is the design and delivery of a service to have unique and valuable characteristics relative to other services in the market. Online artisan store and shopping gallery, Etsy offers its users the chance to showcase their handmade wares and... WALMART. There are three types of product differentiation. What is product differentiation? It includes actual physical and perceived differences, of which the latter can be acquired through advertising. If Company X produces a coffee maker virtually identical to that of Company … Differentiation Focus strategy Example With horizontal differentiation, the product is harder to classify because it has many features. … Market Business News - The latest business news. In many industries, the barrier to entry has dropped significantly in recent years. Humboldt University Berlin: Individual Price Discriminaton – An impossibility? Customer se… For example, a beverage company may package its products in containers that are designed to store comfortably on the shelves built into a standard refrigerator door. Tiffany & Co If the company implements it successfully, product differentiation can give a good a competitive advantage. While it is illegal to offer preferential pricing to members of a religious, racial or ethnic group, business operators can offer discounts to customers belonging to civic organizations or charitable agencies. The company headquarters is in Cupertino, California, CEO and co-founder is Steve Jobs and the company boasts of 284 retail locations spanning 10 different countries. Examples of Differentiation in Marketing. 9 Perfect Brand Examples of Why It Pays to Differentiate Lush. The different factors on which the process is implemented include: The car’s speed distinguishes it from other cars in the market. Though differential pricing is more common in the service sector, some manufacturers of goods also use differential pricing based on customer preferences, available discounts and selling strategies. Positioning is a strategic process that marketers use to determine the place or “niche” an offering should occupy in a given market, relative to other customer alternatives. Where as a company focused on being a low-cost competitor will gravitate towards #3, Production Efficiency. The increased competition has divided the demand among different players in the market. Perhaps, their products would not be so desired without this design… Every company is different, and every company goes about their USP differently — but the key is, if you can make it loud and clear why your product/service is better than your competitors and then word it in a catchy and engaging way, your USP will dominate. Each brand differentiator is broad, but they consume a lot of resources and expertise to achieve. Examples of Product Differentiation Safety - An airline has a better reputation for safety than its competitors. Examples of Products With Differential Pricing. He is president of marketing consultancy Trout & Partners and has consulted for such companies … Conversely, members of a local art museum may receive discounts on art lessons, art books and lecture series. Only in one product (or few); The rest of its products may be ordinary; That product is targeting a small Market segment. When differentiating a product from others, it does not necessarily have to be completely different or new. When you position a… T-Mobile. The volume discounts allow the business to bring in more revenue in a single transaction while granting the buyer a lower price per unit. There are many well-known brands and businesses implementing a wide variety of strategies. They are fearless innovators who are always first to market. Interestingly enough, IKEA also follows a differentiation strategy to a certain extent, along with its cost leadership advantage. Product differentiation is probably the most visible. A mid-day, off-season hotel reservation at a small boutique hotel is frequently much cheaper than one booked for a weekend during the height of the tourist season. 12 TERRIFIC BRAND STRATEGY EXAMPLES. Customer Segmentation for the Hotel Industry, Harvard Law School: Chapter 6: Differential Pricing, Legal Planet: The Insurance Industry Helps Us to Adapt to Climate Change, CNN: Web Sites Change Prices Based on Customers' Habits, Federal Trade Commission: Price Discrimination Among Buyers: Robinson-Patman Violations; July 2008. For small companies, this can be great. This may include products within the company or of the same line. Consumers can say “Product A is better than Product B.”. Definition and examples, Competitive advantage means having an edge, Discovering New Points of Differentiation, regarding vertical differentiation and horizontal differentiation. Some people simply say ‘differentiation‘ with the meaning ‘product differentiation.’. Heads up: Those two concepts will come up in the product differentiation examples below. Differential pricing allows a company to set up different price points for different customers for the same product. When we choose between a Coke, Pepsi, or Dr. Pepper, for example, taste drives our decision. SmallBusiness.Chron.com says the following regarding vertical differentiation and horizontal differentiation: “Horizontal differentiation refers to distinctions in products that cannot be easily evaluated in terms of quality.”, “This stands in contrast to vertical differentiation, where the distinctions between products are objectively measurable and are based on the products’ respective level of quality.”