Product Differentiation - Pick 2

How you position your company impacts every aspect of product development and marketing strategy. It's never too late to realign how you address your market, but the sooner the better. When kicking off a strategic plan, my interviews always begin with the question: what is your differentiation strategy?  

Companies that perform well know if their strength is cost leadership, innovation or customer focus. Especially in the case of fragmented industries, it's critical to keep your value proposition simple and focused. If you're an early stage company, focus on one area only. If you've found your place in a saturated market, a sub-specialty can be helpful if you have the resources to drive this. 

In short, pick two (but preferably one). While everything to everyone seems like a winning recipe, this just isn't practical. In the mind of your customer, you're just another product. What makes you special? What makes you different? When your customer thinks of you, a crystal clear image should come to mind. If not, chances are how you've positioned your product either 1) does not connect with them (wrong target market) or 2) you don't have a clear value proposition. 

Examples: 

  • Wal-Mart vs. Target
    Mass Market  vs. Customer Focus
     

  • *Apple vs. Android
    Customer Focus (+ Innovation) vs. Mass Market (+ Innovation)
     

  • VW vs. Audi
    Mass Market vs. Innovation

 

* In the Apple vs. Android example, Android has a significant challenge in that one user's Android experience can wildly differ than another user's experience. In order to achieve mass market dominance, Google employed a free OS strategy while choosing mobile vendors as their primary source of distribution. The problem is that vendor motives don't often align with Google's design and UX guidelines, which leads to bloatware, which leads to fragmented experiences from one user to the next.  

 As long as a user sticks to a mobile vendor, they can expect a expect a generally predictable customer experience.  The challenge Android faces however, is fragmentation. With hundreds of different versions of Android (on differing hardware specs) in addition to multiple flavors of Android, developers face an uphill battle on optimizing their software for devices.