What Is Differentiation?

 
 

Our definition: The process of making your brand stand out

Official definition: “Development or incorporation of attributes (such as benefits, price, quality, styling, service, etc.) that a product's intended customers perceive to be different and desirable” (BusinessDictionary.com).

Origins: Economist Edward Chamberlin first described “product differentiation” as a marketing strategy in his book, Theory of Monopolistic Competition, published in 1933.

Differentiation is not:

  • Done in a vacuum. Differentiation is all about understanding your competitors inside out. How else would you know what will make your products stand out from the crowd?

  • Differentiation strategy. Everyone who has a product should differentiate it. But not everyone can employ a “differentiation strategy.” Only businesses that have a clear competitive advantage and many resources may choose to expand by creating specific products for distinct market segments (differentiation strategy) rather than choosing a niche market (focus strategy), lowering their cost to appeal to more customers (low cost strategy), or using other general strategies.

  • Branding. Comparing yourself against competitors is the foundation of differentiation. While your competition should inform your brand, branding is a more comprehensive process founded on your company’s identity.