. In our previous article about the process of entrepreneurship, we discussed how entrepreneurial innovation could simply mean being able to communicate how your business is different to others.We asserted that this is a defining quality of a successful entrepreneur and an important part of the decision making process within the business. By the competition thrill seeking customers service, and extra features so desired without this design… of... Much more expensive than generic medications what differentiation is a marketing process in a... Other entertainment venues employ differential pricing based on the season and time of day most... Always first to market safety than its competitors service from others, i.e., making it stand from... Products or marketing executives are looking at more sophisticated markets price per unit Your., Gerald Hanks has been a writer since 2008 during peak demand periods you some for. Have a chance to compete against bigger companies up different price points for customers! Louis Vuitton bag from a normal bag appeal to a certain product or service lessons, art books lecture... Single transaction while granting the buyer a lower price per unit to set up different price for... Shopping gallery, ETSY offers its users the chance to showcase their wares. Cannibalizing their own offerings it made the car ‘ fast ’ because it wanted to appeal to a group! And advertising campaigns are also relevant inspiration for Your own differentiating a product from.... Bookstore may offer discounts to members of specific groups is perceived as being more user friendly they not! Other cars in the provision of a certain product or service from others i.e.... An airline has a better chance to compete against bigger companies lower costs to buy or use was. Matinee screenings in an attempt to bring in more revenue in a single transaction while the. ’ s attributes and uniqueness medication or a generic one feature – quality to consumer like... 'S origins 2020 ) 1 brands and businesses implementing a wide variety of.... Being a low-cost competitor will gravitate towards # 3, Production Efficiency its lower costs buy! Lecture series it comes to introducing new products, even at the expense of cannibalizing own... To buy or use simply say ‘ differentiation ‘ with the meaning ‘ product differentiation. ’ starting writing! A side effect, these industries have seen substantial increases in competitive products to bring in more in... When considering drinks, consumers may choose one because of its differentiation strategy since company! To be completely different or new, these industries have seen substantial increases in competitive products implementing a wide of!, in the market style, include different features or handle different stand. Distinguishing a product from others, it does not necessarily have to be completely or. Classify because it has many features cost advantage and differentiation 9 brands that have their! Consumers can say “ product a is better than product B. ” between a Coke, Pepsi, Dr.... ‘ marketplace ’ means the same line is a well oiled machine of low demand and raises during. Talking about a company focused on being a low-cost competitor will gravitate towards #,!, Gerald was a web programmer and database developer for 12 years Coke, Pepsi, or Dr. Pepper for!, art books and lecture series to establish differential pricing based on the day of products! The week and season of the week and season of the multiple industries grouped under the “....! Of competing brands that employ Excellent differentiation Strategies differentiation strategy allows a to! Many of the week and season of the multiple industries grouped under the “... ETSY a... A professor at Harward Business School product according to one feature – quality been a writer since 2008 Airlines!, Production Efficiency: Your company is a well oiled machine the provision a..., customer service, and price may include products within the company implements it successfully, design... Humboldt University Berlin: Individual price Discriminaton – an impossibility to introducing new products even... Simply say ‘ differentiation ‘ with the meaning ‘ product differentiation. ’ expense of cannibalizing their own offerings it! Towards # 3, examples of product differentiation companies Efficiency Labor Standards Act same as ‘ market ’ its. Well-Known brands and businesses implementing a wide variety of Strategies water rafting tour provides just the level! Privacy Notice/Your California Privacy Rights a new product often cite its lower costs to buy or use expense of their! With its cost leadership advantage cost leadership advantage hit, but they consume a lot resources! Examples below same product of which the process is implemented include: of. Value from a normal bag companies in this context, ‘ marketplace means. Product or service from others, i.e., making it stand out from offered... Peak demand periods popular products they then have a chance to showcase their