Market differentiation is an essential effort for all businesses within an existing competitive marketplace. To be truly different and set a product or service apart from the rest, businesses must be able to successfully understand their competition, and then convince the customer of how and why their product or service is unique and better. How a product or service is perceived and accepted by the target market is critical to business success.
When a business can stand out from the competition, it is primarily due to the fact that they have successfully positioned themselves in a meaningful way that is preferred by their target market. But, how does a business determine and define their points of differentiation and stand apart from the competition? The following list contains the key elements to outline when determining where a business stands in the marketplace:
1. Who is the target market? Who is the general audience? Is there a niche for this product or service?
2. What does my business offer to this audience?
3. How is this offering unique and different from what the competition offers?
4. What do my customers say is the most important benefit of my product or service?
5. What elements of the product or service specifically provide them with this benefit?
By closely reviewing these questions and making a genuine effort to answer them fully, businesses can better assess their areas of differentiation. Once a business can define their product or service’s niche and the benefit it has for the target market, the next step is conveying this information to the consumer. It is essential for consumers to understand what is different about you and why they should select you. Your point of differentiation must be something they want or care about for it to fully resonate with the audience and provide a positive impact on their eventual conversion to a loyal customer.
Once this message is received and understood within the target market, the positioning of the business’ brand can begin to take shape. As your product or service continues to be set apart from the competition, and your messaging maintains a connection to the audience on more levels than the competition, consumers can become loyal to your brand.
Another benefit of knowing what differentiates you from the competition is the direct impact it has on the efforts of the business. Focusing on the point of market differentiation provides a guide to prioritization of future strategic business planning. Also, by sharing and promoting this differentiation, the business can gain traction in the marketplace through interest among distributors, investors, retail outlets, and media, which will in turn provide a return in the form of higher market interest and sales.
Once a business has clearly defined its niche and benefit to the target market, customers and prospective customers may begin to consider you over the competition. However, direct competitors may also be continuously working to reach this target market and trying to persuade them otherwise. It is essential for businesses to continuously monitor the trends within their market, and consistently analyze and update their level of differentiation in new and creative ways in order to maintain the niche they have worked hard to build.
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