If differentiation is the art, science and practice of creating buying preference with customers and prospective customers, it begs the question…
“What is it a customer is really buying?”
The answer is one of the classic……it depends.
Sometimes the customer is buying into the idea and concept of the business – this is differentiating the business.
The business itself is seen as special and what product or service is bought matters less. For example, think of your favourite restaurant and the way you try different things on the menu.
Some people have to buy whatever Apple sell. I’m drawn much more towards an Alfa Romeo much more than a BMW.
Sometimes the customer is buying a differentiated product. The “who you buy it from” is much less important than what you buy.
When I was in my most active CD buying phase I didn’t care whether I bought it from HMV, the old Virgin megastore or one of the independents because my focus was on the product and whether I thought the price was competitive for the effort required to check it out at the other stores. I didn’t have much loyalty to any business, partly because I didn’t have a relationship.
Sometimes the customer is buying into a special offer or promotion It looks a good deal (either because price is low or I get some kind of bonus – there’s a difference between “50% off” and “two for the price of one” both for the buyer and the seller.
An example of buying on offers is the selections you make in a supermarket.
The choice of the supermarket you go to is based on business differentiation.
You buy some products because you have a strong preference grounded in product differentiation (I love Heinz Tomato Soup and won’t buy any other).
But many of the things you buy, if you’re like me, are based on offer differentiation. One product gets preferred to another because there’s a special offer.
Something else gets bought because it’s on special offer, even though I wouldn’t normally buy it or a competitor product.
I succumbed in Morrison’s a couple of months ago to a Frijj Thick & Smooth Chocolate Fudge Brownie Flavour Milkshake because it was on special offer – 50p for 500ml instead of £1.10.
It was delicious but I can’t bring myself to spend £1.10 yet. I bought when I was in another supermarket and so a two for one offer but not at full price.
I know I’d enjoy it but the high calories and sugar content mean that it’s a guilty pleasure and I need to special price to give me an excuse to indulge.
Preference can be created at three levels – the business, the product or the offer or more accurately the offering (combination of product and price).
It’s important you don’t confuse differentiation at each level.
A differentiated offer doesn’t build a differentiated business unless customer loyalty shifts to the business level. Just as Frijj have discovered with me, take the offer away and my business goes away. reintroduce the offer and I’m back buying.
Dominos Pizza differentiated itself with their “fresh hot pizza delivered to your door in 30 minutes of less or it’s free” positioning but the product you bought was a pepperoni pizza or an American hot pizza. Even both under a 2 for 1 offer.
Paul Simister is a business coach who helps small business owners to profit from differentiating their businesses, by being distinctive in the eyes of their customers and standing out in a crowded marketplace…. in other words, by building a business to be proud of.