How to build effective differentiation strategies to grow market share

How to build effective differentiation strategies to grow market share

There are several things that brands can utilise to encourage growth and drive sales. To get ahead of the competition, brands first need to know how they differ fro other brands. This article is all about applying effective differentiation strategies in order to improve market position.

Effective differentiation is all about finding a way to stand out but also (crucially) finding a message which resonates with the customer. Take note, being different for the sake of it is simply not effective. Growing market share requires effective differentiation strategies. By applying these strategies, brands will be able to make themselves an indispensable commodity to the consumers.

What is market positioning and how can it change effective differentiation strategies?

Market position refers to the methods used to establish the image or branding of a business in a way that will make it recognisable to customers. It is created through the use of 4Ps: promotion, price, place and product. The easiest, and most effective, way to do this is through positioning strategy. When businesses are able to define these 4Ps, their marketing strategy will become more effective. Some of the best examples are:

How brands can start market positioning statement and effective differentiation strategies
Source: Smartling
  • Wendy’s and Mcdonald’s have positioned themselves to offer affordable and quick meals.
  • Audi and Tesla have positioned themselves to be luxury symbols.
  • Apple and Microsoft have positioned their brands to be the best tech companies for unique products and solutions.
  • Starbucks has effectively positioned itself to be an upscale coffee shop.

Product positioning is a strategic marketing process which allows a brand to become easily identifiable to its target market. Effective differentiation strategies mean knowing how and when to apply product positioning in order to encourage growth.

Types of Market Positioning

  • Customer needs – Brands need to identify what their customers need. They also need to clarify how they can fulfill this sets of needs.
  • Customer perceptions – Brands need to find a way to capture the imagination of the target customer. For example, a cosmetic company that advocates saving the environment can tell a unique story.
  • Brand recognition – All about visual symbols and information which allow customers to recognise a brand within the marketplace.
  • Pricing – In any market, brands with the lowest prices and reasonable quality items will always tend to win. Remember, pricing is a primary form of competition.
  • Quality – The best way to justify a higher price is to offer a superior quality product for targeted customers.
  • Convenience – Customers tend to choose brands which make their lives easier. This can mean usability, location and terms. For example, customers will choose an e-Commerce website offering low prices, more variety and free returns.
  • Customer service – Providing customers with friendly and diligent support compared to the competition.

Effective differentiation strategies that brands can try

Understanding Customer Needs

Effective differentiation strategies mean companies have to consider how to stay relevant and innovative at the same time. One of the best ways to accomplish this is to understand what the customer needs.

These are the best ways to truly understand customer needs and achieve effective differentiation strategies
Source: SketchBubble

Customer needs

A customer need is a reason which encourages a customer to buy a product or avail of a service. The need is a huge driver in a customer’s decision to buy. Businesses should look into what a customer needs and, use it as an opportunity to resolve a problem. Understanding customer needs requires businesses to pay a lot of attention to their customers. Some of the things that a brand can do are:

  1. Conduct a customer analysis survey – the survey should ask questions about how the customers feel about the brand and its competition. It should also include brand awareness and attitudes.
  2. Means-end analysis – this analysis will help brands get a full picture of why customers buy. The customer’s answers are usually divided into three groups, features, benefits, and values.

Ways to identify unmet customer needs

Brands who are aiming for differentiation should note that the best opportunities can originate from unmet customer needs. No matter how great a product or solution is, customers will not buy unless they need it. To stand out, brands should find a way to satisfy needs that are not being met.

Map the customer journey

Mapping the customer journey will help brands to identify customer pain points. A customer journey map will help brands visualise each process that a customer takes to deal with the product or service. There are tools that can help brands map out the customer journey. Consider the following, Smartlook, Kissmetrics, and Custellence.

Unique customer engagement services provided by Kissmetrics

Use existing customer data

Data can help brands identify what customers are looking for. Consider common customer questions and enquiries. Review chat logs, surveys, purchase histories and reviews as well as, forums and social media insights in order to find out what customers are saying about the brand.

Listen to the Voice of the Customer (VoC)

Voice of the Customer involves surveys or programs which collect real-time data. It helps brands to understand how customers feel about the brand. When brands listen to customer opinion, there is a good chance of finding out what the customer needs.

Perform competitor analysis

Competitor analysis is all about getting to know the competitor. Brands should look at what the competitor does – and what it doesn’t do. This strategy will help companies stay relevant to target audiences. It also helps them to stay ahead of the competition by staying ahead of the trends.

Examples of effective differentiation strategies

Effective differentiation strategies aim to make brands distinguishable from competitor brands. This means the brand should be developed so that it becomes unique in terms of features, design, image, quality or customer service.

Source: Blue Ocean Strategy

Blue Ocean strategy

Blue ocean strategy is all about creating a demand that doesn’t yet exist, instead of fighting against other companies. This theory, method and toolkit were developed by W. Chan Kim and Reneé Mauborgne. The authors outline this theory in their book, Blue Ocean Strategy, published in 2005 and republished in 2015. The strategy shares that marketplaces which have not been explored yet have a deeper potential to grow. The key to creating a successful blue ocean strategy is to find the best market opportunity and make competition irrelevant.

Probably the most popular example of the Blue Ocean strategy is the iPod. When the iPod was released in 2001, Apple looked beyond what the market is currently offering at that time and created an entirely new industry. By looking beyond what the consumers were asking for, Apple created a new but very successful product.

Best tools to use for the Blue Ocean strategy

Strategic Canvas – A strategic canvas helps brands to evaluate current investments and market positioning. This also helps brands to understand where they losing out and where they are gaining versus their competitors.

Who are the nonusers – This tool helps brands to consider potential new markets: the nonusers who may be waiting for the right solutions. It is typically divided into three tiers. These include buyers who buy but are nonusers of the industry, buyers who consciously refuse the industry’s products and services and, consumers who never thought about what the market has to offer. By understanding the nonusers, brands can create a Blue Ocean of new demand.

Visual exploring – This tool is the least discussed but, can be very effective in implementing the Blue Ocean strategy. Visual exploring is all about exploring what is outside of your business. For example, take your staff (anyone from a management level) and spend a day in the field to conduct observational research. Some companies also do storytelling research where they allow consumers to share their day-to-day experiences and see where brands can meet needs.

Join 11,458 smart
online marketers

Get tips and resources for every phase of your business, delivered to your inbox

Table of Contents

About James

James is the founder of Customer Devoted and was previously the managing director of customer engagement agency Ogilvy One and the strategy director for customer loyalty consultancy The Collinson Group.

Related Posts

Follow Us

Sign up for our Newsletter

Get tips and resources for every phase of your business, delivered to your inbox