Competitive Differentiation…lost in definition

This post has been prompted by an article that I saw in the Harvard Business Review (excellent insight and part of my daily reading!) yesterday where the author was putting a ‘limited value’ perspective on Competitive Differentiation in the modern market. The positioning was that with today’s ultra-competitive markets that there is limited differentiation opportunity and therefore more things come into play to allow the consumer to make their choice i.e. Brand and social decision making.

I was compelled to respond with a contribution to HBR and I would like to share these thoughts with you as a way of us taking the idea of Competitive Differentiation forward in the future.

Early thought-leaders such as Michael Porter brought us an angle and insight on being competitive through being ‘Differentiated’. That spawned a basket full of activities from eager disciples seeking to practice what was quite clearly a profound piece of strategic thinking.

The article suggested that in a lot of Business Sector’s differentiation is no longer possible as all the players make and sell things similar to each other in look, feel and functionality. Which is predominantly true.

However, what we need to consider is that Differentiation is what discerns us as consumers or buyers to think about one product or service versus a rival. Opinions on ‘the best’, ‘the valued’ and ‘ranking’ shape conversation between us and will influence our social recommendations of one product/company against another.

So, if products are all the same what conversation could Opinion Formers possibly have?

Let’s use a current topical industry as an example, the Energy Suppliers. Gas is Gas and Electricity is Electricity. You can price and tariff, but Consumers are starting to understand that over a period of time the Suppliers price very similarly, often based on forces outside their control. However, what should not be taken for granted is the Differentiation of delivering the ‘Me Too’ services that make up each Company’s offering. These are the things that are promised in the slogans and banner headlines when pushing the product and the emotion by which influences Consumer thinking.

So, as a Supplier (and this applies to any industry) if you offer clear and accurate billing, focus on delivering this 100%. If you say that you have a Helpdesk that is available 24/7, then make sure it can deliver when the Customer needs you most, etc. All companies provide these base services, but the Differentiation comes from satisfactory completion of your own marketing claims in the eye of the Consumer.

But let’s look to the real mechanics. When your Marketing Department builds an offer, is it 100% backed-off into the Organisation that will make it happen? It may not be seen as differentiating to pick up a phone 100 times a day to a Customer Service Rep as it is just their day job, but to the Consumer it is the ‘1’ call they are making. This then leads on to a very important Business Planning aspect. Is the Organisation’s budgets balanced to deliver the promise and is there an investment to performance analysis made throughout the year?  Differentiation is an investment.

In summary,

  • Competitive Differentiation is still a key strategy for all Private, Public and Non Profit organisations.
  • It can be based on the most fundamental of deliverables from your Company.
  • To succeed, and to be differentiated, you will need to ensure that your Strategy and Plan supports the ‘Me Too’ things that you are expected to deliver.

If you think this is useful to other colleagues or business friends, please feel free to share.

About David Dugdale
Business Transformation Consultant

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