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Differentiation
In his book ‘The Marketing Imagination’ (1986), famous Harvard Business Review editor Theodore Levitt wrote that imagining customer segments is the starting point for all new businesses. For existing businesses it is the way to find the next level of meaningful differentiation from competitors. Marketing Imagination gives organizations insights in the ever evolving problems and challenges that customers face. These insights can subsequently be translated in innovative solutions in the form of:
a) a new strategic marketing concept.
b) a more meaningful company vision.
c) a clearer and more distinctive brand positioning.
d) a collaborative strategy in the form of a cluster brand.
The search for meaningful differentiation is not an one-off exercise. Instead it is an ongoing endeavor as consumers develop new knowledge during the product’s lifecycle. Also, competitors continuously improve their products, services and brand positioning.
Over time, meaningful differentiation often moves up, along a continuum of the following levels: product, service, customer experience, company brand, cluster brand and community needs:
- Level 1: Product differentiation. How can companies add new features to improve the basic function of a product? E.g. provide longer battery life for a smartphone.
- Level 2: Service differentiation. How can companies provide a better service than competitors? E.g. start webshop same day delivery.
- Level 3: Customer experience differentiation. How can a better understanding of the customer’s lifeworld lead to a better overall customer experience? E.g. a full understanding of the emergency of a washing machine that breaks down for a family with 3 children.
- Level 4: Company brand differentiation. How can a company in a market of homogenous products and services differentiate oneself with the help of an attractive brand image? E.g. develop a brand philosophy or story behind a set of products.
- Level 5: Cluster brand differentiation. Put the spotlight on a particular group of businesses to steal customers attention, attract investors and talent.
- Level 6: Community needs differentiation: Here the company looks at the human behind the customer and his/her individual and social needs in order to find a way to differentiate themselves in a meaningful way from competitors.
The level at which the search for differentiation starts often depends on the strategic issues identified in the SWOT analysis.