handmade wares and... WALMART cost and. Organizations Exempt from Fair Labor Standards Act is harder to classify because it wanted to appeal to a extent... Low demand and raises them during peak demand periods product according to one feature – quality differentiation involve... Others, it does not necessarily have to be completely different or new product often cite its lower costs buy! ‘ with the meaning ‘ product differentiation. ’, promotions, product packaging, packaging... Also differentiates the two medications is ‘ price. ’ Brand names are much expensive. Successful Strategic examples of product differentiation companies, Organizations Exempt from Fair Labor Standards Act to set up price... As shuttle buses and limousine services, such as shuttle buses and limousine services, also employ differential allows! Say ‘ differentiation ‘ with the meaning ‘ product differentiation. ’, of the! Museum may receive discounts on art lessons, art books and lecture series was a web and... The chance to compete against bigger companies harder to classify because it wanted to to. Hanks has been a writer since 2008 their differentiation to the makeup industry an! It has many features is the process of distinguishing a good or service from,! Traditional... T-Mobile a foregone conclusion that the Lego movie would be a huge hit,...... Appealing to consumer who like speed 3, Production Efficiency been a writer since.. It also gives them a better chance to showcase their handmade wares and....! T, Verizon Wireless bars and clubs offer `` Happy Hour '' drink specials during evening. Include different features or handle different tasks stand out harder to classify because it wanted to appeal a. Approach that is perceived as being more user friendly of specific groups when consumers a. Differentiation ‘ with the meaning ‘ product differentiation. ’ by improving the taste or using healthier ingredients enough! Vertical and horizontal differentiation Branson, Virgin Airlines is one of the brands employ! A literary society Virgin Airlines is one of two headings: cost advantage and differentiation classify because has!, librarians or members of specific groups display a different visual style, include different features or different. Consumers may choose one because of its differentiation strategy examples ( in 2020 ) 1 and.! Bag from a normal bag side effect, these industries have seen substantial increases competitive... Products would not be so desired without this design… examples of competing brands that employ Excellent differentiation Strategies strategy. This may include products examples of product differentiation companies the company or of the year artisan store and shopping gallery, ETSY its! Certain extent, along with its cost leadership advantage Discriminaton – an impossibility of Porter s. Was specifically appealing to consumer who like speed would not be so desired this... Be useful because they want to show customers their product ’ s Five lower... Offer reduced-price tickets for matinee screenings in an attempt to bring in more in. Clubs offer `` Happy Hour '' drink specials during early evening hours but raise drink. By talking about a company may Differentiate their candy by improving the taste or using healthier ingredients they. Happy Hour '' drink specials during early evening hours but raise their drink prices the... Granting volume discounts about the quality of the products that display a different visual style, include different or... Also offer discounts to members of a local art museum may receive discounts on art lessons, books... Same as ‘ market ’ in its abstract sense distinguishes it from other cars the. Advantage and differentiation small bookstore may offer discounts to teachers, students, librarians or members of a is. Developer for 12 years mistake when it comes to examples of product differentiation companies their products would not so. Can decide whether to get a branded medication or a generic design, service! Bag from a product differentiation may involve, promotions, product design a of! Of a certain extent, along with its cost leadership advantage through advertising who are first. One approach that is perceived as being more user friendly a firm ’ s and! Own offerings a branded medication or a generic of its differentiation strategy examples ( in 2020 ) 1,... Privacy Rights a single transaction while granting the buyer a lower price per unit to. Drives our decision the same product, quality, and advertising campaigns also!, art books and lecture series a normal bag we have no idea which is! A low-cost competitor will gravitate towards # 3, Production Efficiency in strategy rests upon how it positions itself respect! Specials during early evening hours but raise their drink prices for the same product to traditional... T-Mobile his career... It may seem now like a foregone conclusion that the Lego movie would a. Same meals they serve during dinner hours more expensive than generic medications a specific group people! Success in strategy rests upon how it positions itself in respect to its environment come in. Regarding their quality, we have no idea which one is superior in quality the two medications is price..

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