Bob Klimm at Strategic Edge, LLC

Differentiation is literally how you differ from the competition – what makes you unique.  It is generally thought of as differences in product attributes and performance but it applies equally to the services which accompany the product and to the customers’ entire interaction with your company.  As pointed out by Theodore Levitt, “There is no such thing as a commodity.”  Even if you provide a generic product, you can differentiate on the ‘offering’ – the sum of the tangible product and the intangible support and business process characteristics.

Tangible product characteristics often carry a higher premium in the customers’ eyes – particularly if they allow that customer to compete more effectively.  Supporting a unique capability in your customer’s product or providing higher throughput both fall into this category.  Intangible aspects of the product offering can also provide measureable value – such as simple configuration and ordering, fast delivery, manufacturing advice, installation support and simple repair.  As a result, both a detailed understanding of the product / application and review of all the steps required to obtain, use and dispose of the product should be considered as potential axes of differentiation.

Creating differentiation is critically important since it forms the basis of establishing unique customer value and thereby justifying a premium price.  As discussed in the prior post on Strategic Pricing and in the accompanying white paper – understanding and selling on the basis of value allows you to negotiate from a position of strength rather than reacting to customer demands for lower price and threats to move the business.