Differentiation Strategy

Differentiation Strategy

After addressing the Marketing Mix in the previous post, we now move on to Differentiation.

The Differentiation Strategy is at the basis of the formulation of long-term Competitive Advantage Theory. This approach seeks to position a company in the market in a distinctive way, thus creating a unique value proposition for its products or services in order to significantly differentiate it from the competition.

The idea is to offer something exclusive that customers are willing to pay for and, having said that, Porter presents some critical points that help to design a Differentiation Strategy, such as:

1- unique attributes-, the first step is to identify the attributes or characteristics of the product or service that are perceived as “valuable” for the market segment. These attributes can range from a focus on quality to design, passing through any other aspect that highlights the company in the market, and that is not being properly “covered” by the competition.

2- creation of value-, where the company has to present distinctive characteristics. This can be done through marketing campaigns, advertising, customer service and other communication tactics that help identify the unique value of the product or service.

3- “premium” prices -, with products being sold at higher prices compared to more standard products. If the strategy is successful, customers will be willing to pay for the additional value that “differentiation” offers your customers.

4- Finally, there is innovation, which allows sustaining this “differentiation” in the medium and long term. For this the company must allocate resources in Research and Development for example.

In summary, with the implementation of a differentiation strategy, and the adoption of effective segmentation criteria, a startup identifies its positioning in the market, in a distinctive way.

This methodology, evangelized by Michael Porter, a renowned Harvard professor, is part of any internationalization “menu”.Want to learn more? Register for our webinar on the internationalization opportunities you can achieve with WebSummit 2023.

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