The increasingly developing society requires businesses to constantly strive to affirm their position. However, this is also a pressure for managers because they do not know how to maximize production efficiency?
What to do and how to do it seems to be a big question for all the bosses who dream of getting rich?
One of the strategies that managers are most interested in is the “Product Differentiation” strategy. Differentiation strategy is the strategy of offering a product that is completely different from competitors’ products so that customers appreciate your product.
There are many ways to differentiate your product, but to be successful, it must have the following three characteristics: “Create customer value”, “Provide visible value”, and “Be difficult to imitate”.
1. Create customer value.
One of the key factors for a successful differentiation strategy is to add real value to the customer. For example, for customers who want to invest in stocks to make money, convenience is not a value, they want to meet and get advice from leading experts more. Or Bayer's pharmaceutical products are famous for their name, not their ingredients. The following questions must be asked:
– How does this difference affect the customer's buying and using experience?
– Does this difference reduce costs, increase performance, or increase satisfaction?
One way to differentiate a product is to use market research to understand customers and to systematically test ideas and hypotheses. Market research also helps ensure that the added value is worth the price premium over competing products.
2. Provide visible value.
That added value must be visible to the customer. The information must reach the customer, the information must be memorable and believable.
Adding value to a label is a way for buyers to remember, understand, and trust it. The Mr. Goodwrench label helped GM communicate its service program to customers. The Resolution Enhancement label helped HP describe the industry-specific improvements in its Laser Jet printers.
The issue of perceived value is especially important in situations where customers have no ability to assess it. Examples include the safety of flying, or the skill of a dentist. To assess this value, customers rely on signals. So it is the job of the company to manage these signals well, and consumer associations and advertising statements can help. Oral B is the toothbrush recommended by dentists, for example. Michael Jordan wears Air Jordans, for example.
3. Difficult to imitate.
The point of difference must be durable, meaning it must be difficult to imitate. A combination of synergy and priority can be used to create durability for a differentiation strategy.
If the differentiation comes from a comprehensive effort of the organization along with its assets and capabilities, it is difficult and costly to imitate, especially when the differentiation is dynamic and constantly changing. Microsoft is an innovative organization and invests heavily in R&D, so it is impossible to imitate.
New competitors need to be able to enter with determination. Therefore, increasing investment or increasing risk will discourage competitors. For example, having too many differences is very expensive to imitate. Saturn cars have many differences, such as being free of haggling, reliable, safe, and determined.
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