What Is Product Differentiation (And How Do You Achieve It?)

Product differentiation is something that’s becoming more critical to entrepreneurs in crowded marketplaces than ever before. These days, it isn’t enough to offer something similar to what’s already out there. It needs to be unique. Products must stand out on the shelf if they are to offer any hope of anyone buying them. 

The purpose of this article is to explore what product differentiation is (what it means) and how to make it happen in your enterprise. After reading this, you should have a better idea of how to position yourself. 

What Is Product Differentiation? 

Product differentiation is the process of making your products different from everyone else’s. For example, instead of offering everyone the same soy wax candles, you do something in your manufacturing or boxing processes that makes yours different. 

The idea is to create products that people can’t easily substitute elsewhere. For example, while Pepsi is a substitute for Coca-Cola, it doesn’t quite taste the same as the real thing. The same is true of McDonald’s and the average fast-food diner. 

Product differentiation can also fall under the category of making wares more memorable. The more customers reflect on using them (and what made them special), the better. 

How To Achieve Product Differentiation

With that out of the way, how can you actually go about achieving better product differentiation? What should you be doing to make it happen? 

Here are some of our ideas to start you off: 

Make Your Story Intrinsically Compelling

You could start by making your story more compelling. Consumers love products, but they enjoy the narratives around them even more. 

Take a brand like Patagonia, for example. It’s famous for the story it presents concerning its eco-friendliness and environmental activism. It doesn’t just sell hiking boots or anoraks, but actually allows customers to return them, either for recycling or to fix them so they can use them again. 

These proactive measures are rare among most companies, which prefer the throwaway culture and make Patagonia stand out. The fact that it does this makes it unlike virtually any other sports or outdoor clothing company in the world. 

Dominate A Niche

Another approach to product differentiation is to dominate a niche. If you can corner a part of the market and make it your own, you’ll usually have an easier time compared to battling things out with the giants. 

Dominating a niche requires finding an underserved group and then catering to their requirements. If you can find customers the market doesn’t currently serve well and bring them joy in ways they haven’t experienced before, they will continue coming back to you. 

Warby Parker is an example of a firm that carried out this strategy effectively. Instead of trying to take on the entire market, it resolved to focus on affordable and trendy frames. By bringing down the cost while maintaining the aesthetics, it put itself at the head of a lucrative market, allowing it to make more money than its rivals. 

How you do this is up to you, but if you can find an angle that the market isn’t currently meeting, that’s usually a ticket to success. 

Provide A Superior Customer Experience

You can also differentiate your product by providing better customer service. This option is popular in industries where it is hard to do anything differently, either because of technology or regulations. 

Take car servicing companies as an example. These all do the same basic things, like change the oil and replace worn spark plugs, so they need to find new ways to make themselves different from the competition. 

The best way for many of them to do this is to simply treat their customers well. Providing them with accurate estimates and seeking ways to bring down costs relaxes them and builds trust. 

Zappos is another example of a company in a competitive industry (this time, the ecommerce space) that uses customer experience to its advantage. While selling shoes is a simple operation, the company made it more pleasant for customers by offering free shipping and high-quality support, making it among the first brands in the industry to do so. 

Start Innovating More

Another approach to product differentiation is to take a leaf out of Apple’s playbook and start innovating more. If you can get a technical lead over your rivals, that puts you in a great position to dominate the market. 

One approach to this is to keep tweaking or reinventing what you sell. This simple strategy won’t yield many results at the start, but they can all add up over time to make your products more compelling. 

Another method is to employ an R&D team to do work for you. This basic science and research can sometimes lead to larger breakthroughs that allow you to do things that the rest of the industry can’t. 

For example, Tesla did this with its first electric vehicles. It didn’t reinvent the wheel, but it simply brought a bunch of production technologies together that allowed it to make the first and best EVs on the market. 

You don’t always know where innovation is going to lead, so investing in it is usually risky. However, you usually have a good idea where things are going, so it is often worth it. 

Make Your Brand Stand Out

Another approach if you can’t physically differentiate your products, is to make your brand stand out. Ensuring you represent quality is the best way to get people to buy from you repeatedly. 

The best way to do this is to craft a consistent look. The more familiar you are, the more likely customers will trust you and want to use you. 

Part of this approach might involve using custom boxes to sell products. Instead of relying on conventional designs, you could appeal to customers by personalizing their packaging. 

Another approach is to create a message that people recognize instantly. If you can provide them with something that they can get their teeth into, they are far more likely to take you seriously and want to buy what you sell. 

Know Your Audience

While differentiating, it is critical to know your audience. If you understand them on a deep level, you can often predict what they want before rivals do. 

When you think about it, the advantages of this approach are significant. You can benefit from being the first-mover and the company in your industry that always seems to be ahead of the curve. 

You can also find the words and ads that are most likely to make audiences believe you have something truly unique to offer them, even if you don’t in reality. 

One way to do this is to research their pain points and work from there. If you understand what’s irking them, you’re in a much better position to provide them with assistance in the future. 

You can also try organizing your offer around your prospects’ daily habits. If they do something everyday that’s inconvenient or unpleasant, you can use your marketing to show them how your product slots into their lives to make them better. 

Do Something Unique

Finally, you can achieve full product differentiation by doing something unique. Providing audiences with a novel solution they can use in their lives is critical. 

Things you could focus on here include: 

• A new design
• Superior quality
• Features that nobody else has
• Simple branding

Once you have something unique, you have a product or service you can work with in your advertising. Customers will attach to this idea and use it to justify buying from you.