Family Ties Online: Differentiation, the Fourth Pillar of Marketing

How showcasing your uniqueness can help you position your company.

Author’s Note: Differentiation is the Fourth Pillar of the Five Pillars, which, when taken together, support success in marketing. Prior articles have dealt with Positioning, Branding and Strategy.

Differentiation, one of the five pillars of marketing, offers a way to position your product or service in the marketplace and avoid the challenges of head-to-head competition. When your family business builds a feature or benefit into your offering so that it stands without direct competition, you are employing the tactic of differentiation. You make your product or service stand alone and, therefore, more attractive to your target market by differentiating it in the category in ways that are relevant and persuasive to your customer.

Differentiation can involve small distinctions in your packaging or in a unique advertising theme or family business tagline. The physical product or actual service need not change. But it can offer and highlight specific features and/or benefits not otherwise available in the marketplace. Differentiation also can be the result of major differences between two products or services, or you might offer a unique selling proposition such as the “commitment of a multigenerational family business.”

When differentiation is employed, it usually is applied through:

• Differences in service quality, design or application
• Making buyers aware of the essential differences in the characteristics and qualities of what they are purchasing
• Communicating effectively, through carefully targeted promotional activities, your unique commitment to your client/customer’s success.

There are four areas of your family business that readily lend themselves to differentiation. They are:

  1. Price Differentiation
  2. Focus Differentiation
  3. Product/Service Differentiation
  4. Customer Commitment and Service Differentiation.

Let’s briefly examine each of the four.

Price Differentiation

Differentiating on price or the way price is structured (such as Sprint’s unlimited data plan) is probably the most common and easily understood method. However, be careful. Potential customers might expect a lower price from you than from a larger competitor because they perceive you as having less overhead or resources. But be mindful that cheaper prices can evoke perceptions of lower quality or other competitive weaknesses.

And if you compete on price against competitors who have more resources, you can price yourself out of business. Compete on something other than straight price. You might offer more value by offering more products or services for the same price; or enhancements, such as long-term warranties, accessories packages, companion products, free upgrades and coupons for future purchases; or free shipping as a convenience sell. Convenience can provide a powerful differentiating factor.

Focus Differentiation

Rarely will you be perceived as having everything for everybody. And, generally speaking, you won’t want to be perceived in that manner. Pick a specific way to focus your family business. (SC Johnson brands itself as “A Family Company.”) Once you have done that, become more of an expert in that one field, application or industry. Build close relationships through superior support and service with key customers, and those relationships will be hard to compete against.

Here are a variety of ways that you can achieve an effective differentiation:

  • Offer a Wide Selection (within your specialty) — The key is to be specific in one dimension or offer a one-stop shop. Offer everything your target market needs, in your area of expertise.
  • Form Customer User Groups – Bring the groups together either online or in person to network, exchange information and share experiences. Use social media.
  • Location — Take advantage your closeness (geographically and electronically) to prospective customers.
  • Customer Specialization — Be very specific about what characteristics your customers will have. For example, restoring Porsche autos for enthusiasts.
  • Customer Relationships — Form alliances with customers for cross-selling. Extend your sales force by having them speak for you. Reward their assistance.

Product/Service Offering Differentiation

The extent to which you are able to differentiate your product or service offering will vary based on your market or your type of product or service. The key to success is to know and understand your customers. Talk to them often, and you will know their concerns, interests, needs and willingness to pay.

Communicate your product or service by emphasizing a feature or benefit that allows you to be set a notch above your competitors. For instance, use quality by creating a product or service that is exceptional because it’s longer-lasting or easier to install, service and use. Use features and benefits by offering choices, combinations or solutions in a way no one else does, or be the first one to offer something in your location/field. If you are able to more easily handle special orders than big, mass-market competitors, then let the customer know about it. It can be a differentiation factor. Have your family business initiate a program of client/customer visits just to make sure that all is well.

Customer Service Differentiation

Build your reputation by making customers feel and understand how important they really are for you. Make them understand the benefits of doing business with you.

Or be stellar in your delivery and installation time, troubleshooting and update distribution. Be better than customers think possible. Use technology to remain in touch and offer service and education support to your customer. Send a handwritten note personally signed thanking your customer for their business and continuing loyalty. Send out a predetermined number each week.

Extraordinary customer service pays off in many ways and builds relationships that move you to the customer-for-life relationship that can be most profitable. Don’t be afraid to offer guarantees and warranties. Offer 100 percent money-back or no-cost training support via Internet or phone.

To be successful with your differentiation, you need to adopt a position that potential customers will perceive as uniquely yours. Leverage the fact that you are a family-owned business.

Once you are perceived as being different from your competitors in a way that is relevant to your customer, you will have succeeded in using differentiation effectively.

Differentiation can contribute to sales performance in several ways. Here are two:

  1. Reduced resistance to price. Often your customer is willing to pay a premium price for the differentiation elements.
  2. Minimizes head-to-head comparison, which usually results in a price competition. Significant differences in relevant aspects of the product or service makes comparative analysis more difficult, which, in turn, draws fewer comparisons with its competition.

The real benefit of successful differentiation is to cause customers to be less sensitive to competing offers. This, in turn, can level the playing field and reduce price as a critical factor in the buying decision. In addition, your customer—by embracing the distinctions presented by differentiation—may very well react favorably to other benefits or features of your application, product or service.

©2012 Sherman Titens