Product Differentiation and Positioning

Traditional positioning is done via 2 competing forces

1. Price
2. Uniqueness

Uniqueness relates to the degree of differentiation, which can be divided into 2 main areas:

• Merchandise
• Support

And produces the following possibilities:

• An offer differentiated by both merchandise and support can be classified as a system
• Undifferentiated by both merchandise and support then the offer is a commodity (common, like bread and milk)
• Differentiated by merchandise but not by support and the offer is a product
• Differentiated by support but not by merchandise and the offer is a service

This produces a declining scale of uniqueness: System > Product or Service > Commodity

And the customer is the final judge and jurer on this matter.

If your customer does not appreciate the way in which you are differentiated, if he or she does not see your offer as significantly, substantially unique from your competitors, then really you are not differentiated, and are simply offering a commodity. Because the customer will see no special value in your offer over your competitors offer in terms of merchandise or support.

In which case you are probably to compete on price, unless you can find a genuine way to differentiate your offer in the minds of your prospect. This is ?brand/product positioning?.

Methods of Differentiation

There are 2 ways to differentiate merchandise:

1. By content (tangible attributes) or
2. By image (perceived attributes).

There are 2 ways to differentiate support:

1. By expertise (functional competence of the offer) or
2. By personalisation (flexibility in terms of customisation)

For a deeper approach to Positioning see the Strategic Business Units page.

Originally posted 2008-08-09 15:17:49.

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