Three pillars with the highest pillar featuring a golden trophy to denote competitive differentiation

Competitive Differentiation: How to Stand Out in the Marketplace

Heather Eastman
Latest posts by Heather Eastman (see all)

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You want your brand to be different from anyone else in the marketplace, but how do you articulate your unique qualities to potential customers? Through competitive differentiation. 

Competitive differentiation is not just about pointing out all the ways you believe you are different from your competitors. It’s about identifying the unique characteristics of your brand and products that your competitors lack and promoting those characteristics in a way that helps customers choose you over everyone else.  

This blog post shows you how to differentiate yourself from the competition by identifying exactly what makes your brand and the products you sell so unique.  

How Does Competitive Differentiation Work?  

The goal of competitive differentiation is to set your brand and products apart from the competition by clearly articulating to your audience what you do differently. The purpose of this is to compel customers to choose your products because they understand the ways in which your products are better or different from others like them on the marketplace.  

Competitive differentiation shows up in a variety of ways, from packaging and slogans to marketing campaigns and customer service. But before you start redesigning any of these elements, you must first identify what sets your brand and products apart from your competitors and who those differentiators appeal to the most. Begin by defining the specific advantages of your brand or products, then figure out how to clearly and unambiguously communicate those differences to your customers.  

Distinguish Your Brand from Competitors 

To differentiate from the competition, you must take the time to define specific advantages of your products or brand and craft a strategy for promoting these advantages to potential customers. Both of these steps are crucial: you cannot create competitive differentiation until you figure out what makes you truly unique and different, and it’s not enough to be unique and different if your customers don’t know about it.  

Your customers must also care about the ways in which you are different. Adding unique colors to your branding or coming up with pithy ad campaigns may make you stand out, but you’ll only truly differentiate your brand if these actions resonate with your audience. 

Remember that ‘different’ does not have to be extreme. You don’t have to revolutionize your category to win at competitive differentiation. All you need are a few unique value propositions that you can offer up to make customers want to choose you.  

You Can’t Be Everything to Everyone 

Like it or not, you’re already being compared to your competition every time your customers type their queries into a search engine. Products are already displayed alongside a variety of other choices, so if you try to be too broad in your offerings, you risk getting lost in the shuffle. If all you can offer is the lowest price for a certain product, all that needs to happen is for a competitor to come in and offer a slightly lower price to take away your perceived competitive edge.  

If a brand is struggling to differentiate, chances are they have fallen into the trap of trying to appeal to everyone regardless of whether or not they meet the customer’s needs. Think of the classic film, Miracle on 34th Street: rather than try to convince the harried mother to buy a different toy for her child because his store didn’t carry the one the child wanted, Kris Kringle sent her to another store to find the desired toy. The mother effusively praised his efforts to the manager, explaining that in doing so he had made her a loyal customer for life.  

To truly lean into your competitive advantage, you must be willing to acknowledge the limitations of what you offer. Put another way, you must be willing to exclude certain customers if their needs are not in line with your products. Apple began as a company dedicated to the concept of developing a personal computer that appealed to the average consumer. Their main rival at the time, IBM, was focused on creating computers best suited for the corporate market. Both companies offered similar products, but Apple differentiated itself by focusing on their end consumer and tailoring products and marketing to appeal to that demographic.  

Specialization is Key to Differentiation 

There is an incredible advantage to specialization as it often creates a stronger brand identity and allows you to charge a premium for your products. Differentiation often goes hand in hand with specialization, but it doesn’t mean you have to limit yourselves to one type of product. Since it’s early success with the personal computer, Apple has since developed innovative mp3 devices, smart phones, smart watches, and a variety of other products that changed the world of consumer electronics and allows them to remain a dominant player in that sphere to this day.  

Specialization also allows brands to command higher prices and create a sense of exclusivity. It leads to that most-sought-after component of modern commerce, brand loyalty. 

Defining Your Differentiators 

Before you define your brand’s differentiators, take a step back and think about your target audience. Who are your existing customers? What are their specific wants and needs? Who are your best prospective customers? What do they want? You must have clear answers to these questions before you can competitively differentiate yourself from other brands, otherwise you run the risk of promoting differentiators that do not resonate with your target audience.  

Make a List 

Make a list of all the things your brand does that sets you apart from the competition. Remember, your products don’t have to be the only thing that sets you apart. Maybe a handful of competitors in your category use sustainable materials, but your company donates a certain percentage of profits to environmental groups or participates in sustainable causes. Maybe you sell products in a highly competitive category but offer superior customer support and answer common customer questions and concerns in your product listings. List everything you can think of that your brand or products do that your competitors do not. Here are areas to consider when determining your competitive differentiation:  

  • Quality and durability 
  • Style and design 
  • Competitive pricing 
  • Unique capabilities 
  • Usability and convenience 
  • Speed and performance 
  • Health and safety 
  • Compatibility and configurability 
  • Sustainability 
  • Customer service 
  • Innovation 

Know that whatever sets you apart must be accurate, relevant to what your target audience is looking for, and provable. False and unprovable claims are easily recognized as exactly what they are and can damage your brand reputation, and differentiators that don’t resonate with your target audience aren’t worth spending the extra effort to promote. 

Narrow it Down 

Once you have a list, narrow it down by asking whether or not your direct competitors can claim the same thing (if you don’t know who your direct competitors are, we’ve written a free eBook to help you find out). If your competitors can make the exact same claim, it’s not enough of a differentiator.  

Once you’ve identified what your brand or products do that no one else does, you can start to formulate new packaging, marketing campaigns, and other ways to get the message out there.  

Strengthen Your Message 

Be on the lookout for generic words and platitudes. Being passionate about your product is not a differentiator; every brand is passionate about what they create. Instead, ask why you do what you do the way that you do it. If you own a dog toy brand who specializes in making durable chew toys that are pet safe and aesthetically pleasing, instead of saying “we are passionate about creating toys your dog will love,” you might say, “we create durable toys to complement your home décor because your dog is part of the family.”  The first message feels generic, but the other speaks to specific differentiators of your brand.  

Spread the Word 

Once you have clearly defined your competitive differentiators you need to make sure your customers know exactly what sets you apart. This could be as simple as updating your product listings or as complex as a top to bottom re-brand. This is where working with an agency can be incredibly helpful as they often have the personnel, resources, and expertise to help set you apart from the competition. Just remember that whatever makes your brand or products unique won’t matter if customers don’t know about it, so get out there and spread the word.  

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Heather Eastman
Latest posts by Heather Eastman (see all)